McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 15 Lean Operations

15-2 JIT/Lean Production  Just-in-time (JIT): A highly coordinated processing system in which goods move through the system, and services are performed, just as they are needed,  JIT   lean production  JIT  pull (demand) system  JIT operates with very little “fat”

15-3 Goals  Eliminate disruptions  Make system flexible  Eliminate waste, especially excess inventory

15-4 Sources of Waste  Overproduction  Waiting time  Unnecessary transportation  Processing waste  Inefficient work methods  Product defects

15-5 Kaizen Philosophy  Waste is the enemy  Improvement should be done gradually and continuously  Everyone should be involved  Built on a cheap strategy  Can be applied anywhere

15-6 JIT Building Blocks  Product design  Process design  Personnel/organizational elements  Manufacturing planning and control

15-7 Product Design  Standard parts  Modular design  Concurrent engineering

15-8 Process Design  Small lot sizes  Setup time reduction  Limited work in process  Quality improvement  Balanced system

15-9 Personnel/Organizational Elements  Workers as assets  Cross-trained workers  Continuous improvement  Leadership/project management

15-10 Manufacturing Planning and Control  Pull systems  Visual systems  Close vendor relationships  Preventive maintenance

15-11 Pull/Push Systems  Pull system: System for moving work where a workstation pulls output from the preceding station as needed. (e.g. Kanban)  Push system: System for moving work where output is pushed to the next station as it is completed

15-12 Kanban Production Control System  Kanban : Card or other device that communicates demand for work or materials from the preceding station  Kanban is the Japanese word meaning “signal” or “visible record”  Paperless production control system  Authority to pull, or produce comes from a downstream process.

15-13 Kanban Formula N= DT(1+X) Q N = Total number of containers D = Planned usage rate of using work center T = Average waiting time for replenishment of parts plus average production time for a container of parts X = Policy variable set by management - possible inefficiency in the system Q = Capacity of a standard container (C in Book)

15-14 KANBAN policy A KANBAN policy uses N containers, each containing Q units of the item and with a card on the bottom. When a container becomes empty, the card (a KANBAN) is used as an order for Q units.

15-15 KANBAN policy (Q=4, N=8) Supply / production product card Stock Cards and empty containers Full containers with cards Demands Card send first to avoid delays Machine

15-16 KANBAN versus (R,Q) A KANBAN policy is very similar to an (R, Q) policy with R = (N - 1)Q. But if there are already N outstanding orders, i.e., no stock on hand, no more orders can be triggered since no KANBANs are available. We can therefore interpret a KANBAN policy as an (R, Q) policy where backorders are not subtracted from the inventory position.

15-17 Comparison of JIT and Traditional FactorTraditionalJIT Inventory Much to offset forecast errors, late deliveries Minimal necessary to operate Deliveries Few, largeMany, small Lot sizes LargeSmall Setup; runs Few, long runsMany, short runs Vendors Long-term relationships are unusual Partners Workers Necessary to do the workAssets Table 15.3

15-18  JIT II: a supplier representative works right in the company’s plant, making sure there is an appropriate supply on hand. JIT II