This document provides an overview of lean operations and just-in-time (JIT) manufacturing. It discusses that JIT aims to produce goods with minimum lead time and lowest cost by eliminating waste. Toyota popularized JIT techniques like reducing setup times and implementing kanban systems. Key aspects of JIT include eliminating waste, reducing variability, and improving throughput by pulling materials based on demand. JIT requires close supplier partnerships and scheduling to achieve small lot sizes and low inventories. The document outlines tactics to implement JIT principles in both manufacturing and service industries.

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. 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. 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. Toyota Motor Corp.
• Largest vehicle manufacturer
• Techniques of JIT, TPS and Lean
Operation
• Introduced by Taiichi Ohno

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. 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. 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. Three Elements of JIT

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. The most dangerous
kind of waste is the
waste we do not
recognize

11. Ohno’s Seven Wastes
• Overproduction
• Queues
• Transportation
• Inventory
• Motion
• Over processing
• Defective products

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. Eliminate Waste
• Efficient, sustainable production
minimizes inputs, reduces waste
• Traditional “housekeeping” has been
expanded to the 5 Ss

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. © 2011 Pearson Education,
Inc. publishing as Prentice
Hall
Two additional Ss
• Safety- build in good practices
• Support Maintenance- reduce variability
and unplanned downtime

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. 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. Inventory is Evil

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. 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. 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. JIT and Competitive Advantage

23. JIT and Competitive Advantage
© 2011 Pearson Education, Inc. publishing as
Prentice Hall

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. JIT Partnerships

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. 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. 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. JIT Inventory
•JIT Inventory Tactics
•Four tactics
• Reduce
Inventory
• Reduce
Lot Size
•Reduce
Variability
• Reduce
Setup
Costs
4 1
23

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. •Uncovering of the “rocks”
•Reveals problems,
variability
•Management clears the
lake
Inventory
level
Process
downtimeScrap
Setup
time
Late deliveries
Quality
problems Problems
revealed

32. No problems No inventory
Inventory
level
Process
downtime
removed
No scrap
Setup
time
reduced
Late
deliveries
Quality
problems
removed

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. •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. 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. • High setup costs encourage large lot sizes
Ultimate Solution: Reducing setup costs
Reduces lot size &
average inventory
Reduces Optimum
order size

37. Holding cost
T2
S2
Setup cost curves (S1, S2)
T1
S1
Cost
Lot size
Sum of ordering
and holding costs

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. © 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. 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. 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. JIT Scheduling: Two major tools
Level
Schedules
Kanban

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. Freezing
• Not allowing changes
• Improves the performance
• The portion closest to the due dates
• Allows
– Production system to function
– Schedule to be met

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. © 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. 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. 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. 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. 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. © 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. • 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. • 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. 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. 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. 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. JIT in Services
The JIT techniques used in
manufacturing are used in services
• Suppliers
• Layouts
• Inventory
• Scheduling

58. Group 7
THANK YOU
ANY QUESTIONS?