1. Just-in-Time Systems
 An integrated management system developed by
Taiichi Ohno, VP of Toyota Motor Company
 It takes Toyota 20 years to perfect the system
 Early Studies
 1977 Hertz Repair Study
 Quasar Plant Productivity Study
 Two Fundamental Concepts
 Elimination of Waste
 Respect for People

2. 1977 Hertz Repair Study
Model Repair per 100 vehicle
(first 12,000 miles)
Ford 326
Chev 425
Pinto 306
Toyota 55

3. Quasar Benchmarking Study
Under Under
Motorola Matsushita
Direct Labor Employees 1,000 1,000
Indirect Employees 600 300
Total 1,600 1,300
Daily Production 1,000 2,000
Assembly Repair 130% 6%
Annual Warranty Cost ($M) $16 $2

4. JIT’s Management Philosophy
 Elimination of Waste
Focused Factory Network
Group Technology
Jidoka– Quality at the Source
Just-in-Time Production (little JIT)
Kanban System
Uniform Plant Loading
Minimize setup times

5. Focused Factory Networks
 Small Specialized plants
# Employees # Plants
1000+ <750
30-1000 60,000
30- 180,000
 Difficult to manage a large installation
 Create waste
 Stifle communication flows
 Buy special machine tools to do critical job
 Create Business Group
 Toyota, Mitsubishi, Hitachi, ….

6. Group Technology
 Key concepts
 Group products into product families
 Assign a set of dissimilar machine to each family
 Arrange machines in a narrow U
 Use multifunctional workers
Why Product families?
 job shop – move a job from department to department
 Cincinnati Miracron’s Study
Move time + setup + queue time: 90-95% of the total
processing time
Run Time: 5-10%

7. Group Technology (con’d)
Job Shop Layout
L L L M M M
L L L M M M
Input Output
G G G D D D
G G G D D D

8. Group Technology (con’d)
Convert Job Shop Layout to Group
Technology Layout (Cellular Manufacturing)
 Classification and Coding Scheme
 Assign a code number to each part (products)
 Assign products with similar codes to a family
 Production Flow Analysis
 Form product families based on manufacturing
similarities

9. Group Technology (con’d)
 A set of machines dedicated to processing one or more
family
 Arrange machines in a narrow U
 Workers rotate among several machines

10. Group Technology (con’d)
Advantages
 Reduce cycle time
Move time
Queue time
Set up time
 Adjust the output rate by increasing or
decreasing the number of workers in a cell
 Facilitate job training
 Promote job satisfaction

11. Jidoka: Quality at the Source
Stop everything when something goes
wrong
Instead of using QC staff, each worker
becomes his or her own inspector
Avoid batch processing: give each person
only on part to work on at a time
Autonomation: automatic control of defect
 Foolproof systems
 Visual control (call light, Andon, and stop watch)

12. Just-in-Time Production
What is JIT? – provide
 Necessary products (services)
 Necessary quantities
 Necessary time
Work well in a repetitive processing
environment
The ideal lot size is one (Inventory is evil!)
 Typical internal lot sizes are 1/10 of a day’s production
 Makes no allowances for contingencies
JIT Vs. Just-in-case Philosophy

13. Little JIT (Con’d)
Inventory covers up problems
Unreliable Machine Absenteeism Poor
delivery Breakdowns Quality

14. Kanban Control
 Kanban = Card
 Production Kanban: Authorizes the manufacturing of a container of material
 Withdrawal Kanban: Authorizes the withdrawal and the move of one container
Kanban Flow
Kanban Rule: No Kanban card, no
production or movement of material
Can accommodate 10%-20% of changes in
planned production
Can easily extend to suppliers (supplier
Kanban)

15. Uniform Plant Loading
Kanban system cannot function smoothly if
parts withdrawal is irregular
How to ensure smooth production
 Mixed model assembly line: an assembly produces small
quantities of several products at the same time.
 Avoid the reaction wave in response to schedule variation
Freeze monthly production rate
Produce the same mix of products every day
Determine the sequence for “introducing” products to
the same assembly line (Goal Chasing Algorithm)

16. Uniform Plant Loading (con’d)
Models Monthly Daily Cycle Time Production
Demand demand Cycle
A 8,000 400 4
(480 min *
B 6,000 300 2 shifts) / 3
C 4,000 200 1000 2
= 0.96
D 2,000 100 1
min/unit
Total 20,000 1,000 10
 One production cycle consists of 4 units of A’s, 3 units of
B’s, 2 C’s, and I D
 The sequence for producing this cycle is determined by
the Goal Chasing Algorithm to ensure a constant parts
consumption

