Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –1 Managerial Issues Using JIT as a tool for controlling the flow of materials, identifying sources of error, and minimizing inventories. Developing the strong supplier relationships on which successful implementation of JIT depends. Achieving production linearity in manufacturing and service operations.

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –2 JIT Logic JIT (just-in-time) –Is an integrated set of activities Seeks to achieve high volume production using minimal inventories of raw material, work in process, and finished goods. – A coordinated approach that continuously reduces inventory while also improving quality. –Just in time is also based on the logic that nothing will be produced until it is needed –“Big” JIT (lean production) Seeks to eliminate all forms of waste in production activities: human relations, supplier relations, technology and management of material and inventories. –“Little” JIT Focuses on scheduling goods inventories and providing service resources where and when needed.

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –3 Pull System Exhibit 14.1

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –4 The Japanese Approach To Productivity Fundamental National Goal –Full employment through industrialization Target Industries for Market Dominance –Electronics, vehicles, shipbuilding –Competitive tactics: Imported technology rather than take R&D risks. Focused engineering on the shop floor to achieve high productivity and low cost. Improved quality beyond that of competitors. Eliminated waste in all forms. Have great respect for people.

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –5 Quasar Plant Productivity Exhibit 14.2 *2 years later. † Same people

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –6 The Japanese Approach to Productivity Elimination of Waste Focused Factory Networks Group Technology Jidoka (quality at the source) (stop everything when something goes wrong) Just-in-Time Production Uniform Plant Loading Kanban Minimized Setup Times

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –7 Group Technology versus Departmental Specialty Exhibit 14.3

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –8 Just-In-TimeJust-In-Time Exhibit 14.4 Source: Adapted from Chris Gopal (of Price Waterhouse), “Notes on JIT.”

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –9 Inventory Hides Problems Exhibit 14.5

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –10 Toyota Example of Mixed-Model Production Cycle in a Japanese Assembly Plant Exhibit 14.6

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –11 Flow of Two Kanbans Kanban Pull System –A manual, self-regulating system for controlling the flow of material. Workers produce only when the Kanban ahead of them is empty, thereby creating a “pull” system through the factory. Exhibit 14.7

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –12 Minimizing Setup Time—Hood and Fender Press Comparison (800 ton press) Exhibit 14.8 *For low-demand items (less that 1,000 per month), as large as seven days.

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –13 Setup Reduction Results at JKC Exhibit 14.9

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –14 Respect for People Lifetime Employment Company Unions Attitude toward Workers Automation/Robotics Bottom-Round Management Subcontractor Networks Quality Circles

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –15 JIT in the United States Problems with Implementing JIT –Geographic distances –Supplier-customer relationships –“Jumbo-Inventory-Transfer” –MRP systems

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –16 Implementing JIT Production JIT Layouts/Design Flow Process –Design must ensure balanced continuous workflow with minimum of work in process and delays. –Internal and external logistics must be considered. –Preventive maintenance is emphasized. –Process orientation encourages the use of simple machines. –Goal is a economic production lot size of one.

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –17 How to Accomplish Just-in-Time Production Exhibit Source: This diagram is modeled after the one used by Hewlett-Packard’s Boise plant to accomplish its JIT program.

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –18 The Impact of JIT on Lot Size Exhibit 14.11

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –19 Implementing JIT Production JIT in a Line Flow or Product Layout –No work done until product has been pulled from the end of the line. –Completed work stays at the workstation until remove by a downstream station. Exhibit 14.12

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –20 Relationship between JIT and Quality Exhibit Source: Richard J. Schonberger, “Some Observations on the Advantages and Implementation Issues of Just-in-Time Productions Systems,” Journal of Operations Management 3, no. 1 (November 1982), p. 5.

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –21 Total Quality Control Stabilize Schedule Kanban Pull Work with Vendors Continuous Inventory Reduction Improve Product Design Concurrently Solve Problems and Measure Performance

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –22 Diagram of Outbound Stockpoint with Warning Signal Marker Exhibit Source: Robert Hall, Zero Inventories (Homewood, IL: Dow Jones-Irwin, 1983), p. 51.

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –23 Company Experiences with JIT JIT/TQC benefits –Average inventory reduction of about 50 percent –Reduction of throughput time of 50 to 70 percent –Reduction in setup times of as much as 50 percent without major investment in plant or equipment

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –24 JIT in Services Application of JIT to Services –Synchronization and balance of information and workflow –Total visibility of all components and processes –Continuous improvement of the process –Holistic approach to the elimination of waste –Flexibility in the use of resources –Respect for people

Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –25 Gizmo Production Flow Case Exhibit 14.1