Operations Management

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Operations Management
For Competitive Advantage
Chapter 10

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Just-In-Time and Lean Systems

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Just-in-Time and Lean Systems

JIT Defined The Japanese Approach to Productivity JIT Implementation Requirements JIT in Services
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Just-In-Time (JIT) Defined

JIT can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods). JIT also involves the elimination of waste in production effort. JIT also involves the timing of production resources (e.g., parts arrive at the next workstation just in time).
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Characteristics of JIT

JIT is popularly known as stockless production Produce just enough to meet demand Inventory is wasteful
Labor and materials Equipment and time Storage and insurance Capital, etc.

Quality must be at the source

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Exhibit Exhibit10.1 10.1

JIT Demand-Pull Logic

Fab Sub Customers Vendor

Final Assembly
Sub

Fab

Vendor

Fab

Vendor

Fab
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Vendor

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The Japanese Approach to Productivity

Imported technologies Efforts concentrated on shop floor Quality improvement focus Elimination of waste Respect for people
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Waste in Operations
(1) Waste from overproduction (2) Waste of waiting time (3) Transportation waste (4) Inventory waste (5) Processing waste (6) Waste of motion (7) Waste from product defects
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Minimize Waste: Focused Factory Networks

Small specialized plants Thinner is better

Better control Bolsters specialization and excellence More economical to manage

Large vertically integrated operations are:

Bureaucratic Difficult to manage
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Minimizing Waste: Focused Factory Networks

Coordination System Integration

Final Assembly

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Minimizing Waste: Group Technology

Identification of:
Machine cells Part families

Based on similarities in:

Design Manufacture

Saves time and effort

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Minimizing Waste: Group Technology (Part 1)

Using Departmental Specialization for plant layout can cause a lot of unnecessary material movement.
Saw Saw Saw Grinder Grinder

Heat Treat

Lathe

Lathe

Lathe

Press

Press

Press

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Minimizing Waste: Group Technology (Part 2)

Revising by using Group Technology Cells can reduce movement and improve product flow.

Grinder Saw Lathe

Lathe

Press

Heat Treat

Grinder Saw Lathe

Lathe

Press

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Minimizing Waste Use of Other Technologies

Robotics Supply chain management Value stream mapping Flexible manufacturing systems Computer integrated manufacturing systems Expert systems Neural networks
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Minimizing Waste: Quality at the Source

Self-inspection
Limited use of QC departments

Automated inspection Line-stopping empowerment

Quality before quantity
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Minimizing Waste: JIT Production

Produce... ...what is needed... ...when its needed... ...NOTHING MORE!
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Minimizing Waste: Uniform Plant Loading

This does not mean building a single product.

But maintaining a stable mix of products,

and firm monthly schedules.

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Minimizing Waste: Uniform Plant Loading

Suppose we operate a production plant that produces a single product. The schedule of production for this product could be accomplished using either of the two plant loading schedules below.

Not uniform

Jan. Units 1,200

Feb. Units 3,500 or Feb. Units 3,000

Mar. Units 4,300 Mar. Units 3,000

Total 9,000 Total 9,000

Uniform

Jan. Units 3,000

How does the uniform loading help save labor costs?

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Minimizing Waste: Just-In-Time Production

WHAT IT IS Management philosophy Pull system though the plant Attacks waste

Exhibit Exhibit10.3 10.3

WHAT IT DOES
Exposes problems and bottlenecks Achieves streamlined production

WHAT IT REQUIRES

WHAT IT ASSUMES Stable environment

Employee participation
Industrial engineering/basics Continuing improvement Total quality control Small lot sizes CHASE

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Minimizing Waste: Inventory Hides Problems

Machine downtime Scrap Work in process queues (banks) Vendor delinquencies Change orders Design backlogs Decision backlogs

Exhibit Exhibit10.4 10.4

Example: By identifying defective items from a vendor early in the production process the downstream work is saved.

Engineering design redundancies

Paperwork backlog

Inspection backlogs

Example: By identifying defective work by employees upstream, the downstream work is saved.
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Minimizing Waste: Kanban Production Control System

Uses signaling system to regulate JIT flows Kanban--sign or instruction card Kanban system is a pull system
Authority to produce comes from downstream It is a form of information system Production kanban--can be single card if move distance is short Move (withdrawal, conveyance) kanban
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Minimizing Waste: Kanban Production Control Systems

Withdrawal kanban

Exhibit Exhibit10.6 10.6

Machine Center

Storage Part A

Storage Part A

Assembly Line

Production kanban

Material Flow Card (signal) Flow

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Determining the Number of Kanbans Needed

Setting up a kanban system requires determining the number of kanbans (or containers) needed. Each container represents the minimum production lot size. An accurate estimate of the lead time required to produce a container is key to determining how many kanbans are required.
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The Number of Kanban Card Sets

