1. Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Manufacturing Planning and Control MPC 6 th Edition Chapter 9

2. 9-2 Just-in-Time Just-in-time (JIT) approaches to manufacturing planning and control change both manufacturing practices and MPC execution. JIT reduces the complexity of detailed material planning, the need for shop-floor tracking, work-in-process inventories, and the transactions associated with shop-floor and purchasing systems.

3. 9-3 Agenda Just-in-Time (JIT) and MPCJIT ExampleJIT ApplicationsNon-repetitive JITJoint-Firm JITJIT SoftwareManagerial ImplicationsPrinciples

4. 9-4 Just-in-Time in Manufacturing Planning & Control Resource planning Sales and operations planning Demand management Master production scheduling Detailed material planning Material and capacity plans Shop-floor systems Supplier systems Detailed capacity planning JIT impacts most MPC systems

5. 9-5 JIT Elements Elimination of discrete batches Reduction of work- in-process inventory Level loaded capacity schedules Mixed model master production schedules (all items are made all of the time) Visual control systems Direct ties to vendors

6. 9-6 JIT Action Programs Reduced setup times and lot sizes “No defects” goal Improved quality through process improvement Total productive maintenance (TPM) Poka-yoke–foolproof operations Continuous improvement Worker involvement Cellular manufacturing

7. 9-7 Streamlined execution on shop floor and purchasing Reduced number of planned parts and fewer levels in BOM Level capacity loading Higher velocity of manufacturing eliminates the need for complex production activity control JIT and MPC

8. 9-8 JIT Benefits Reduced throughput time Shorter material movement distances Fewer material movements Reduced transactions Simplified MPC Reduced changeover times Greater market responsiveness Inventory reductions Labor cost reductions More satisfied/cohesive workers Better team work Space reductions Quality cost reductions Quality improvements

9. 9-9 The Hidden Factory The hidden factory processes transactions Logistical transactions Balancing transactions Quality transactions Change transactions Hidden Factory

10. 9-10 JIT Building Blocks Product design Process design Manufacturing planning and control Human/ organizational elements JIT

11. 9-11 JIT Example Multiple models with unique parts and widely varying forecasts 200,000 basic 2,500 clad 25,000 basic 100,000 clad

12. 9-12 Leveling the Production Plan a level output of each model Production of each model during each day (or suitable short interval) Full-mix production reduces inventory build- up Convert annual forecasts to daily requirements Differences between requirements and current lot sizes drives setup time reduction

13. 9-13 Pull System Introduction A pull system authorizes a work center to produce only when there is a downstream need Work centers don’t produce just to keep workers busy Production in response to a signal Verbal request, empty container, kanban cards, etc.

14. 9-14 Daily Production and Current Lot Size Mismatches Pan ModelHandleMetalAnnual Forecast Daily Forecast Lot Size 151ABasicSheet200,0008008,000 151BBasicClad2,50010900 151CExecutiveSheet25,0001003,000 151DExecutiveClad100,0004006,000 Lot sizes cover 10 to 90 days usage!

15. 9-15 Product Redesign for JIT Common handle with variable grip Simplified handle design reduces inventory items and number of operations

16. 9-16 Process Design for JIT Product redesign allows rethinking factory layout Cellular manufacturing with visible inventory management, less inventory, and shorter product flow distances

17. 9-17 Pull System Inventory Control 2 full containers signal handle assembly to stop working Final assembly consumes stock until container is empty Empty container returned, signaling handle assembly to begin working Final assembly uses second container while first is refilled Full container is returned to final assembly for use

18. 9-18 JIT Applications Single-card kanban system A card is attached to each container of finished parts. When the parts are moved to the next processing center, the card is returned to the supplying center to authorize more production. Each container has a kanban card, the number of cards controls the inventory levels

19. 9-19 Non-Repetitive JIT JIT originated in high-volume repetitive manufacturing situations Many principles can be applied to low-volume settings Two key problems arise Requirement of setting up high-volume flow lines dedicated to a few products Level loading

20. 9-20 Service-Enhanced JIT JIT objective of accepting any customer order and producing it behind any other order remains key Flexibility to handle large surges in volume or mix changes is also important Flexible systems can enhance JIT Product design, manufacturing flexibility, and worker cross-training are keys

21. 9-21 Joint-Firm JIT When properly implemented, JIT can facilitate relationships with suppliers and improve both firm’s competitiveness. Poorly implemented, suppliers are often asked to buffer inaccurate schedules. A number of basic requirements exist A stable schedule Reduced supplier base

22. 9-22 JIT Coupling Tightly Coupled Suppliers build to an exact sequence Parts are not held in inventory at the supplier or the manufacturer Inventory transactions are unnecessary, supplier is paid based on manufacturer production Requires flawless execution by both firms Less Tightly Coupled Supplier has more customers Customer has multiple suppliers Goods are delivered according to a schedule Some goods are held in inventory at supplier and/or manufacturer Useful when uncertainty is higher

23. 9-23 JIT Hubs Suppliers place goods in an inventory location that is physically close to the customer Supplier and customer can eliminate their inventories Visibility of hub inventory is available to both supplier and customer Supplier needs knowledge of customer’s expected usage Supplier has flexibility in how to meet demand

24. 9-24 JIT Software Overall Platform MRP Systems JIT Systems Common Systems (both MRP and JIT)

25. 9-25 Information systems– changes are required to support JIT MPC–JIT can reduce inventories and the need for much of quality control, receiving, kitting, paperwork, and detailed scheduling Scorekeeping– measurement systems must change to reflect the objectives and realities of JIT Pros and Cons–JIT works well in some situations and not in others Managerial Implications

26. 9-26 Principles Stabilizing (or leveling) the production schedule is a prerequisite to effective JIT systems. Achieving very short lead times supports better customer service and responsiveness. Reducing hidden factory costs can be as important as reducing more visible costs. Implementing the “whole person” concept reduces distinctions between white- and blue- collar workers and taps all person’s skills for improving performance.

27. 9-27 Principles Cost accounting and performance measures need to reflect the shift in emphasis associated with JIT. To achieve JIT’s benefits in a non-repetitive application, some basic features of repetitive- based JIT must be modified. JIT is not incompatible with MRP systems. With an incremental approach, MRP firms can adopt as much or as little of JIT as they desire.

28. 9-28 Quiz – Chapter 9 JIT replaces discrete manufacturing batches with ____________ ___________ goals. Under JIT, the objective is to reduce _________, __________, and ______________. Transactions required to track materials, verify activities, ensure quality, and manage changes are referred to as the ___________ factory. JIT is likely to utilize a push scheduling system? (True/False) A kanban system is used to manage ___________ transactions. JIT adoption may require a change in measurement and reward systems? (True/False)