Just In Time and Lean Operation Chapter Presentation


Published on

This presentation encompasses all the topics under "JIT AND LEAN OPERATIONS". It is largely based on the textbook by Jay Heizer and Barry Render 9th Edition


Published in: Business, Technology

Just In Time and Lean Operation Chapter Presentation

  1. 1. LEAN OPERATiONS Presented By: Group 7 Pearson Education, Inc. publishing as Prentice Hall © 2011 Based on the textbook by Heizer and Render Most of the figures from the book:
  2. 2. What is JIT? • A corporate system designed to produce output within the minimum lead time and at the lowest total cost by continuously identifying and eliminating all forms of corporate waste and variance.
  3. 3. Looking Back • JIT originated in Japan, post WWII • Driven by a need survive after the devastation caused by the war • JIT gained worldwide prominence in the 1970s • Toyota Motor Co. developed JIT
  4. 4. Toyota Motor Corp. • Largest vehicle manufacturer • Techniques of JIT, TPS and Lean Operation • Introduced by Taiichi Ohno
  5. 5. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Main assembly complex Supplier buildings surround main assembly complex Implementation of JIT and TPS at Toyota plant
  6. 6. Just-In-Time, TPS, and Lean Operations • JIT - continuous and forced problem solving via a focus on throughput and reduced inventory • TPS -continuous improvement, respect for people, and standard work practices • Lean production - supplies the customer with exact wants when the customer wants it without waste
  7. 7. Just In Time Good production systems require that managers address three issues that are pervasive and fundamental to operations management: eliminate waste, remove variability, and improve throughput
  8. 8. Three Elements of JIT
  9. 9. Eliminate Waste • Waste is anything that does not add value from the customer point of view • Storage, inspection, delay, waiting in queues, and defective products do not add value and are 100% waste
  10. 10. The most dangerous kind of waste is the waste we do not recognize
  11. 11. Ohno’s Seven Wastes • Overproduction • Queues • Transportation • Inventory • Motion • Over processing • Defective products
  12. 12. Common Causes of Waste • Layout (distance) • Long setup time • Incapable processes • Poor maintenance • Poor work methods • Lack of training • Inconsistent performance measures • Ineffective production planning • Lack of workplace organization • Poor supply quality/reliability
  13. 13. Eliminate Waste • Efficient, sustainable production minimizes inputs, reduces waste • Traditional “housekeeping” has been expanded to the 5 Ss
  14. 14. The 5 Ss • Sort/segregate – when in doubt, throw it out • Simplify/straighten – methods analysis tools • Shine/sweep – clean daily • Standardize – remove variations from processes • Sustain/self-discipline – review work and recognize progress
  15. 15. © 2011 Pearson Education, Inc. publishing as Prentice Hall Two additional Ss • Safety- build in good practices • Support Maintenance- reduce variability and unplanned downtime
  16. 16. Reducing Waste: Push Vs Pull Material Flow Information Flow Customer Raw Material Supplier Final Assembly PUSH Customer Raw Material Supplier Final Assembly PULL
  17. 17. Remove Variability • JIT systems require managers to reduce variability caused by both internal and external factors • Variability is any deviation from the optimum process • Inventory hides variability • Less variability results in less waste
  18. 18. Inventory is Evil
  19. 19. Sources of Variability 1. Incomplete or inaccurate drawings or specifications 2. Poor production processes resulting in incorrect quantities, late, or non- conforming units 3. Unknown customer demands
  20. 20. Improve Throughput • The time it takes to move an order from receipt to delivery • The time between the arrival of raw materials and the shipping of the finished order is called manufacturing cycle time • A pull system increases throughput
  21. 21. Improve Throughput • By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement • Manufacturing cycle time is reduced • Push systems dump orders on the downstream stations regardless of the need
