1. Just-in-Time and Lean Production Systems

2. Introductory Quotation
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
© 1995 Corel Corp.

3. SCM : Supplier – Production – Distribution System
Supplier Distribution
Inventories
Raw material
in-transit
Sub-assembly
parts in-transit
Maintenance,
repair, and ordering
supplies in-transit
Raw Material
Inventory
Work-in-process
Factory
Finished
Goods
Component
MRO
Purchasing
Production and
Inventory Control
Shipping and
Traffic
Retailer
Orders
Warehouse
Productions Inventories
Customer Distribution
This slide is a good one to give students an overall perspective.

4. What is Just-in-Time?
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.
It is good at this point to emphasize the notion that JIT is a philosophy not simply delivery of small lots at specific times. It is also helpful to emphasize that JIT requires an ongoing effort.

5. Lean Production
Lean Production supplies customers with exactly what the customer wants, when the customer wants, without waste, through continuous improvement.

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

7. Types of Waste Overproduction Waiting Transportation
Inefficient processing
Inventory
Unnecessary motion
Product defects
You should ask students to consider why such waste occurs.
© 1995 Corel Corp.

8. JIT Reduced Waste at Hewlett-Packard
Waste Reduction (%)
82%
50%
30%
20%
40% 0%
60%
80%
100%
Work-in-Process Inventory
Raw Material Inventory
Lead Time
Space
Finished Goods Inventory
Scrap
Setup Time
It may be useful to spend a few minutes on this slide to convince students that JIT really does work when pursued in an appropriate manner.

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
It would also be useful if you could have students develop a similar list for services.

10. 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
Ask students to suggest some examples of each process.

11. JIT Contribution to Competitive Advantage
Suppliers
reduced number of vendors
supportive supplier relationships
quality deliveries on time
Layout
work-cell layouts with testing at each step of the process
group technology
movable, changeable, flexible machinery
high level of workplace organization and neatness
reduced space for inventory
delivery direct to work areas

12. JIT Contribution to Competitive Advantage - Continued
Inventory
small lot sizes
low setup times
specialized bins for holding set number of parts
Scheduling
zero deviation from schedules
level schedules
suppliers informed of schedules
Kanban techniques

13. JIT Contribution to Competitive Advantage - Continued
Preventive Maintenance
scheduled
daily routine
operator involvement
Quality Production
statistical process control
quality by suppliers
quality within firm

14. JIT Contribution to Competitive Advantage - Continued
Employee Empowerment
empowered and cross-trained employees
few job classifications to ensure flexibility of employees
training support
Commitment
support of management, employees, and suppliers

15. Results of JIT Contribution
Queue and delay reduction, speedier throughput, freed assets, and winning orders
Quality improvement, reduces waste and wins orders
Cost reduction increases margin or reduces selling price
Variability reductions in the workplace reduces waste and wins orders
Rework reduction, reduces waste and wins orders
You can use this slide to summarize the results of JIT.

16. Faster response to the customer at lower cost and higher quality
Yielding
Faster response to the customer at lower cost and higher quality
Here is the outcome - competitive advantage. Note that JIT is not simply a way to gain competitive advantage, it also helps make other strategies more effective.
A competitive advantage!

17. Just-in-Time Success Factors
Suppliers
Preventive Maintenance
Layout
Inventory
Scheduling
Quality
Employee Empowerment
JIT
This side outlines the essential features, more detail is provided in subsequent slides.

18. Suppliers Incoming material and finished goods involve waste
Buyer and supplier form JIT partnerships
JIT partnerships eliminate
Unnecessary activities
In-plant inventory
In-transit inventory
Poor suppliers
You might point out here that both buyer and supplier gain from this relationship.

19. Characteristics of JIT Partnerships Suppliers
Few
Nearby
Repeat business
Analysis and support to enable desirable suppliers to become or stay price competitive
Competitive bidding mostly limited to new purchases
Buyer resists vertical integration and subsequent wipeout of supplier business
Suppliers encouraged to extend JIT to their suppliers (2nd and 3rd tier suppliers)
These characteristics of JIT partnerships imply that not only do both parties benefit from the relationships, but both parties are also limited by the relationships.

