JIT/Lean Production

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 2 Some Statistics from Framingham (GM) 40.7 hours 130 defects 2 weeks Toyota Takaoka 16 hours 45 defects 2 hours A comparison of: 1)assembly hours 2)defects per 100 cars 3)average inventory levels

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 3 Post World War II Growing and rebuilding world economy Demand > Supply US Manufacturing: –Higher volumes –Capital substitution –“Breakthrough” improvements –“The production problem has been solved”

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 4 View from Japan Very little capital War-ravaged workforce Little space Poor or no raw materials Lower demand levels Little access to latest technologies  U.S. methods would not work

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 5 Japanese Approach to Operations Maximize use of people Simplify first, add technology second Gradual, but continuous improvement Minimize waste (including poor quality)  Led to the development of the approach known as Just-in-Time

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 10, Slide 6 Just-in-Time Repetitive production system in which processing and movement of materials and goods occur just as they are needed

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 7 Pre-JIT: Traditional Mass Production

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 8 Post-JIT: “Lean Production” Tighter coordination along the supply chain Goods are pulled along — only make and ship what is needed

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 9 JIT Goals (throughout the supply chain) Eliminate disruptions Make the system flexible Reduce setup times and lead times Minimize inventory Eliminate waste

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 10 Waste Definition: Waste is ‘anything other than the minimum amount of equipment, materials, parts, space, and worker’s time, which are absolutely essential to add value to the product.’ — Shoichiro Toyoda President, Toyota

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 11 Forms of Waste: Overproduction Waiting time Transportation Processing Inventory Motion Product Defects

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 12 Inventory as a Waste Requires more storage space Requires tracking and counting Increases movement activity Hides yield, scrap, and rework problems Increases risk of loss from theft, damage, obsolescence

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 13 Examples of Eliminating “Wastes” Big Bob’s Automotive Axles: Wheels bought from outside supplier Axles made and assembled in house

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 14 BEFORE:Shipping in Wheels Truck Cost: $500 (from Peoria) Maximum load of wheels: 10,000 Weekly demand of wheels: 500

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 15 AFTER: Shipping in Wheels Truck Cost: $50 (from Burlington) Maximum load of wheels: 500 Weekly demand of wheels: 500 What wastes have been reduced?

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 16 Process Design “Focused Factories” Group Technology Simplified layouts with little storage space Jidoka and Poka-Yoke Minimum setups

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 17 Personnel and Organizational Elements Workers as assets Cross-trained workers Greater responsibility at lower levels Leaders as facilitators, not order givers

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 18 Planning and Control Systems “Small” JIT Stable and level schedules –Mixed Model Scheduling “Push” versus “Pull” –Kanban Systems

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 19 Kanban Uses simple visual signals to control production Examples:  empty slot in hamburger chute  empty space on floor  kanban card

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 20 Kanban Example Workcenter B uses parts produced by Workcenter A How can we control the flow of materials so that B always has parts and A doesn’t overproduce?

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 21 When a container is opened by Workcenter B, its kanban card is removed and sent back to Workcenter A. This is a signal to Workcenter A to produce another box of parts. Kanban card: Signal to produce

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 22 Empty Box: Signal to pull Empty box sent back. Signal to pull another full box into Workcenter B. Question: How many kanban cards here? Why?

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 15, Slide 23 How Many Kanbans? y = number of kanban cards D = demand per unit of time T = lead time C = container capacity X = fudge factor