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JIT/Lean Production


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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

Chapter 16, Slide 2

Chapter Objectives

Be able to: Describe what JIT/Lean is and differentiate between the Lean

philosophy and kanban systems. Discuss the Lean perspective on waste and describe the eight

major forms of waste, ormuda, in an organization.

Discuss the Lean perspective on inventory and describe how akanban system helps control inventory levels and synchronizethe flow of goods and materials across a supply chain.

Describe how the concepts of the Lean supply chain and LeanSix Sigma represent natural extensions of the Lean philosophy.

Explain how a two-card kanban system works. Calculate the number of kanban cards needed in a simple

production environment. Show how MRP and kanban can be linked together and illustrate

the process using a numerical example.


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Chapter 16, Slide 3

Some Statistics from

1986 ...

Framingham (GM)

40.7 hours

130 defects

2 weeks

Toyota Takaoka

16 hours

45 defects

2 hours

A comparison of:1) assembly hours

2) defects per 100 cars

3) average inventory levels


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Chapter 16, Slide 4

Post World War II

Growing and rebuilding world economy

Demand > Supply

US Manufacturing: Higher volumes

Capital substitution

Breakthrough improvements The production problem has been solved


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Chapter 16, Slide 5

View from Japan

Very little capital

War-ravaged workforce

Little space Poor or no raw materials

Lower demand levels

Little access to latest technologies

U.S. methods would not work


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Chapter 16, Slide 6

Japanese Approach to

Operations

Maximize use of people

Simplify first, add technology second

Gradual, but continuous improvement

Minimize waste (including poor quality)

Led to the development of the

approach known as Just-in-Time


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Just-in-Time

Repetitive production system

in which processing and movement ofmaterials and goods occurjust as they

are needed


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Chapter 16, Slide 8

Pre-JIT: Traditional Mass

Production

Big lot sizesLots of inventoryPUSH material to next

stage

Lower

per unitcost

Big purchase shipments

Big pushes of finished goods

to warehouses or customers

???


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Chapter 16, Slide 9

Post-JIT: Lean Production

Tighter coordination along the supply chainGoods are pulled along

only make and ship what is neededSmaller lots

Faster setupsLess inventory, storage spacePULL material to next stage

Minimalor no

inventoryholding

cost

Smaller shipments

Goods are pulled out ofplant by customer demand


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Chapter 16, Slide 10

JIT Goals(throughout the supply chain)

Eliminate disruptions

Make the system flexible

Reduce setup times and lead times

Minimize inventory

Elim inate waste


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Waste

Definition:

Wasteis anything other than the minimum

amount of equipment, materials, parts,

space, and workers time, which are

absolutely essential to add value to the

product.

Shoichiro Toyoda

President, Toyota


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Forms of Waste:(muda in Japanese)

Overproduction

Waiting

Unnecessary movement Wrong process

Unnecessary inventory

Excess motion Defects

Underutilization of employees


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Inventory as a Waste

Requires more storage space

Requires tracking and counting

Increases movement activity Hides yield, scrap, and rework

problems

Increases risk of loss from theft,damage, obsolescence


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Lean Perspective

Process of reducing inventory leads to reduction of

the other wastes and exposes problems in

order of severity (water and rocks analogy)


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Lean Six Sigma & Supply

Chain in Lean Environment

Six Sigma methodology combines wellwith Lean goals, helps address the rocksas they become exposed when reducing

inventory. Supply chain choices affect many of the

wastes. Supplier variances such as leadtime and quality create need for safetystock a direction opposite reduction ofinventory goals


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Examples of Eliminating

Wastes

Big Bobs Automotive Axles:

Wheels boughtfrom outsidesupplier

Axles made andassembled in house


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BEFORE: Shipping in

Wheels

Bobs

Wheels

Warehouse

Truck Cost: $500 (from Peoria)

Maximum load of wheels: 10,000

Weekly demand of wheels: 500


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BEFORE: Making Axles(Different lengths)

Manufacturing Minimum Batch1,000 Axles

Tool Bin Final Assembly

Push toFinalAssembly

Axle Maker

Setup: 8 hours

Setup cost: $800


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BEFORE: Making Axles(Oops!)

Manufacturing Minimum Batch1,000 Axles

Tool Bin Final Assembly

Push to

FinalAssembly

Axle Maker

Setup: 8 hoursSetup cost: $800

Defect: Axles are not true!

What is the outcome

of detect ing defect ive

axles at the end?


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After: Making Axles I(Different lengths)

Manufacturing

Final Assembly

Pull toFinalAssembly

Axle Maker

Setup: 15 min.

