1. © 1997 Prentice-Hall, Inc. 11- 1 Principles of Operations Management Just-In-Time Systems Chapter 11

2. © 1997 Prentice-Hall, Inc. 11- 2 Learning Objectives n Explain Just-in-Time (JIT) n Compare ‘pull’ & ‘push ’ systems n List the types of waste n Describe the 7 JIT requirements n State at least 5 characteristics of JIT vendor partnerships n Explain the relationship between lot size, setup cost, & inventory

3. © 1997 Prentice-Hall, Inc. 11- 3 What is Just-in-Time? n Management philosophy of continuous & forced problem solving n ‘Pull’ system of production & purchasing l Downstream work centers request delivery from upstream work centers

4. © 1997 Prentice-Hall, Inc. 11- 4 What Does Just-In-Time Do? n Attacks waste l Anything not adding value to the product s Customer’s perspective n Exposes problems & bottlenecks l Caused by variability s Deviation from optimum n Achieves streamlined production l By reducing inventory

5. © 1997 Prentice-Hall, Inc. 11- 5 Types of Waste n Overproduction n Waiting n Transportation n Inefficient processing n Inventory n Unnecessary motion n Product defects © 1995 Corel Corp.

6. © 1997 Prentice-Hall, Inc. 11- 6  Streamlined Production Flow with JIT Traditional Flow Customers Suppliers Customers Suppliers  Production Process (stream of water) Inventory (stagnant ponds) Material (water in stream)

7. © 1997 Prentice-Hall, Inc. 11- 7 Just-in-Time Success Factors SuppliersSuppliers Preventive Maintenance LayoutLayout InventoryInventory SchedulingScheduling QualityQuality Employee Empower- ment JIT

8. © 1997 Prentice-Hall, Inc. 11- 8 SuppliersSuppliers n Incoming material & finished goods involve waste n Buyer & supplier form JIT partnerships n JIT partnerships eliminate l Unnecessary activities l In-plant inventory l In-transit inventory l Poor suppliers

9. © 1997 Prentice-Hall, Inc. 11- 9 Characteristics of JIT Partnerships n Few, nearby suppliers n Long-term contract agreements n Steady supply rate n Frequent deliveries in small lots n Buyer helps suppliers meet quality n Suppliers use process control charts n Buyer schedules inbound freight

10. © 1997 Prentice-Hall, Inc. 11- 10 Supplier Worries n Lack of flexibility l Long-term contract with 1 customer n Poor customer scheduling n Frequent engineering changes n Strict quality assurance n Small lot sizes n Close physical proximity

11. © 1997 Prentice-Hall, Inc. 11- 11 LayoutLayout n JIT objective: Reduce movement of people & material l Movement is waste n JIT requires l Work cells for product families l Moveable or changeable machines l Short distances l Little space for inventory l Delivery directly to work areas

12. © 1997 Prentice-Hall, Inc. 11- 12 Work Cells vs. Process Layout Process Layout Work Cell Saw Lathe Grinder Heat Treat Lathe Lathe LatheSaw Heat Treat Grinder Grinder Press Press 1 1 1 1 2 2 3 3 4 4 5 5 2 2 6 6 Saw Press

13. © 1997 Prentice-Hall, Inc. 11- 13 InventoryInventory n Traditionally, inventory exists in case problems arise n JIT objective: Eliminate inventory n JIT requires l Small lot sizes l Low setup time l Containers for fixed number of parts n JIT inventory: Minimum inventory to keep system running

14. © 1997 Prentice-Hall, Inc. 11- 14 To Lower Inventory Reduce Lot Sizes Time Inventory Level Lot Size 200 Lot Size 80 Avg. inv = 100 Avg. inv = 40 Avg. inventory = (Lot size)/2

15. © 1997 Prentice-Hall, Inc. 11- 15 Reducing Lot Sizes Increases # Lots Customer orders 10 Lot size = 5 Lot 1 Lot 2 Lot size = 2 Lot 1 Lot 2 Lot 3 Lot 4 Lot 5

16. © 1997 Prentice-Hall, Inc. 11- 16... Which Increases Inventory Costs Lot Size Cost Holding Cost Total Cost Setup Cost Optimal Lot Size Smaller Lot Size

17. © 1997 Prentice-Hall, Inc. 11- 17 SchedulingScheduling n Involves timing of operations n JIT requires l Communicating schedules to suppliers l Level material use schedules l Freezing part of schedule nearest due date s May freeze monthly output rate l Small lots l Kanban techniques

18. © 1997 Prentice-Hall, Inc. 11- 18 Level Material Use Schedules n Reduce ripple effect of small variations in schedules (e.g., final assy) n Production quantities evenly distributed over time (e.g., 7/day) n Build same mix of products every day l Results in many small lots l ItemMonthly QuantityDaily Quantity A402 B603

19. © 1997 Prentice-Hall, Inc. 11- 19 AA AAAABBBBBBCC Small vs. Large Lots JIT Small Lots Large-Lot Approach Time Time AAAABBBBBBCC AAAAAABBBBBBBBBBBBCCCC JIT produces same amount in same time if lower setup time

20. © 1997 Prentice-Hall, Inc. 11- 20 KanbanKanban n Japanese word for card l Pronounced ‘kahn-bahn’ (not ‘can-ban’) n Authorizes production from downstream operations l ‘Pulls’ material through plant n May be a card, flag, verbal signal etc. n Used often with fixed-size containers l Add or remove containers to change production rate

21. © 1997 Prentice-Hall, Inc. 11- 21 Preventive Maintenance (PM) n All activities involved in keeping equipment in working order n Done to prevent failure n JIT requires l Scheduled & daily PM l Operator performs PM s Knows machines s Responsible for product quality

22. © 1997 Prentice-Hall, Inc. 11- 22 QualityQuality n JIT exposes quality problems by reducing inventory n JIT limits # defects with small lots n JIT requires TQM l Statistical process control l Worker involvement s Inspect own work s Quality circles l Immediate feedback

23. © 1997 Prentice-Hall, Inc. 11- 23 Employee Empowerment n Getting employees involved in product & process improvements l Know job best n JIT requires l Empowerment l Cross-training l Training support l Few job classifications © 1995 Corel Corp.

24. © 1997 Prentice-Hall, Inc. 11- 24 ConclusionConclusion n Explained Just-in-Time (JIT) n Compared ‘pull’ & ‘push ’ systems n Listed the types of waste n Described the 7 JIT requirements n Stated at least 5 characteristics of JIT vendor partnerships n Explained the relationship between lot size, setup cost, & inventory