© 2008 Prentice Hall, Inc.16 – 1 Operations Management Chapter 16 – JIT and Lean Operations Presented by :- Robin Shweiki Supervised by: Dr Yousef abu Farah

© 2008 Prentice Hall, Inc.16 – 2 Outline  Global Company Profile: Toyota Motor Corporation  Just-in-Time, the Toyota Production System, and Lean Operations  Eliminate Waste  Remove Variability  Improve Throughput الانتاجية

© 2008 Prentice Hall, Inc.16 – 3 Outline – Continued  Just-in-Time  JIT Partnerships  Concerns of Suppliers  JIT Layout  Distance Reduction  Increased Flexibility  Impact on Employees  Reduced Space and Inventory

© 2008 Prentice Hall, Inc.16 – 4 Outline – Continued  JIT Inventory  Reduce Variability  Reduce Inventory  Reduce Lot Sizes  Reduce Setup Costs  JIT Scheduling  Level Schedules

© 2008 Prentice Hall, Inc.16 – 5 Outline – Continued  JIT Quality  Toyota Production System  Continuous Improvement  Respect for People  Standard Work Practices  Lean Operations  Building a Lean Organization  Lean Operations in Services

© 2008 Prentice Hall, Inc.16 – 6 Learning Objectives When you complete this chapter you should be able to: 1.Define just-in-time, TPS, and lean operations 2.Define the seven wastes and the 5 Ss 3.Explain JIT partnerships

© 2008 Prentice Hall, Inc.16 – 7 Learning Objectives When you complete this chapter you should be able to: 5.Define kanban 6.Compute the required number of kanbans 7.Explain the principles of the Toyota Production System

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© 2008 Prentice Hall, Inc.16 – 10 JIT definition Just in time (JIT)Just in time (JIT) is a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs.is a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs.return on investmentinventorycarrying costsreturn on investmentinventorycarrying costs Just-in-time production method is also called the Toyota Production System.Just-in-time production method is also called the Toyota Production System.Toyota Production SystemToyota Production System

© 2008 Prentice Hall, Inc.16 – 11 TPS: Toyota Production System A system that continually searches for and eliminates waste throughout the value chain.A system that continually searches for and eliminates waste throughout the value chain.

© 2008 Prentice Hall, Inc.16 – 12 Lean Manufacturing

© 2008 Prentice Hall, Inc.16 – 13 Lean operations Lean Manufacturing –Lean Manufacturing – A way to eliminate waste and improve efficiency in a manufacturing environmentA way to eliminate waste and improve efficiency in a manufacturing environment Lean focuses on flow, the value stream and eliminating “muda”, the Japanese word for wasteLean focuses on flow, the value stream and eliminating “muda”, the Japanese word for waste

© 2008 Prentice Hall, Inc.16 – 14 Waller, D.L.,,1999,”Operations Management: A Supply Chain Approach”, (Thompson, London) Lean Manufacturing goals

© 2008 Prentice Hall, Inc.16 – 15 Lean operation cont,,, A common error is to think that the opposite of Lean is “fat”. Not in this context, because theA common error is to think that the opposite of Lean is “fat”. Not in this context, because the term Lean comes from automobile racing. For a motor which burns a minimum of fuel, you say, “Theterm Lean comes from automobile racing. For a motor which burns a minimum of fuel, you say, “The motor runs lean.” The opposite of Lean is a motor burning too much fuel without making the car go faster. You say, “The motor runs rich,” and it just wastes fuel.motor runs lean.” The opposite of Lean is a motor burning too much fuel without making the car go faster. You say, “The motor runs rich,” and it just wastes fuel.

© 2008 Prentice Hall, Inc.16 – 16 Henry Ford’s production line was developed in The idea was inspired by a trip to an abattoir.

© 2008 Prentice Hall, Inc.16 – 17 Any colour you like provided it is Black! - Standardised Vertically integrated – even farmed sheep! Model T Ford Model T Ford Any colour you like provided it is black!

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© 2008 Prentice Hall, Inc.16 – 19 Just-In-Time Production Systems Just-in-time (JIT) production systems take a “demand pull” approach in which goods are only manufactured to satisfy customer orders.

© 2008 Prentice Hall, Inc.16 – 20 Waller, D.L., 2003,”Operations Management: a Supply Chain Perspective 2 nd Edition”, Thompson, London

© 2008 Prentice Hall, Inc.16 – 21 What’s the difference between JIT – TPS- Lean production

© 2008 Prentice Hall, Inc.16 – 22 Just-In-Time, TPS, and Lean Operations  JIT is a philosophy of continuous and forced problem solving via a focus on throughput and reduced inventory  TPS emphasizes continuous improvement, respect for people, and standard work practices  Lean production supplies the customer with their exact wants when the customer wants it without waste

© 2008 Prentice Hall, Inc.16 – 23 Just-In-Time, TPS, and Lean Operations  JIT emphasizes forced problem solving  TPS emphasizes employee learning and empowerment in an assembly-line environment  Lean operations emphasize understanding the customer

© 2008 Prentice Hall, Inc.16 – 24 Just-in-time operations are always lean—but lean operations do not necessarily perform just-in-time.

© 2008 Prentice Hall, Inc.16 – 25 Difference between JIT & Lean production The first step of Lean is extraverted: obtain the Voice of the Customer, whereas Just-in-Time was introverted, focusing mainly on the production process itself.The first step of Lean is extraverted: obtain the Voice of the Customer, whereas Just-in-Time was introverted, focusing mainly on the production process itself.

© 2008 Prentice Hall, Inc.16 – 26 Difference cont..  Different from JIT in that it is externally focused on the customer  Starts with understanding what the customer wants  Optimize the entire process from the customer’s perspective

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© 2008 Prentice Hall, Inc.16 – 29 JIT goals  Eliminate Waste  Remove Variability  Improve Throughput

© 2008 Prentice Hall, Inc.16 – 30 Eliminate Waste  Waste is anything that does not add value from the customer point of view  Storage, inspection, delay, waiting in queues طوابير, and defective products do not add value and are 100% waste

© 2008 Prentice Hall, Inc.16 – 31 Ohno’s Seven Wastes 1.Overproduction 2.Queues 3.Transportation 4.Inventory 5.Motion 6.Overprocessing 7.Defective products

© 2008 Prentice Hall, Inc.16 – 32 Eliminate Waste  Other resources such as energy, water, and air are often wasted  Efficient, ethical, and socially responsible production minimizes inputs, reduces waste  Traditional “housekeeping” ادارة الممتلكات has been expanded to the 5 Ss

© 2008 Prentice Hall, Inc.16 – 33 5S Strategy for creating a well organized, smoothly flowing manufacturing process

© 2008 Prentice Hall, Inc.16 – 34 5S Examples BeforeAfter

© 2008 Prentice Hall, Inc.16 – Inventory Hides Problems Work in process queues (banks) Change orders Engineering design redundancies Vendor delinquencies Scrap Design backlogs Machine downtime Decision backlogs Inspection backlogs Paperwork backlog Minimizing Waste: JIT

© 2008 Prentice Hall, Inc.16 – 36 Remove Variability  JIT systems require managers to reduce variability caused by both internal and external factors  Variability “is any deviation from the optimum الأمثل process”  Inventory hides variability  Less variability results in less waste

© 2008 Prentice Hall, Inc.16 – 37 Sources of Variability 1.Incomplete or inaccurate drawings or specifications 2.Poor production processes resulting in incorrect quantities, late, or non-conforming units 3.Unknown customer demands

© 2008 Prentice Hall, Inc.16 – 38 Sources of Variability 1.Incomplete or inaccurate drawings or specifications 2.Poor production processes resulting in incorrect quantities, late, or non-conforming units 3.Unknown customer demands Both JIT and inventory reduction are effective tools in identifying causes of variability

© 2008 Prentice Hall, Inc.16 – 39 Improve Throughput  The time it takes to move an order from receipt to delivery  The time between the arrival of raw materials and the shipping of the finished order is called manufacturing cycle time  A pull system increases throughput

© 2008 Prentice Hall, Inc.16 – 40 Improve Throughput  By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement  Manufacturing cycle time is reduced

© 2008 Prentice Hall, Inc.16 – 41 JIT Layout Table 16.1 Reduce waste due to movement benefits  Distance Reduction  Increased Flexibility  Impact on Employees  Reduced Space and Inventory

© 2008 Prentice Hall, Inc.16 – 42 Functional layout Cellular layout Askin G.G & Standridge C.R. (1993) Modelling and Analysis of Manufacturing Systems, John Wiley ISBN

© 2008 Prentice Hall, Inc.16 – 43 © Siemens Power Generation Systems Functional layout

© 2008 Prentice Hall, Inc.16 – 44 Manufacturing cells © Siemens Power Generation Systems

© 2008 Prentice Hall, Inc.16 – 45 Multifunction double gantry mill طاحونة A single machine acting as a cell