20. Characteristics of JIT Partnerships Quantities
Steady output rate
Frequent deliveries in small-lot quantities
Long-term contract agreements
Minimal or no paperwork (use EDI or internet)
Delivery quantities fixed for whole contract term
Little or no permissible overage or underage
Suppliers package in exact quantities
Suppliers reduce their production lot sizes
Ask students to consider what these benefits mean to the production departments of buyers.

21. Characteristics of JIT Partnerships Quality
Minimal product specifications imposed on suppliers
Help suppliers meet quality requirements
Close relationship between buyers’ and suppliers quality assurance people
Suppliers use poka-yoke and process control charts instead of lot-sampling techniques

22. Characteristics of JIT Partnerships Shipping
Scheduling of inbound freight
Gain control by use of company-owned or contract shipping and warehousing
Use of Advanced Shipping Notice (ASN)

23. Goals of JIT partnerships
Elimination of unnecessary activities
Elimination of in-plant inventory
Elimination of in-transit inventory
Elimination of poor suppliers

24. Concerns of Suppliers Diversification Poor customer scheduling
Frequent engineering changes
Quality assurance
Small lot sizes
Physical proximity
This side points out that the supplier does have some worries. One in particular is that problems in the buyer’s plant propagate backward to the supplier. Students should be asked for suggestions as to how to ease some of these worries.

25. Streamlined Production
Flow with JIT
Traditional Flow
Customers
Suppliers
Production Process (stream of water)
Inventory (stagnant ponds)
Material (water in stream)

26. Layout 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
If students have not yet gained the impression that JIT is not just about inventory - but rather about the philosophy and design of the entire productive system - the issue should be raised at this point.

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

28. Layout Tactics Build work cells for families of products
Minimize distance
Design little space for inventory
Improve employee communication
Use poka-yoke devices
Build flexible or movable equipment
Cross train workers to add flexibility

29. Inventory Traditional: inventory exists in case problems arise
JIT objective: eliminate inventory
JIT requires
Small lot sizes
Low setup time
Containers for fixed number of parts
JIT inventory: Minimum inventory to keep system running
Students should be asked to draw their own connection between inventory and problems. Given that inventory exists in case of problems, if we wish to eliminate inventory, we also must eliminate problems. Again the notion that JIT is not simply an inventory methodology.

30. 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

31. Inventory Hides Problems Just as Water in a Lake Hides Rocks
Inventory level
Scrap
Setup time
Late deliveries
Quality problems
Process downtime
Scrap
Setup time
Late deliveries
Quality problems
Process downtime
Inventory level

32. Lowering Inventory Reduces Waste
Scrap
Work in process inventory level (hides problems)
Unreliable Vendors
Capacity Imbalances
The analogy presented in this and the next four slides may help to illustrate the action of inventory in hiding problems.

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

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

35. 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
The next several slides look at the process and consequences of reducing inventory.

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

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

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

39. Frequent Orders can Reduce Average Inventory
Time
Inventory
100
200
Q1 When average order size = 200, average inventory is 100
Q2 When average order size = 100, average inventory is 50

40. Lower Total Cost Requires Small Lot Sizes and Lower Setup Costs
Sum of ordering and holding cost T1 T2 S2 S1
Cost

41. Steps to Reduce Setup Time
90 min
Initial Setup Time
Separate setup into preparation, and actual setup, doing as much as possible while the machine/process is running (save 30 minutes)
Step 1
60 min
Move material closer and improve material handling (save 20 minutes)
Step 2
45 min
Standardize and improve tooling (save 15 minutes)
Step 3
25 min
Use one-touch system to eliminate adjustments (save 10 minutes)
Training operators and standardizing work procedures (save 2 minutes)
Step 4
15 min
13 min
Step 5

42. Scheduling Involves timing of operations JIT requires
Communicating schedules to suppliers
Level schedules
Freezing part of schedule nearest due date
Small lots
Kanban techniques
Students should be asked what problems they would expect to encounter when trying to introduce schedules appropriate to JIT.

