1. JIT/Lean Production
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

2. Some Statistics from 1986 ... A comparison of: assembly hours
defects per 100 cars
average inventory levels
Framingham (GM)
40.7 hours
130 defects
2 weeks
Toyota Takaoka
16 hours
45 defects
2 hours
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

3. Post World War II Growing and rebuilding world economy
Demand > Supply
US Manufacturing:
Higher volumes
Capital substitution
“Breakthrough” improvements
“The production problem has been solved”
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

4. View from Japan Very little capital War-ravaged workforce Little space
Poor or no raw materials
Lower demand levels
Little access to latest technologies  U.S. methods would not work
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

5. Japanese Approach to Operations
Maximize use of people
Simplify first, add technology second
Gradual, but continuous improvement
Minimize waste (including poor quality)  Led to the development of the approach known as Just-in-Time
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

6. Repetitive production system
Just-in-Time
Repetitive production system
in which processing and movement of materials and goods occur just as they are needed
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

7. Pre-JIT: Traditional Mass Production
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

8. Post-JIT: “Lean Production”
Tighter coordination along the supply chain
Goods are pulled along
— only make and ship what is needed
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

9. JIT Goals (throughout the supply chain)
Eliminate disruptions
Make the system flexible
Reduce setup times and lead times
Minimize inventory
Eliminate waste
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

10. Waste
Definition:
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
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

11. Forms of Waste: Overproduction Waiting time Transportation Processing
Inventory
Motion
Product Defects
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

12. Inventory as a Waste Requires more storage space
Requires tracking and counting
Increases movement activity
Hides yield, scrap, and rework problems
Increases risk of loss from theft, damage, obsolescence
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

13. Examples of Eliminating “Wastes”
Big Bob’s Automotive Axles:
Wheels bought
from outside
supplier
Axles made and
assembled in house
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

14. BEFORE: Shipping in Wheels
Truck Cost: $500 (from Peoria)
Maximum load of wheels: 10,000
Weekly demand of wheels: 500
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

15. AFTER: Shipping in Wheels
Truck Cost: $50 (from Burlington)
Maximum load of wheels: 500
Weekly demand of wheels: 500
What wastes have been reduced?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

16. BEFORE: Making Axles (Different lengths)
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

17. BEFORE: Making Axles (Oops!)
What is the outcome of detecting defective axles at the end?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

18. After: Making Axles I (Different lengths)
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

19. After: Making Axles II (More improvements)
What wastes have been reduced?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

20. Building Blocks of JIT Product design Process design
Standard parts
Modular design
Quality
Process design
Personnel and organizational elements
Manufacturing planning and control
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

21. Process Design “Focused Factories” Group Technology
Simplified layouts with little storage space
Jidoka and Poka-Yoke
Minimum setups
Jidoka is Japanese for “Stop everything when something goes wrong”, a form of stopping quality problems at their source.
Poka-Yoke is Japanese for failproofing: Examples are gasoline nozzles, VCR cassettes (they are ejected if inserted incorrectly), inkjet cartridges, etc.
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

22. Multi-Task Work Cells 500 chairs per hour Seats Packing
Assembly
Packing
Legs
Slats
Backposts
Planning takes place for one area:
What does the BOM look like? What about lead times?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

23. Personnel and Organizational Elements
Workers as assets
Cross-trained workers
Greater responsibility at lower levels
Leaders as facilitators, not order givers
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

24. Classic Organizational View
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

25. JIT Organization View
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

26. Planning and Control Systems
“Small” JIT
Stable and level schedules
Mixed Model Scheduling
“Push” versus “Pull”
Kanban Systems
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

27. Kanban Uses simple visual signals to control production Examples:
empty slot in hamburger chute
empty space on floor
kanban card
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

28. Kanban Example Workcenter B uses parts produced by Workcenter A
How can we control the flow of materials so that B always
has parts and A doesn’t overproduce?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

29. Kanban card: Signal to produce
When a container is opened by Workcenter B, its kanban card is removed and sent back to Workcenter A.
This is a signal to Workcenter A to produce another box of parts.
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

30. Empty Box: Signal to pull
Empty box sent back. Signal to pull another full box into
Workcenter B.
Question: How many kanban cards here? Why?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

31. How Many Kanbans? y = number of kanban cards
D = demand per unit of time
T = lead time
C = container capacity
X = fudge factor
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

32. Example Hourly demand = 300 units Lead time = 3 hours
Each container holds 300 units
Assuming no variation in lead-time or demand (x = 0): y = (300  3) / 300 = 3 kanban cards
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

33. Example: 8:00 AM
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34. One Hour Later at 9:00 AM
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

35. Extended Out Further . . .
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

36. Note:
For a kanban system to work, we NEED CONSISTENT demand across the work centers
Example - think “McDonald’s”
How do we ensure this?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

37. Mixed Model Sequencing
Product
Monthly Demand
Daily Requirement A
800 40 B C
200 10
Largest integer that divides evenly into daily requirement is 10:
A: 40 / 10 = 4
B: 40 / 10 = 4
C: 10 / 10 = 1
Mixed model sequence: A-B-A-B-A-B-A-B-C
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

38. Mini-Quiz: Mixed Model Scheduling and Establishing Kanbans
Product
Monthly Demand
Daily Requirement D
1200 60 E
400 20 F
600 30
What would sequence be if NO
minimum job size?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

39. Sequence with Minimum of 5:
60 / 4 = 15 D’s
20 / 4 = 5 E’s
30 / 4 = 7.5 F’s
5D - 7F - 5D - 5D - 5E - 5D - 8F - 5D - 5D - 5E
Sequence of 55 (27.5×2)
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

40. Kanbans Required: Product D
Hourly Requirements = 60/8 = 7.5
Lead time = 2 hours
Container size = 2 units
“Fudge” factor = 10%
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

41. Kanban Cards Required:
Implications? Impact of container size?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

42. Implementing JIT What about automation?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

43. Putting the Squeeze on Resources . . .
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield