1. Module 9: JIT & Lean Systems Operations Management as a Competitive Weapon

2. 2 Module 9: JIT & Lean Systems OM Course Framework TOC JIT MRP Operational Issues Aggregate Planning Inventory Location Capacity Tactical Issues Manufacturing Design & Selection Process Analysis Operations Strategy Strategic Issues

3. 3 Module 9: JIT & Lean Systems Planning & Control Strategies

4. 4 Module 9: JIT & Lean Systems Learning Objectives At the end of this module, each student will be able to: 1.Discuss Just-In-Time philosophy 2.Discuss JIT elements 3.Compare JIT and MRP

5. 5 Module 9: JIT & Lean Systems 1. APICS definition of JIT A philosophy of manufacturing based on waste elimination and continuous improvement of productivity.

6. 6 Module 9: JIT & Lean Systems 2. Primary Elements A.Manufacturing have only the required inventory when needed, reduce lead times by reducing setup times, queue lengths, and lot sizes, B.Total Quality Management improve quality to zero defects, incrementally revise the operations themselves, and Accomplish these activities at minimum cost.

7. 7 Module 9: JIT & Lean Systems Inventory Hides Problems Work in process queues (banks) Change orders Engineering design redundancies Vendor delinquencies Scrap Design backlogs Machine downtime Decision backlogs Inspection backlogs Paperwork backlog Example: By identifying defective items from a vendor early in the production process the downstream work is saved. Example: By identifying defective work by employees upstream, the downstream work is saved.

8. 8 Module 9: JIT & Lean Systems Economic Order Quantity COSTCOST Total Cost Q* TC* Optimal Order Quantity = = Q D S H 2 Q** TC**

9. 9 Module 9: JIT & Lean Systems Total Quality Management  Quality system involving entire organization from supplier to customer  Objective: Meet or exceed customer needs through company-wide continuous improvement  Early proponents W. Edwards Deming - natural variability Philip B. Crosby - Quality is Free

10. 10 Module 9: JIT & Lean Systems Deming: Natural variability  All process are subject to variability Natural causes Assignable causes  Objective: Identify assignable causes

11. 11 Module 9: JIT & Lean Systems Crosby: Quality is Free Improved Quality Increased Profits Lower Costs Productivity Rework/Scrap Warranty Market Gains Reputation Volume Price

12. 12 Module 9: JIT & Lean Systems 3. Comparison MRP – Backward scheduling BOM Workcenter MRP schedule

13. 13 Module 9: JIT & Lean Systems Comparison (cont.) JIT – Reduce lead time and WIP Repetitive manufacturing (assembly line) Production level Products WIP Vendors

14. 14 Module 9: JIT & Lean Systems Comparison (cont.) Assembly Line Variable demand Assembly Line Level demand High Low Long Short

15. 15 Module 9: JIT & Lean Systems Comparison (cont.) Frozen Level Terrible Balanced Larger lot sizes Rejects Balanced capacity No rejects