  22. 22. JIT and Competitive Advantage
  23. 23. JIT and Competitive Advantage © 2011 Pearson Education, Inc. publishing as Prentice Hall
  24. 24. JIT Partnerships • JIT partnerships exist when a supplier and purchaser work together to remove waste and drive down costs • Four goals of JIT partnerships are: • Removal of unnecessary activities • Removal of in-plant inventory • Removal of in-transit inventory • Improved quality and reliability
  25. 25. JIT Partnerships
  26. 26. JIT Layout •Reduces another kind of waste -“Movement” •Places material directly where needed •Eg. Toyota JIT Layout Tactics • Build work cells for families of products • Include a large number operations in a small area • Minimize distance • Design little space for inventory • Improve employee communication • Use poka-yoke (fail safe) devices • Build flexible or movable equipment • Cross-train workers to add flexibility
  27. 27. Concerns of Suppliers • Diversification – ties to only one customer increases risk • Scheduling – don’t believe customers can create a smooth schedule • Changes – short lead times mean engineering or specification changes can create problems • Quality – limited by capital budgets, processes, or technology • Lot sizes – small lot sizes may transfer costs to suppliers
  28. 28. JIT Inventory •Why does extra inventory exist? •“Just In Case” •cover problems •Just-in-time Inventory •Minimum inventory to keep a perfect system running
  29. 29. JIT Inventory •JIT Inventory Tactics •Four tactics • Reduce Inventory • Reduce Lot Size •Reduce Variability • Reduce Setup Costs 4 1 23
  30. 30. •Inventory hides variability & problems •Analogy with the lake full of rocks Inventory level Process downtimeScrap Setup time Late deliveries Quality problems Water: Inventory Flow Rocks: Problems
  31. 31. •Uncovering of the “rocks” •Reveals problems, variability •Management clears the lake Inventory level Process downtimeScrap Setup time Late deliveries Quality problems Problems revealed
  32. 32. No problems No inventory Inventory level Process downtime removed No scrap Setup time reduced Late deliveries Quality problems removed
  33. 33. •Key to JIT: “Good product in small lot sizes” •Reduces Inventory Costs Q2 When average order size = 100 average inventory is 50 200 – 100 – Inventory Time Q1 When average order size = 200 average inventory is 100 Lowering the order size Increases the Order size Decreases Inventory
  34. 34. •Ideal Situation •Lot Sizes of ONE pulled from ONE process to the next •But, unrealistic •Small lot sizes possible but Single lot size not feasible •Two necessary changes: •Improve Material Handling •Reduce Setup time
  35. 35. Lot Size Example: Crate Furniture Inc. D = Annual demand = 400,000 units d = Daily demand = 400,000/250 = 1,600 per day p = Daily production rate = 4,000 units Q = EOQ desired = 400 H = Holding cost = $20 per unit S = Setup cost (to be determined) Q = 2DS H(1 - d/p) Q2 = 2DS H(1 - d/p) S = = = $2.40 (Q2)(H)(1 - d/p) 2D (3,200,000)(0.6) 800,000 Setup time = $2.40/($30/hour) = 0.08 hr = 4.8 minutes
  36. 36. • High setup costs encourage large lot sizes Ultimate Solution: Reducing setup costs Reduces lot size & average inventory Reduces Optimum order size
  37. 37. Holding cost T2 S2 Setup cost curves (S1, S2) T1 S1 Cost Lot size Sum of ordering and holding costs
  38. 38. • Setup time can be reduced through preparation prior to shutdown and changeover • Reduced Setup times=A major JIT Component • Setup Costs highly correlated with Setup time
  39. 39. © 2011 Pearson Education, Inc. publishing as Prentice Hall Reduce Setup Times Figure 16.6 Use one-touch system to eliminate adjustments (save 10 minutes) Step 4 Step 5 Training operators and standardizing work procedures (save 2 minutes) Step 2 Move material closer and improve material handling (save 20 minutes) Step 1 Separate setup into preparation and actual setup, doing as much as possible while the machine/process is operating (save 30 minutes) Step 3 Standardize and improve tooling (save 15 minutes) Initial Setup Time 90 min — 60 min — 45 min — 25 min — 15 min — 13 min — — Repeat cycle until subminute setup is achieved Step 6
