Just-In-Time Chapter 3

JIT Overview JIT is both a management philosophy and a set of operational techniques. An element of the Toyota’s Production System (VBW, Figure 3.17) The philosophy is based on: Planned elimination of all waste Continuous improvement of productivity

Sources of Waste Overproduction (inventory) Defects Personnel Equipment Space Time (inefficiency) Utilities

Major Elements of JIT Carry inventory only when needed Improve quality to zero defects Reduce setup times and lot sizes. Focus on continual improvement. Make efforts to involve workers and use their knowledge to a greater extent. Achieve improvement at minimum cost

JIT in Manufacturing JIT makes major changes in the actual practice of manufacturing by reducing: Complexity of detailed material planning. Need for shop-floor tracking. Work-in-process inventories. Transactions associated with shop-floor and purchasing systems.

JIT in Services Synchronize and balance information and workflow Increase process visibility Continuously improve processes Eliminate all waste (including paperwork) Increase resource flexibility

JIT and MPC: the System (VBW, figure 3.1)

JIT and MPC Front end: Engine: Back end: Level capacity loading Reduce number of part numbers planned. Reduce number of levels in the BOM. Back end: Focus on simplicity—shop-floor and purchasing. Backflushing.

JIT and MPC Building Blocks (Table 3.1, VBW, p. 77) Product design Standard parts, product simplification, modular design, robust design, scheduled design changes, design quality Process design Band width—surge capacity to accommodate product mix and demand variations. Process flexibility Setup time reduction Cellular system

JIT and MPC Building Blocks (Table 3.1, VBW, p. 77) Human/organizational elements Whole person concept—continual learning and improvement. Cross-training Motivation and empowerment Manufacturing planning/control Pull system Visibility Simplified planning and control

JIT Example—Muth Pots Leveling the production Pull system introduction Material movements and production authorized by signal of need from a “downstream” work center. Schedule must be “frozen” for a period of time. Determine the container size/capacity/number. Product design Process design Bill of materials implications

JIT Applications Single-card kanban system (Figure 3.16, p. 90) Two-card kanban system (Toyota) Transport, or conveyance, card. Production card. Two-bin or three-bin system Kanban cards replace all work orders and move tickets. Kanban cards may be used with suppliers.

Calculating Number of Kanbans Y=no. of kanbans D=demand/unit of time [800/day] L=lead time [2 hours=0.25 days] a=container capacity [20] =safety stock [25%]

Control Through Signaling Simplicity Use different methods – kanban, container, tennis balls, computerized display board (Andon board), etc. Planning to schedule/producing to pull signal Make or move only with an authorized signal First-in, first-out

Workplace Organization Is referred to as housekeeping Is a means to identify and maintain an orderly environment Is a prerequisite for inventory management Prevents errors and contamination Basic concepts: simplification, organization, discipline, cleanliness, participation

Six (6) S’s Seiri – organization Seiton –tidiness Seiso –purity Seiketsu – cleanliness Shitsuke – discipline Shikkari-yarou – let’s try hard

Setup Time Internal versus external setup time (setup time when the machine is not running) Reduce the setup time by studying: The machine itself Attachments Tools Workplace organization Transfer of internal setup to external setup

Maintenance Focus on preventive maintenance Develop a total productive maintenance system (TPM) Train and assign workers to carry out preventive maintenance on their machines Provide technical assistance for workers Develop a set of measurements for improving the maintenance system

Flexibility Mobility Variable output rate Multipurpose Flexible capability Simplicity Surge capacity

Transportation Strategies Repetitive schedules Mixed loads Milk run Freight consolidation Local warehouses Local suppliers

Implication of JIT in Repetitive Systems Use production rates instead of work orders Gross-only explosions for MRP No lead-time offset is required Cumulative MRP format may be used No need for due dates on individual lots Planning buckets are usually in days or weeks

Implications of JIT in Job Shop Visual control of queues The level of BOM is reduced Manage the total load of the shop Use rate-based scheduling Use mixed-model scheduling Use cellular layout Emphasis part standardization

JIT in Purchasing Basics: Lessons Scheduling system producing reasonably certain requirements. Achieving a stable schedule. Pursuing all JIT objectives and building blocks. Pruning the number of vendors. Controlling the cost of transportation. Lessons Don’t shift inventory-holding from the company to the vendor. Effectively manage vendor relationships.

Implication of JIT in Human Resources Management Employee involvement and empowerment Motivation Suggestion systems Intra- and inter-functional teams Job design Compensation and rewards Education and training Relationships with unions

Changing Roles and Responsibilities - Management Culture change – from maintain status quo to improvement Supervisors as coaches Treat employees fairly Sharing information Provide support and motivation Provide extra time for improvement

Changing Roles and Responsibilities - Employees Make decisions and solve problems Help make improvement Work with colleagues closely Expanded job responsibilities Responsibility at the source Use scientific techniques

Concluding Principles Stabilizing and in some cases leveling the production schedules are prerequisites to effective JIT systems. Achieving very short lead times supports better customer service and responsiveness. Reducing hidden factory costs can be at least as important as reducing costs more usually attributed to factory operations. Implementing the whole person concept reduces distinctions between white- and blue-collar workers and taps all persons’ skills for improving performance.

Concluding Principles Cost accounting and performance measurements need to reflect the shift in emphasis away from direct labor as the primary source of value added. To achieve JIT’s benefits in nonrepetitive applications, some basic features of repetitive-based JIT must be modified. JIT is not incompatible with MRP-based systems. Firms can evolve toward JIT from MRP-based systems, adopting JIT as much as or little as they want, with an incremental approach.

Homework Assignment Problem 3.2 and 3.12 Due Tuesday, December 3