43. JIT Scheduling Tactics
Communicate the schedule to suppliers
Make level schedules
Freeze part of the schedule
Perform to schedule
Seek one-piece-make and one-piece-move
Eliminate waste
Produce in small lots
Use kanbans
Make each operation produce a perfect part
As we continue to look at the factors affecting the success of JIT, the need for good communication is a part of each.

44. Level Schedules
Reduce ripple effect of small variations in schedules (e.g., final assembly)
Production quantities evenly distributed over time (e.g., 7/day)
Build same mix of products every day
Results in many small lots
Item Monthly Quantity Daily Quantity A B 60 3

45. Small versus Large Lots
JIT produces same amount in same time if setup times are lowered
JIT Small Lots A A B B B C A A B B B C
Time
Small lots also increase flexibility to meet customer demands
Large-Lot Approach
In discussing this slide, it is helpful to stress the caveat that JIT works given that other problems are solved. JIT not only requires the solution of other problems, it also helps in diagnosis. A A A A B B B B B B C C
Time

46. Comparison of Level and Large Lot Material-use Approaches

47. Kanban Japanese word for card
Pronounced ‘kahn-bahn’ (not ‘can-ban’)
Authorizes production from downstream operations
‘Pulls’ material through plant
May be a card, flag, verbal signal etc.
Used often with fixed-size containers
Add or remove containers to change production rate

48. Diagram of Outbound Stockpoint with Warning-Signal Marker

49. Kanban Signals “Pull” Material Through the Process

50. Kanban: Additional Points
When producer and user are not in visual contact, a card may be used; otherwise, a light, flag, or empty spot on the floor may work.
Because a pull station may require several resupply components, several kanban pull techniques can be used at the same station.
Usually, each card controls a specific quantity of parts, although multiple card systems can be used if the producing cell produces several components or the lot size is different from the move size.
In an MRP system, the schedule can be thought of as a “build” authorization and the kanban as a type of “pull” system that initiates the actual production.

51. Kanban: Additional Points - Continued
The kanban cards provide direct control (limit) on the amount of work-in-process between cells.
If there is an intermediate storage area, a two-card system may be used; one card circulates between user and storage area, and the other circulates between the storage area and the producing area.

52. Preventive Maintenance (PM)
All activities involved in keeping equipment in working order
Done to prevent failure
JIT requires
Scheduled & daily PM
Operator performs PM
Knows machines
Responsible for product quality
That the operator is the one to perform the PM is another example of the need to empower employees if JIT is to be a success.
Only when systems are reliable will JIT work. Preventive maintenance is a prerequisite to reliability. Variability must be removed for JIT to work.

53. Quality JIT exposes quality problems by reducing inventory
JIT limits number defects with small lots
JIT requires TQM
Statistical process control
Worker involvement
Inspect own work
Quality circles
Immediate feedback

54. JIT Quality Tactics Use statistical process control Empower employees
Build failsafe methods (poka-yoke, checklists, etc.)
Provide immediate feedback
At this point, it might be helpful to ask students to prepare a list of JIT characteristics, and for each characteristic listed, tell how that characteristic works to improve overall effectiveness and efficiency. (Homework?)
Students could also be asked to categorize these characteristics. You might either provide categories or allow them to devise their own.

55. Employee Empowerment
Get employees involved in product & process improvements
Employees know job best!
JIT requires
Empowerment
Cross-training
Training support
Few job classifications
© 1995 Corel Corp.
It is important to point out to students that Employee Empowerment is one of the Critical Success Factors of JIT - perhaps the most important one.

56. All the techniques used in manufacturing are used in services
JIT in Services
All the techniques used in manufacturing are used in services
Suppliers
Layouts
Inventory
Scheduling
Ask your students to provide some examples. A useful assignment if you have the time is to ask your students to develop a treatment parallel to that which you and the slides have just presented - but oriented toward services.

57. Attributes of Lean Producers - They
use JIT to eliminate virtually all inventory
build systems to help employees product a perfect part every time
reduce space requirements
develop close relationships with suppliers
educate suppliers
eliminate all but value-added activities
develop the workforce
make jobs more challenging
reduce the number of job classes and build worker flexibility
It might be helpful to discuss whether each of these attributes is simply a condition, a necessary condition, or a sufficient condition for lean producers.