Expected demand during lead time + Safety stock k= Size of the container dL(1 + S ) = C
k = Number of kanban card sets (a set is a card) d = Average number of units demanded over some time period L = lead time to replenish an order (same units of time as demand) S = Safety stock expressed as a percentage of demand during lead time C = Container size
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Example of Kanban Card Determination: Problem Data

A switch assembly is assembled in batches of 4 units from an upstream assembly area and delivered in a special container to a downstream control-panel assembly operation. The control-panel assembly area requires 5 switch assemblies per hour. The switch assembly area can produce a container of switch assemblies in 2 hours. Safety stock has been set at 10% of needed inventory.
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Example of Kanban Card Determination: Calculations

Expected demand during lead time + Safety stock k= Size of the container dL(1 + S ) 5(2)(1.1) = = = 2.75, or 3 C 4
Always round up!
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Minimizing Waste: Minimized Setup Times

What are the consequences of long setup times?

Long manufacturing lead times Increased cost Reduced capacity

A requirement for small-lot-size, mixedmodel production?

Practice more setups to reduce time/setup Fixed production quantity--improves setup SMED
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Respect for People

Strive to maintain level payrolls Workers as assets Cooperative employee unions Subcontractor networks Bottom-round management style Quality circles (Small group involvement activities)
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JIT Requirements: Design Flow Process

See SeeExhibit Exhibit10.8 10.8

Link operations Balance workstation capacities Relayout for flow Emphasize preventive maintenance Reduce lot sizes Reduce setup/changeover time
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JIT Requirements: Total Quality Control

Design for quality and quality at the source Worker responsibility/quality culture Measure SQC and use achievable goals Enforce compliance Fail-safe methods Automatic inspection
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JIT Requirements: Stabilize Schedule

Level schedule
Pull materials into final assembly in uniform pattern

Underutilize capacity
Realized by removing excess inventory Inventory less likely with quality and equipment maintenance

Establish freeze windows

Fixed schedule with no further changes possible
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JIT Requirements: Kanban-Pull

Demand pull Backflush

Used to explode end items BOM to determine how many of each product went into it

Reduce lot sizes

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JIT Requirements: Work with Vendors

Limited number of suppliers for better control Reduce lead times Frequent deliveries Project usage requirements Quality expectations
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JIT Requirements: Planning and Control

Plan for quality Uniform production rate

Smooth flow of materials Emphasize rate not capacity Refocused productivity
Less expensive machines Push towards lot size of one

Less expensive machines

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JIT Requirements: Reduce Inventory More

Look for other areas Stores Transit Carousels Conveyors

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JIT Requirements: Improve Product Design

Standard product configuration Standardize and reduce number of parts Process design with product design Quality expectations
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JIT in Services (Examples)

Organize Problem-Solving Groups Upgrade Housekeeping Upgrade Quality Clarify Process Flows Revise Equipment and Process Technologies
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JIT in Services (Examples)

Level the Facility Load Eliminate Unnecessary Activities Reorganize Physical Configuration Introduce Demand-Pull Scheduling Develop Supplier Networks
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New Paradigms: The Kanban Production System

Direction of Pull Supplier
Cutting
RHF Cell

Assembly

2 Order Signal

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Kanban Production System

Objectives
Lead time reduction Lot size reduction Waste elimination

One of Several Tools of Lean Mfg. (WCM)

Ineffective without others Prerequisites must be met
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New Paradigms

Follow rules of the kanban control system

Withdraw only the quantity needed Produce only to quantity given by kanban Kanban is withdrawal/production authority Move only good parts Smooth and level production Decrease number of cards to reduce inventory
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Lean Manufacturing (WCM)

What, Why, How, When Baseline measurements Benchmarking JIT Education/Training for all Milestone charts Communication Numerical goal setting
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Performance Measurement

Quality levels Customer satisfaction Equipment effectiveness Supplier performance Throughput time Inventory levels Setup/lead time reduction Layout efficiency
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Overriding Principles

Simplification

Eliminate all nonessentials

Product design Processes & layout Work methods

Visibility--Andons
Quality Inventory Productivity
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Timely data gathering/analysis/reporting Real time control of:

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Visual Control (5s)

Sort--Seiri (organization; find whats not needed) Set in order--Seiton (place for everything) Shine--Seiso (cleanliness) Standardize--Seiketsu (develop/maintain stds.) Sustain--Shitsuke (self-discipline)
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The Clean Workplace

Post all pertinent Information Schedule

Returns Problems

Procedures Posted

Store Tools Close to the Point of use

Part A

Part B

Holding areas Identified

Outgoing

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Overriding Principles

Variance reduction

Identify sources and reduce/eliminate Check the standards and enforce them Quality, delivery, setup, level production Shoot for perfection always Benchmarking
Where are we right now? Where do we want to be? How to get there. Post results of improvements
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Measurement

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Benchmarking

Where are we now? Where do we want to be? How do we get there--whats the plan?
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Quality Inventory Orderliness Quality Inventory Orderliness

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