Setup cost: $25

Tools next to Maker

Nominimumbatch size


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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 23

Building Blocks of JIT

Product design

Standard parts

Modular design

Quality

Process design

Personnel and organizational elements

Manufacturing planning and control

MPC

Staff ORG

Process Design

Product Design


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Process Design

Focused Factories

Group Technology

Simplified layouts with little storagespace

Jidoka andPoka-Yoke

Minimum setups


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Multi-Task Work Cells

Seats Assembly Packing

Legs

Backposts

Slats

500 chairs per hour

Plann ing takes p lace for o ne area:

What does the BOM look l ike? What about lead t imes?


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Personnel and Organizational

Elements

Workers as assets

Cross-trained workers

Greater responsibility at lower levels

Leaders as facilitators, not order givers


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Top Management

Long-term planningProduct line decisions

Expansion issues

Middle management

Planning, purchasinghiring, and capital decisionsMoni tor costs

Supervisors

Control activities in specific areasMonitor qual i ty, del ivery, etc.

Direct Labor

Perform predetermined tasks

Technical Staff

Work methods, QCProcess improvements,

MIS

Planning Info

Control Info

Detailed Methods,

Schedules

Classic Organizational View


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JIT Organization View

Top Management

Long-term planningProduct line decisions

Expansion issues

Middle management

Planning, with less purchasing,hiring, and capital decisionsMonitor costs and assist labor

Direct Labor (self-supervising)

Task performance and schedule attainmentControl specific areas of activity

Monitor quality, delivery, etc.Participate in hiring and continuous

improvement

Technical Staff

Training and TechnicalSupport

Planning Info

Control Info

TechnicalIdeas

Pl i d C t l


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Planning and Control

Systems

Small JIT

Stable and level schedules

Mixed Model Scheduling

Pull versus Push

Kanban Systems


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Kanban

Uses simple visual signals to control

productionpull processing

Examples: empty slot in hamburger chute

empty space on floor

kanban card


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Kanban Example

Workcenter B uses parts produced by Workcenter A

How can we control the flow of materials so that B alwayshas parts and A doesnt overproduce?

Workcenter A Workcenter B

K b d Si l t


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When a container is opened by Workcenter B, its kanban card isremoved and sent back to Workcenter A.This is a signal to Workcenter A to produce another box of parts.

Kanban card: Signal to

produce


Kanban Card


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Empty Box: Signal to pull

Empty box sent back. Signal to pull another full box intoWorkcenter B.Question: How many kanban cards here? Why?



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How Many Kanbans?

y = number of kanban cardsD = demand per unit of time

T = lead timeC = container capacityX = safety factor

C

x)DT(1y


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Example

Hourly demand = 300 units

Lead time = 3 hours

Each container holds 300 units

Assuming no variation in lead-time or

demand (x = 0):

y = (300 3) / 300 = 3 kanban cards


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Example: 8:00 AM

11:00 AM toNoon

10:00 to 11:00AM

9:00 to 10:00AM

8:00 to 9:00AM

Process B:300 per hour

Process A:300 per hour


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One Hour Later at 9:00 AM

Noon to 1:00PM

11:00 AM toNoon

10:00 to 11:00AM

9:00 to 10:00AM

Process B:300 per hour

Process A:300 per hour


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Extended Out Further . . .

B

A


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Note:

For a kanban system to work, we NEED

CONSISTENT demand across the work

centers

Example - think McDonalds

How do we ensure this?


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Mixed Model Sequencing

Largest integer that divides evenly into dailyrequirement is 10:

A: 40 / 10 = 4

B: 40 / 10 = 4C: 10 / 10 = 1

Mixed model sequence: A-B-A-B-A-B-A-B-C

Product MonthlyDemand

DailyRequirement

A 800 40

B 800 40

C 200 10


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Mini-Quiz: Mixed Model Scheduling

and Establishing Kanbans

What would sequence be if NO

minimum job size?

Product Monthly

Demand

Daily

Requirement

D 1200 60

E 400 20

F 600 30


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2008 Pearson Prentice Hall --- Introduction to Operations and Supply

Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036


Sequence with Minimum of 5:

60 / 4 = 15 Ds20 / 4 = 5 Es

30 / 4 = 7.5Fs

5D - 7F - 5D - 5D - 5E - 5D - 8F - 5D - 5D - 5E

Sequence of 55 (27.52)


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Kanbans Required: Product D

Hourly Requirements = 60/8 = 7.5Lead time = 2 hoursContainer size = 2 unitsSafety factor = 10%


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Kanban Cards Required:

Impl icat ion s? Impact of container size?

cardsorcards

containerperunits

t imeleadhourhourunitsCards

9,25.8

)2(

1.1)2()/5.7(


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Implementing JIT

EliminateSurprises

IncreaseFlexibility

Simplify

Drive OutWaste

What aboutautomation?

Putting the Squeeze on


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Putting the Squeeze on

Resources . . .

Squeeze!

Simplify

Eliminate Uncertainty

Increase Flexibility

NO

PAIN? YES


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Case Study in JIT/LeanProduction

A Bumpy Road for Toyota

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