1. Best Performing Consulting Organization by “JIT & Lean Manufacturing” Adding Value In Totality !!

2. Session Topics What is JIT? Benefits of JIT Value Added Management Push vs. Pull Buffered vs. Lean Manufacturing Performance Measures

3. Management philosophy of continuous and forced problem solving Supplies and components are ‘pulled’ through system to arrive where they are needed when they are needed. What is Just-in-Time?

4. Attacks waste – Anything not adding value to the product Customer’s perspective Exposes problems and bottlenecks – Caused by variability Deviation from optimum Achieves streamlined production – By reducing inventory What Does Just-in-Time Do?

5. 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 What is Waste

6. Just-In-Time Manufacturing JIT seeks to reduce waste. Waste is viewed as a symptom of some unsolved problem. Types of waste include: –Overproduction –Waiting Time –Movement –Inventory –Product Defects –Process Waste

7. Just-In-Time Manufacturing JIT is used for many activities including: Inventory Reduction Quality Improvement Lead Time Reduction Continuous Improvement (Kaizen) Preventive Maintenance

8. Major Objective of JIT Identify the causes of system variance (waste) and eliminate or control these causes. By attacking the causes of variance, JIT can reduce the dependency of the manufacturing process on wasteful buffers like excessive inventory, long lead times, and idle capacity.

9. Variability Occurs Because Employees, machines, and suppliers produce units that do not conform to standards, are late, or are not the proper quantity Engineering drawings or specifications are inaccurate Production personnel try to produce before drawings or specifications are complete Customer demands are unknown

10. Benefits of JIT Shorter Lead Times (Faster Response) Lower Defect Rates Reduced Inventories Enhanced Flexibility

11. Advantages Of Faster Response Times –Increased Productivity –Increased Quality –Reduced Risk –Increased Profitability –Increased Market Share –Increased Product Variety

12. Value Added Management A Strategy for Time-Based Competition Focus on:  Reducing Lead Times  Process Flow Analysis  Eliminating or Reduce Non-Value Adding Activities  WIP Storage  Material Movement  Inspection  Rework  Unscheduled Maintenance  Changeovers

13. Value Added Management Value-Added Activity Time The time required to perform those activities essential to the production of a product, or the delivery of a service.

14. Value Added Management Non Value-Adding Activities Any activity that does not add value to the product being built, or the service being offered. Non value-adding activities are waste.

15. Value Added Management Examples of Non-Value Added Activities –Administrative Processes & Paperwork –Process Delays –Material Movement –Material Storage –Inspection –Rework –Unscheduled Maintenance –Machine Changeovers

16. Value Added Management Cycle Time Improvements Improvements to cycle times are achieved by reducing or eliminating non value- adding activities

17. Value Added Management Identifying Non Value-Adding Activities The key to identifying non value-adding activities is process flow analysis.

18. Value Added Management Value-Added Time Analysis Worksheet Process Activity Total Time Value Added Time Non Value Added Time

19. Non Value-Adding Value Adding 95% 5% Total Mfg. Lead Time Traditional Response Non Value-Adding Value Adding 98% 2% Value-Adding Response Non Value Adding Value Adding 50% Lead Time Reduced Non Value-Adding Time Reduced VALUE ADDED MANAGEMENT

20. Value Added Ratio V.A.R. = Value Added Time Total Cycle Time Improved By: Eliminating or Reducing Non Value-Adding Time WIP Storage/FGI Storage Material Movement Rework Unscheduled Maintenance Changeover Time ANYTHING THAT DOES NOT ADD VALUE FOR THE CUSTOMER Increase V.A.R. by Reducing Cycle Time Forces Continuous Process Flow Analysis Drives Quality Improvement

21. Value Added Management Results –Oregon Cutting SystemsOutput Per Hour Up 55% Lead Time from 21 to 1 day –Abbott LaboratoriesProduction Cost Down 40% Lead Time Reduced > 80% –LockheedDefect Rate Reduced 80% Rework Down 91% Lead Time Down by 95% –Texas InstrumentsLead Time Down 15.8 to 3.7 days

22. JIT & Inventory Why do companies hold inventories? What are some advantages to holding inventories? What are some problems with holding inventories?

