JIT/Lean Production Chapter 13

Chapter Objectives Be able to: Describe JIT/Lean and differentiate between the Lean philosophy and kanban systems. Discuss the Lean perspective on waste and describe the eight major forms of waste, or muda, in an organization. Discuss the Lean perspective on inventory and describe how a kanban system helps control inventory levels and synchronize the flow of goods and material across a supply chain. Describe how the concepts of the Lean supply chain and Lean Six Sigma represent natural extensions of the Lean philosophy. Explain how a two-card kanban system works. Calculate the number of kanban cards needed in a simple production environment. Show how MRP and kanban can be linked together and illustrate the process using a numerical example.

Just-in time/Lean Just-in-time – A philosophy of manufacturing, applicable to manufacturing and services based on planned elimination of all waste and on continuous improvement of productivity Lean – A philosophy of production that emphasizes the minimization of the amount of all resources (including time) used in the various activities of an enterprise. It includes identifying and eliminating non-value-adding activities. © 2010 APICS Dictionary

Performance Advantage of a Lean Plant Circa 1986 Figure 13.1 Kicked off the JIT/Lean Production Revolution in the late 1980’s/early 1990’s

Lean Philosophy The Lean philosophy can be applied to a wide range of production and service environments. Companies following the Lean philosophy can and do use a wide range of planning and control techniques, not just kanban. The Lean philosophy is consistent with business process improvement, quality improvement, and supplier management initiatives.

Lean Waste Lean Waste – Any activity that does not add value to the good or service in the eyes of the consumer. Called “muda” in Japanese Identification of lean wastes began with Taiichi Ohno, a Toyota engineer. © 2010 APICS Dictionary

Eight Lean Wastes Overproduction Waiting Unnecessary transportation Inappropriate process Unnecessary inventory Unnecessary/excess motion Defects Underutilization of employees

Lean Perspective on Inventory Triangles represent inventory between work centers A, B, and C. The buildup of inventory hides problems (at a cost) that may occur. Figure 13.2

Lean Perspective on Inventory After a Lean transformation, wasted movement and space are eliminated and work centers are moved closer together. Inventory levels are reduced dramatically and work centers make only what is needed when it is needed. Figure 13.3

Lean Perspective on Inventory Process of reducing inventory leads to reduction of the other “wastes” and exposes problems in order of severity (‘water and rocks’ analogy) Figure 13.4

Recent Developments in Lean Thinking Lean Six Sigma – A methodology that combines the organizational elements and tools of Six Sigma with Lean’s focus on waste reduction. Lean Supply Chain Management – An extension of the Lean philosophy to supply chain efforts beyond production. Lean supply chain management seeks to minimize the level of resources required to carry out all the supply chain activities.

Kanban System Kanban system – A production control approach that uses containers, cards, or visual cues to control the production and movement of goods through the supply chain. Key characteristics: Uses simple signaling mechanisms to indicate when specific items should be produced or moved. Can be used to synchronize activities either within a plant or between different supply chain partners. Are not considered planning tools, but rather control mechanisms that are designed to pull parts or goods through the supply chain based on downstream demand.

Kanban System Two-card kanban system – Uses one card to control production and another card to control movement of materials.

Kanban System for Two Work Centers Figure 13.5

Release of Finished Materials from Work Center B Figure 13.6

Pulling of Raw Materials into Production at Work Center B Figure 13.7

Removal of Finished Materials from Work Center A Figure 13.8

Two-card System Summary A downstream system station pulls finished material out of work center B. Work center B pulls raw material into production. Demand for more raw material in work center B pulls finished material out of work center A.

Pull System Pull system – A production system in which actual downstream demand sets off a chain of events that pulls material through the various process steps. A kanban system is also called a pull system.

Kanban System Other signaling methods: Single-card systems Color coding of containers Designated storage spaces Computerized bar-coding systems

Controlling Inventory Levels Using Kanbans Calculating the number of kanbans:

Kanban - Example 13.2 Determine the number of production cards needed using the following information:

Kanban - Example 13.2 Convert the number of kanbans into the number of subassemblies and hours work:

Kanban - Example 13.3 After a Lean initiative, the following improvements, were made: Production lead time has been cut from 2.6 hours to a constant 1.6 hours. Demand from final assembly has been stabilized at 300 subassemblies per hour. Smaller, standardized containers that hold just 25 subassemblies are now being used.

Kanban - Example 13.3 If the safety factor is reduced to 4%

Synchronizing the Supply Chain Using Kanbans To synchronize the supply chain, there must be a smooth, consistent flow of material through the supply chain links. Figure 13.9

Using MRP and Kanbans Together Example 13.4 Combine the planning capabilities of MRP with the control capabilities of kanban. Figure 13.11

Using MRP and Kanbans Together Example 13.4 There is no projected ending inventory. Consistent with Lean philosophy of having no more inventory in the system than is needed. Planned orders all occur in the same week as the planned receipts. Because planning lead time is just 1.6 hours, orders released in a week should be completed in that week. Planned order quantities can be used to calculate the demand rates and kanban cards for each week.

Using MRP and Kanbans Together Example 13.4 Calculate D values Calculate the number of production cards

JIT/Lean Production Case Study Supply-Chain Challenges in Post-Earthquake Japan

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