17. Goal Chasing Algorithm
 Objective: maintain a constant parts consumption rate (create
a constant demand)
 Principle: minimize the difference between the ideal parts
consumption and actual parts consumption
Units
Ideal parts consumption
Actual parts consumption
Production sequence

18. Minimize Setup Times
 Attanept to achieve a single-digit setup (less than one
minute)
 Relationship between setup time and inventory level
 Example: Hood and Fender press comparison (800-ton
press)
Toyota USA Sweden Germany
Setup time 10 minutes 6 hours 4 hours 4 hours
Setups/day 3 1 - ½
Lot size 1 day 10 days 1 month -
(inventory)

19. Minimize Setup Times (con’d)
Separate internal setup from external setup
 Internal setup: has to be performed while the
machine is stopped
 External setup: can be performed while the
machine is running
Convert internal setup to external setup
Eliminate the adjustment process
Abolish the setup step
 Produce more than one parts at the same time (one
die, two parts)

20. JIT’s Management Philosophy
(con’d)
Respect for People
Life time employee
Company-wide unions
Attitude toward workers
Automation/Robotics
Bottom-Round Management
Subcontractor
Quality Circle

21. Life time Employment
1/3 of workforce (permanent workers)
No layoff or firing of the regular workers
Mandatory retirement at age 55
Lump sum compensation
Advantages
 Job stability and lifetime training
 Opening for young people
 Team spirit and loyalty
 Forced savings

22. Company Unions
Included everybody in the company
(did not matter what skills were)
The relationship between the union
and management is cooperative
Compensation (based on bonus, up to
50% of salaries) reinforces the
harmony relationship

23. Attitude Toward Workers
Do not look at people like human machines
If a machine can do a job, then a person
should not do it (human dignity)
Give opportunity for workers to do more
(what workers are doing is only tapping their
capability)
The Japanese spend more for employee
training and education than any other
industrial nation.

24. Automation/ Robotics
Automation and robotics are not considered
staff-cutting moves; eliminates dull jobs
Japan has invested as much as 1/ of its GNP
in capital investment
Invested first in low-cost enhancement
Japan had about 5 times of the number of
programmable robots (some very simple) as
the United States
Employees often initiate automation projects

25. Bottom-Round Management
 More than 100 million people crowded
on an island about the size of California,
80% of which is mountainous
Recommen-
 The importance of the group dations
superseded that of individual
Company hierarchy
 Decisions are made at the lowest Recommen-
possible level and involved all potentially dations
interested parties
 A very slow decision making process
Problems +
(quick implementation) solutions

26. Subcontractor Networks
The bulk of the subcontractors have fewer
than 30 employees
More than 90% of all Japanese companies
are part of am enormous subcontractor
network
Sole-source arrangement
 Mutual trust
 No inspection, no paperwork, no delay
 Help vendors improve their manufacturing system
 Provide financial help

27. Quality Circles
 The OC circles at Toyota mirror its formal
organizational structure
 A QC circle is made of a foreman and his
subordinates
 All employees must participate in some circles
 Discuss problems encountered and devise solutions
to their management
 Education & training
 Problems solving and presentation skills
 Advisor and trainer courses
 Inspection tours to U.S. and Europe

28. Quality Circles (con’d)
Reward Systems
 Topic Recommendation awards the individual topic
registered by a circle
 Effort Prize (momentary rewards): when a topic is
completed
 Advisor Prize: 1/3 of the Topics Recommendations
 Coordinator Prize: 1/3 of the Advisor Prize
 Gold and Silver Prize (at the plant level)
 QC circle-Toyota Prize
 All-Japan QC Circles Contest

29. Quality Circles (con’d)
Nissan spent $30,000+ to train each
assembly worker (Smyrna, Tennessee)
before they started on the job
Effects
 Toyota: 5 million suggestions a year (500/employee)
 Cannon: 900,000 suggestions, 78 suggestions per
employees
 Matsushita: 6.5 million suggestions a year

30. Principles of Continuous
Improvement
Create a mind-set for improvement
Try and try again
Think; Don’t buy improvement
Work in teams
Recognize improvement knows no limits