JIT/Lean Production. © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

JIT/Lean Production

© 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain 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, or muda, in an organization. Discuss the Lean perspective on inventory and describe how a

kanban system helps control inventory levels and synchronize the flow of goods and materials across a supply chain.

Describe how the concepts of the Lean supply chain and Lean Six 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.


Chapter 16, Slide 3

Some Statistics from1986 ...

Framingham (GM)• 40.7 hours• 130 defects• 2 weeks

Toyota Takaoka• 16 hours• 45 defects• 2 hours

A comparison of:1) assembly hours2) defects per 100 cars3) average inventory levels


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”


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


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

Just-in-Time

Repetitive production system

in which processing and movement of materials and goods occur just as they

are needed


Chapter 16, Slide 8

Pre-JIT: Traditional Mass Production

Big lot sizesLots of inventory”PUSH” material to nextstage

Lowerper unit

cost

Big purchase shipments

Big “pushes” of finished goodsto warehouses or customers

???


Chapter 16, Slide 9

Post-JIT: “Lean Production”

Tighter coordination along the supply chainGoods are pulled along

only make and ship what is neededSmaller lotsFaster setupsLess inventory, storage space”PULL” material to next stage

Minimalor no

inventoryholding

cost

Smaller shipments

Goods are pulled out ofplant by customer demand


Chapter 16, Slide 10

JIT Goals(throughout the supply chain)

• Eliminate disruptions

• Make the system flexible

• Reduce setup times and lead times

• Minimize inventory

• Eliminate waste



WasteDefinition:

Waste is ‘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



Forms of Waste:(‘muda’ in Japanese)

• Overproduction• Waiting• Unnecessary movement• Wrong process• Unnecessary inventory• Excess motion• Defects• Underutilization of employees



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



Lean Perspective

Process of reducing inventory leads to reduction of the other “wastes” and exposes problems in order of severity (‘water and rocks’ analogy)



Lean Six Sigma & Supply Chain in Lean Environment

• Six Sigma methodology combines well with Lean goals, helps address the ‘rocks’ as they become exposed when reducing inventory.

• Supply chain choices affect many of the ‘wastes’. Supplier variances such as lead time and quality create need for safety stock — a direction opposite reduction of inventory goals



Examples of Eliminating “Wastes”

Big Bob’s Automotive Axles:

Wheels boughtfrom outsidesupplier

Axles made andassembled in house



BEFORE: Shipping in Wheels

Bob’s

Wheels

Warehouse

Truck Cost: $500 (from Peoria)

Maximum load of wheels: 10,000

Weekly demand of wheels: 500



AFTER: Shipping in Wheels

Truck Cost: $50 (from Burlington)

Maximum load of wheels: 500

Weekly demand of wheels: 500

What wastes have been reduced?

Bob’sWheels



BEFORE: Making Axles (Different lengths)

Manufacturing Minimum Batch1,000 Axles

Tool Bin Final Assembly

Push toFinalAssembly

“Axle Maker”Setup: 8 hoursSetup cost: $800



BEFORE: Making Axles (Oops!)

Manufacturing Minimum Batch1,000 Axles

Tool Bin Final Assembly

Push toFinalAssembly

“Axle Maker”Setup: 8 hoursSetup cost: $800

Defect: “Axles are not true!”

What is the outcome of detecting defective axles at the end?



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



After: Making Axles II(More improvements)

What wastes have been reduced?

Manufacturing

Final Assembly

Poka-YokeDevice

“Axle Maker”Setup: 15 min.Setup cost: $0

Tools next to “Maker”

Verify Trueness



Building Blocks of JIT

• Product designStandard partsModular designQuality

• Process design• Personnel and organizational elements• Manufacturing planning and control

MPC

Staff ORG

Process Design

Product Design



Process Design

• “Focused Factories”

• Group Technology

• Simplified layouts with little storage space

• Jidoka and Poka-Yoke

• Minimum setups



Multi-Task Work Cells

Seats Assembly PackingL

eg

s

Ba

ckp

os

ts

Sla

ts

500 chairs per hour

Planning takes place for one area:What does the BOM look like? What about lead times?



Personnel and Organizational Elements

• Workers as assets

• Cross-trained workers

• Greater responsibility at lower levels

• Leaders as facilitators, not order givers



Top Management

Long-term planningProduct line decisions

Expansion issues

Middle management

Planning, purchasinghiring, and capital decisions

Monitor costs

Supervisors

Control activities in specific areasMonitor quality, delivery, etc.

Direct Labor

Perform predetermined tasks

Technical Staff

Work methods, QCProcess improvements,

MIS

Planning Info

Control Info

Detailed Methods,Schedules

Classic Organizational View



JIT Organization View

Top Management

Long-term planningProduct line decisions

Expansion issues

Middle management

Planning, with less purchasing,hiring, and capital decisions

Monitor 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

Tec

hn

ica

l Id

eas



Planning and Control Systems

• “Small” JIT

• Stable and level schedules

– Mixed Model Scheduling

• “Pull” versus “Push”

– Kanban Systems



Kanban

Uses simple visual signals to control production “pull” processing

• Examples:

empty slot in hamburger chute

empty space on floor

kanban card



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 doesn’t overproduce?

Workcenter A Workcenter B



When a container is opened by Workcenter B, its kanban card is removed 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



Empty Box: Signal to pull

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




How Many Kanbans?

y = number of kanban cardsD = demand per unit of timeT = lead timeC = container capacityX = safety factor

Cx)DT(1

y



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



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



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



Extended Out Further . . .

B

A



Note:

• For a kanban system to work, we NEED CONSISTENT demand across the work centers

• Example - think “McDonald’s”

• How do we ensure this?



Mixed Model Sequencing

Largest integer that divides evenly into daily requirement is 10:

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

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

Product Monthly Demand

Daily Requirement

A 800 40

B 800 40

C 200 10



Mini-Quiz: Mixed Model Scheduling and Establishing Kanbans

What would sequence be if NOminimum job size?

Product Monthly Demand

Daily Requirement

D 1200 60

E 400 20

F 600 30



Sequence with Minimum of 5:

60 / 4 = 15 D’s20 / 4 = 5 E’s30 / 4 = 7.5 F’s

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

Sequence of 55 (27.5×2)



Kanbans Required: Product D

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



Kanban Cards Required:

Implications? Impact of container size?

cardsorcards

containerperunitstimeleadhourhourunits

Cards

9,25.8

)2(1.1)2()/5.7(



Implementing JIT

EliminateSurprises

IncreaseFlexibility

Simplify

Drive OutWaste

What about automation?



Putting the Squeeze on Resources . . .

Squeeze!

– Simplify– Eliminate Uncertainty– Increase Flexibility

NO

PAIN? YES

Case Study in JIT/Lean Production

A Bumpy Road for Toyota

Documents

JIT/Lean Production. © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036