1. McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 9 JIT and Lean Operations

2. Nguyễ Trí Dũng MSc. 9-2 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”

3. Nguyễ Trí Dũng MSc. Goal of JIT The ultimate goal of JIT is a balanced system. Achieves a smooth, rapid flow of materials through the system 9-3

4. Summary JIT Goals and Building Blocks Figure 9.1 Product Design Process Design Personnel Elements Manufactur- ing Planning Eliminate disruptions Make the system flexible Eliminate waste A balanced rapid flow Ultimate Goal Supporting Goals Building Blocks 9-4 Nguyễ Trí Dũng MSc.

5. Supporting Goals  Eliminate disruptions  Make system flexible  Eliminate waste, especially excess inventory 9-5

6. Nguyễ Trí Dũng MSc. Sources of Waste  Overproduction  Waiting time  Unnecessary transportation  Processing waste  Inefficient work methods  Product defects 9-6

7. Nguyễ Trí Dũng MSc. 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 9-7

8. Nguyễ Trí Dũng MSc. Kaizen Philosophy (cont’d)  Supported by a visual system  Focuses attention where value is created  Process orienteted  Stresses main effort of improvement should come from new thinking and work style  The essence of organizational learning is to learn while doing 9-8

9. Nguyễ Trí Dũng MSc.  Big JIT – broad focus  Vendor relations  Human relations  Technology management  Materials and inventory management  Little JIT – narrow focus  Scheduling materials  Scheduling services of production Big vs. Little JIT 9-9

10. Nguyễ Trí Dũng MSc. JIT Building Blocks  Product design  Process design  Personnel/organizational elements  Manufacturing planning and control 9-10

11. Nguyễ Trí Dũng MSc. Product Design  Standard parts  Modular design  Highly capable production systems  Concurrent engineering 9-11

12. Nguyễ Trí Dũng MSc. Process Design  Small lot sizes  Setup time reduction  Manufacturing cells  Limited work in process  Quality improvement  Production flexibility  Balanced system  Little inventory storage 9-12

13. Benefits of Small Lot Sizes Reduces inventory Less storage space Less rework Problems are more apparent Increases product flexibility Easier to balance operations 9-13 Nguyễ Trí Dũng MSc.

14. Single-Minute Exchange  Single-minute exchange of die (SMED): A system for reducing changeover time  Categorize changeover activities  Internal – activities that can only be done while machine is stopped  External – activities that do not require stopping the machine 9-14

15. Nguyễ Trí Dũng MSc. Production Flexibility  Reduce downtime by reducing changeover time  Use preventive maintenance to reduce breakdowns  Cross-train workers to help clear bottlenecks 9-15

16. Nguyễ Trí Dũng MSc. Production Flexibility (cont’d)  Use many small units of capacity  Use off-line buffers  Reserve capacity for important customers 9-16

17. Nguyễ Trí Dũng MSc. Quality Improvement  Autonomation  Automatic detection of defects during production  Jidoka  Japanese term for autonomation 9-17

18. Nguyễ Trí Dũng MSc. Production Flexibility  Balance system: Distributing the workload evenly among work stations  Work assigned to each work station must be less than or equal to the cycle time  Cycle time is set equal to the takt time  Takt time is the cycle time needed to match customer demand for final product 9-18

19. Nguyễ Trí Dũng MSc. Personnel/Organizational Elements  Workers as assets  Cross-trained workers  Continuous improvement  Cost accounting  Leadership/project management 9-19

20. Nguyễ Trí Dũng MSc. Manufacturing Planning and Control  Level loading  Pull systems  Visual systems  Close vendor relationships  Reduced transaction processing  Preventive maintenance 9-20

21. Nguyễ Trí Dũng MSc. 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 9-21

22. Nguyễ Trí Dũng MSc. 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. 9-22

23. Kanban Formula N= DT(1+X) C 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 C = Capacity of a standard container 9-23 Nguyễ Trí Dũng MSc.

24. Limited Work in Process  Benefits  Lower carrying costs  Increased flexibility  Aids scheduling  Saves cost of rework and scrap  Two general approaches  Kanban – focuses on individual work stations  Constant work in process (CONWIP) – focuses on the system as a whole 9-24

25. Traditional Supplier Network Buyer Supplier Figure 9.4a 9-25 Nguyễ Trí Dũng MSc.

26. Tiered Supplier Network Figure 9.4b Supplier Buyer Supplier First Tier Supplier Second Tier Supplier Third Tier Supplier 9-26 Nguyễ Trí Dũng MSc.

27. Preventive Maintenance and Housekeeping  Preventative maintenance: Maintaining equipment in good condition and replacing parts that have a tendency to fail before they actually fail.  Housekeeping: Maintaining a workplace that is clean and free of unnecessary materials. 9-27

28. Nguyễ Trí Dũng MSc. Housekeeping Five S’s 1.Sort 2.Straighten 3.Sweep 4.Standardize 5.Self-discipline 9-28

29. 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 9.3 9-29 Nguyễ Trí Dũng MSc.

30. Transitioning to a JIT System  Get top management commitment  Decide which parts need most effort  Obtain support of workers  Start by trying to reduce setup times  Gradually convert operations  Convert suppliers to JIT  Prepare for obstacles 9-30

31. Nguyễ Trí Dũng MSc. Obstacles to Conversion  Management may not be committed  Workers/management may not be cooperative  Difficult to change company culture  Suppliers may resist  Why? 9-31

32. Nguyễ Trí Dũng MSc. Suppliers May Resist JIT  Unwilling to commit resources  Uneasy about long-term commitments  Frequent, small deliveries may be difficult  Burden of quality control shifts to supplier  Frequent engineering changes may cause JIT changes 9-32

33. Nguyễ Trí Dũng MSc. JIT in Services The basic goal of the demand flow technology in the service organization is to provide optimum response to the customer with the highest quality service and lowest possible cost.  Eliminate disruptions  Make system flexible  Reduce setup and lead times  Eliminate waste  Minimize WIP  Simplify the process 9-33

34. Nguyễ Trí Dũng MSc.  JIT II: a supplier representative works right in the company’s plant, making sure there is an appropriate supply on hand. JIT II 9-34

35. Nguyễ Trí Dũng MSc. Benefits of JIT Systems  Reduced inventory levels  High quality  Flexibility  Reduced lead times  Increased productivity 9-35

36. Nguyễ Trí Dũng MSc. Benefits of JIT Systems (cont’d)  Increased equipment utilization  Reduced scrap and rework  Reduced space requirements  Pressure for good vendor relationships  Reduced need for indirect labor 9-36

37. Nguyễ Trí Dũng MSc.  Smooth flow of work (the ultimate goal)  Elimination of waste  Continuous improvement  Eliminating anything that does not add value  Simple systems that are easy to manage  Use of product layouts to minimize moving materials and parts  Quality at the source Elements of JIT Table 9.4 9-37

38. Nguyễ Trí Dũng MSc.  Poka-yoke – fail safe tools and methods  Preventative maintenance  Good housekeeping  Set-up time reduction  Cross-trained employees  A pull system Elements of JIT (cont’d) Table 9.4 9-38