© 2008 Prentice Hall, Inc.16 – 46 Inventory Inventory is at the minimum level necessary to keep operations running JIT Inventory Tactics  Use a pull system to move inventory  Reduce lot sizes  Develop just-in-time delivery systems with suppliers  Deliver directly to point of use  Perform to schedule  Reduce setup time  Use group technology Table 16.2

© 2008 Prentice Hall, Inc.16 – 47  Reduce Variability  Reduce waste  Reduce Inventory  Reduce Lot Sizes  Reduce Setup Costs JIT Inventory JIT Inventory

© 2008 Prentice Hall, Inc.16 – 48 Reduce Variability Inventory level Process downtime Scrap Setup time Late deliveries Quality problems Figure 16.3

© 2008 Prentice Hall, Inc.16 – 49 Inventory level Reduce Variability Scrap Setup time Late deliveries Quality problems Process downtime Figure 16.3

© 2008 Prentice Hall, Inc.16 – 50 Lowering Inventory Reduces Waste inventory hides problems

© 2008 Prentice Hall, Inc.16 – 51 Lowering Inventory Reduces Waste inventory hides problems

© 2008 Prentice Hall, Inc.16 – 52 Lowering Inventory Reduces Waste Reducing inventory makes problem very visible STOP

© 2008 Prentice Hall, Inc.16 – 53 Lowering Inventory Reduces Waste Remove problem, run With less inventory

© 2008 Prentice Hall, Inc.16 – 54 Lowering Inventory Reduces Waste Reduce inventory again to find new problems

© 2008 Prentice Hall, Inc.16 – 55 Reduce Lot Sizes Figure – –Inventory Time Q 2 When average order size = 100 average inventory is 50 Q 1 When average order size = 200 average inventory is 100

© 2008 Prentice Hall, Inc.16 – 56 Reduce Setup Costs  High setup costs encourage large lot sizes  Reducing setup costs reduces lot size and reduces average inventory  Setup time can be reduced through preparation prior to shutdown and changeover

© 2008 Prentice Hall, Inc.16 – 57 JIT Scheduling  Schedules must be communicated inside and outside the organization  Level schedules  Process frequent small batches  Freezing the schedule helps stability

© 2008 Prentice Hall, Inc.16 – 58 Level Schedules  “Jelly bean” scheduling  Freezing the schedule closest to the due dates can improve performance

© 2008 Prentice Hall, Inc.16 – 59 Scheduling Small Lots ABCAAABBBBBC JIT Level Material-Use Approach ACAAABBBBBCCBBBBAA Large-Lot Approach Time Figure 16.7

© 2008 Prentice Hall, Inc.16 – 60 Kanban  Kanban is the Japanese word for card  The card is an authorization for the next container of material to be produced  A sequence of kanbans pulls material through the process  Many different sorts of signals are used, but the system is still called a kanban

© 2008 Prentice Hall, Inc.16 – 61 Kanban 1.User removes a standard sized container 2.Signal is seen by the producing department as authorization to replenish Part numbers mark location Signal marker on boxes Figure 16.8

© 2008 Prentice Hall, Inc.16 – 62 Kanban Figure 16.9 Work cell Raw Material Supplier Kanban Purchased Parts Supplier Sub- assembly Ship Kanban Kanban Kanban Kanban Finished goods Customer order Final assembly Kanban

© 2008 Prentice Hall, Inc.16 – 63 More Kanban  When the producer and user are not in visual contact, a card can be used  When the producer and user are in visual contact, a light or flag or empty spot on the floor may be adequate  Since several components may be required, several different kanban techniques may be employed

© 2008 Prentice Hall, Inc.16 – 64 More Kanban  Usually each card controls a specific quantity or parts  Multiple card systems may be used if there are several components or different lot sizes

© 2008 Prentice Hall, Inc.16 – 65 The Number of Kanban Cards or Containers  Need to know the lead time needed to produce a container of parts  Need to know the amount of safety stock needed Number of kanbans (containers) Demand during Safety lead time+stock Size of container =

© 2008 Prentice Hall, Inc.16 – 66 Number of Kanbans Example Daily demand=500 cakes Production lead time=2 days (Wait time + Material handling time + Processing time) Safety stock=1/2 day Container size=250 cakes Demand during lead time = 2 days x 500 cakes = 1,000 Number of kanbans = = 5 1,

© 2008 Prentice Hall, Inc.16 – 67 JIT in Services  The JIT techniques used in manufacturing are used in services  Suppliers  Layouts  Inventory  Scheduling