  40. 40. JIT Scheduling • Better Scheduling Organization • Supports JIT1 • Improves ability to meet customer orders2 • Drives down inventory3 • Allows smaller lot sizes4 • Reduces work-in-process5
  41. 41. JIT Scheduling: Example Ford Motor Company Ford communicates its schedules to bumper Polycon Industries Schedule describes: Style and color of the bumper for each vehicle It transmits the information to Polycon Warehouse personnel PW Personnel load the bumpers onto conveyors leading to the loading dock Bumpers are then trucked to ford plant
  42. 42. JIT Scheduling: Two major tools Level Schedules Kanban
  43. 43. 1. Level Schedules: Jelly Bean Scheduling • Technique processes frequent small batches • Many “always changing” small lots A B CA AAB B B B B C JIT Level Material-Use Approach A CA AA B B B B B C CB B B BA A Large-Lot Approach Time
  44. 44. Freezing • Not allowing changes • Improves the performance • The portion closest to the due dates • Allows – Production system to function – Schedule to be met
  45. 45. 2. Kanban: Only when ready • “Kanban”-Japanese word for “card” • Technique that uses “pull” system • Match or nearly match the processing time • Card=an authorization for the next container of material to be produced • Empty containers • Lights • Flag or rag • Colored golf balls Signaling devices to control the flow of material
  46. 46. © 2011 Pearson Education, Inc. publishing as Prentice Hall Kanban 1. User removes a standard sized container 2. Signal is seen by the producing department as authorization to replenish Part numbers mark location Signal marker on boxes Figure 16.8
  47. 47. Work cell Raw Material Supplier Kanban Purchased Parts Supplier Sub- assembly Ship Kanban Kanban Kanban Kanban Finished goods Customer order Final assembly Kanban Kanban
  48. 48. Number of Kanban Cards or Containers • 1st – Set the size of each container – Need to know the lead time needed to produce a container of parts – Need to know the amount of Safety Stock needed • 2nd – Calculate no of Kanbans
  49. 49. Example: No of Kanban: Hobbs Bakery • Daily Demand =500 cakes • Production Lead Time =2 days • Safety Stock =0.5 days • Container size =250 cakes • Now, Demand during lead time =2 days x 500 cakes = 1,000
  50. 50. Quality JIT cuts the cost of obtaining good quality JIT improves quality Better quality means fewer buffers=Easier-to use JIT system •Strong Relationship between JIT & Quality
  51. 51. © 2011 Pearson Education, Inc. publishing as Prentice Hall JIT Quality Tactics Use statistical process control Empower employees Build fail-safe methods (poka-yoke, checklists, etc.) Expose poor quality with small lot JIT Provide immediate feedback Table 16.4
  52. 52. • Continuous improvement • Build an organizational culture and value system that stresses improvement of all processes • Part of everyone’s job • Respect for people • People are treated as knowledge workers • Engage mental and physical capabilities • Empower employees Toyota Production System
  53. 53. • Standard work practice • Work shall be completely specified as to content, sequence, timing, and outcome • Internal and external customer-supplier connection are direct • Product and service flows must be simple and direct • Any improvement must be made in accordance with the scientific method at the lowest possible level of the organization Toyota Production System
  54. 54. Lean Operations • Different from JIT in that it is externally focused on the customer • Starts with understanding what the customer wants • Optimize the entire process from the customer’s perspective
  55. 55. Building a Lean Organization • Transitioning to a lean system can be difficult • Lean systems tend to have the following attributes • Use JIT techniques • Build systems that help employees produce perfect parts • Reduce space requirements
  56. 56. Building a Lean Organization • Develop partnerships with suppliers • Educate suppliers • Eliminate all but value-added activities • Develop employees • Make jobs challenging • Build worker flexibility
  57. 57. JIT in Services The JIT techniques used in manufacturing are used in services • Suppliers • Layouts • Inventory • Scheduling
  58. 58. Group 7 THANK YOU ANY QUESTIONS?