23. Traditional: inventory exists in case problems arise JIT objective: Reduce inventory JIT requires – Small lot sizes – Low setup time – Containers for fixed number of parts JIT inventory: Minimum inventory to keep system running Inventory

24. 14 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

25. Scrap Work in process inventory level (hides problems) Unreliable Vendors Capacity Imbalances Lowering Inventory Reduces Waste

26. Scrap Reducing inventory reveals problems so they can be solved. Unreliable Vendors Capacity Imbalances WIP Lowering Inventory Reduces Waste

27. Scrap Reducing inventory reveals problems so they can be solved. Unreliable Vendors Capacity Imbalances WIP Lowering Inventory Reduces Waste

28. JIT Inventory Tactics Use a pull system to move inventory Reduce lot size Reduce setup time Develop Just-in-Time delivery systems with suppliers Deliver directly to point of use Perform-to-schedule Use group technology

29. To Lower Inventory Reduce Lot Sizes Time Inventory Level Lot Size 200 Lot Size 80 Average inventory = 100 Average inventory = 40 Average inventory = (Lot size)/2

30. Customer orders 10 Lot size = 5 Lot 1 Lot 2 Lot size = 2 Lot 1Lot 2Lot 3Lot 4Lot 5 Reducing Lot Sizes Increases the Number of Lots

31. Lot Size Cost Holding Cost Total Cost Setup Cost Optimal Lot Size …Which Increases Inventory Costs Smaller Lot Size

32. Unless Setup Costs are Reduced Lot Size Cost Holding Cost Total Cost Setup Cost Original optimal lot size New optimal lot size

33. 20 Minimizing Waste: Reducing Setup Times What are the consequences of long setup times? What are the advantages of short setup times?

34. Steps to Reduce Setup Time Separate setup into preparation, and actual setup, doing as much as possible while the machine/process is running Move material closer and improve material handling Standardize and improve tooling Use one-touch system to eliminate adjustments Training operators and standardizing work procedures Step 1 Step 2 Step 3 Step 4 Step 5

35. Push versus Pull Push system: material is pushed into downstream workstations regardless of whether resources are available Pull system: material is pulled to a workstation just as it is needed

36. Push Scheduling Moves an order to the next operation or work center in its route immediately on completion of the current activity whether or not that work center can begin processing it.

37. Traditional Push System M A T E R I A L Inv. Process Work-In-Process Staging Area Process Work-In-Process Staging Area F I N I S H E D G O D S Inv. Material Is Moved Down Stream After Processing at Each Stage Work-In-Process Inventories Develop Traditional Efficiency Measures Encourage Overproduction

38. Push Scheduling Benefits Implementation is relatively simple Eliminates the need to coordinate between work centers Keeps a work center busy as long as work remains in its queue

39. Push Scheduling Problems High WIP Levels Higher Quality Problems Hides Processing Problems Requires dispatching rules to sequence orders

40. Pull Scheduling Orders are processed and transferred in response to signals from downstream work centers

41. Alternative Pull System M A T E R I A L Inv. Signal Supplier Process Signal CUSTOMERDEMANDCUSTOMERDEMAND FGI Signal Pull Systems Move Material In Response To A Signal From a Downstream Process Minimal WIP Buildup/Reduced Space Requirements Reduced Material Inventory/ More Frequent Supplier Deliveries Minimal Finished Goods InventoryEmphasis on Throughput Not Efficiencies

42. Pull Scheduling Benefits Simplifies scheduling—each center builds only what is required when needed Orders are driven by real demand thus minimizing inventory accumulation Makes problems immediately apparent Prevents additional load from piling up extra work at the bottleneck in the event of some problem

43. Pull Scheduling Problems Challenging to implement Success requires coordination among related work centers Requires good planning Must limit interventions requesting changes in product mix, quantity, or due dates.

44. JIT objective: Reduce movement of people and material – Movement is waste! JIT requires – Work cells for product families – Moveable or changeable machines – Short distances – Little space for inventory – Delivery directly to work areas Layout

45. Process LayoutWork Cell Saw Lathe Grinder Heat Treat Lathe Lathe Saw Heat Treat Grinder Grinder Press Press 1 1 2 3 4 5 2 6 Saw Press Work Cell versus Process Layout

46. Layout Tactics Distance reduction – Build work cells for families of products Increased flexibility – Flexible or movable equipment Impact on employees – Cross-training; immediate feedback – ‘Poka-yoke’ self-testing functions Reduced space and inventory – Design little space for inventory

47. Just-In-Time Manufacturing Management philosophy Pull system though the plant WHAT IT IS Employee participation Industrial engineering/basics Continuing improvement Total quality control Small lot sizes WHAT IT REQUIRES Attacks waste Exposes problems and bottlenecks Achieves streamlined production WHAT IT DOES Stable environment WHAT IT ASSUMES

48. Just-in-Time JIT Technology Management  Structured Flows  Set-Up Reduction  Small Lot Sizes People Management  Housekeeping  Control Through Visibility  Total Quality  Problem Solving  Employee Involvement Systems Management  Balanced Lines  TPM  Supplier Partnerships  Pull System

49. Buffered Manufacturing Buffered Manufacturing Has Limited Goals: –Acceptable Number Of Defects –Acceptable Inventory Levels –Limited Product Variety –Acceptable Levels Of Waste

50. Lean Manufacturing Lean Manufacturing Seeks Perfection –Strives To Reduce Costs –Strives For Zero Defects –Strives To Reduce Inventory –Strives For Greater Product Variety –Strives To Reduce Cycle Times –Seeks To Eliminate Waste –Seeks Continuous Process Improvement

51. Lean Manufacturing Key Features Of Lean Manufacturing –Transfers Tasks To Workers Adding Value –Quickly Uncovers & Solves Problems

52. Getting employees involved in product & process improvements – Know job best JIT requires – Empowerment – Cross-training – Training support – Few job classifications © 1995 Corel Corp. Employee Empowerment

53. Lean Manufacturing Basic Tenets of Lean Manufacturing –Produce Only What Is Demanded –Produce At The Market Rate Of Demand –Produce With Perfect Quality –Produce With No Waste –Develop Employees’ Productive Potential

54. Traditional Performance Measures Traditional Measures Focus On Outputs. This Leads To –Long Production Runs –Large Inventories –Large Buffers –Long Lead Times –Poorer Quality –Lack Of Responsiveness

55. Time-Based Performance Measures Time-Based Measures Track Process Improvements Value-Added Ratio Setup Times & Number Throughput Times Quality Delivery Speed & Reliability

56. New Management Measures Customer Focused On-Time Delivery Defects Customer Satisfaction Production Focused Throughput WIP FGI Lead Time Process Focused Value Added Ratio Changeover Times Drivers of Competitive Mfg. Drivers of Competitive Mfg. Measures are Stable Capable Improving Measures are Stable Capable Improving

57. New Business Paradigm Total Quality Leadership - Culture- Customers- Suppliers - Process Improvement People- Business Planning - Communication - Recognition Competing Through Manufacturing Just-In-Time - Pull Manufacturing Philosophies Value-Added Management Process Flow Analysis - Focus on Time New Performance Measures Time-Based - Quality Based - Customer Focused

58. Homework Assignment Estimate the value added ratio for some process in your organization. Identify 3 sources of waste in your operation? Is it possible to eliminate the waste? What performance measures do you use? Do the measures help or hinder your continuous improvement efforts? Can you suggest better performance measures?

59. ADDVALUE Services VALUE ADDED COACHING-VAC ® BUSINESS COACHINGLIFE COACHING Operation Excellence Team Excellence Business Excellence Counselling Therapy Astrology Adding Value In Totality !!

60. Best Performing Consulting Organization AddValue at a glance Business CoachingLife Coaching

61. Thank You