Just-in-Time and Lean Systems The Philosophy of

Just-in-Time and Lean Systems

The Philosophy of JIT - Lean System (Production) n Central (1 st) belief: All waste (non value items) must be eliminated (started at Toyota Motor Co. ) n n excess inventory backup equipment anything (time, energy, space, human activity) that does not contribute to the value of the product/service Other beliefs: n 2. Broad view that entire organization must focus on serving customers n rather than focusing on their own jobs, employees know that they are ALL ultimately responsible for serving the customer (eliminate “it’s not my job” attitude)

The Philosophy of JIT - Lean System (Production) n 3. JIT is built on simplicity- the simpler the better n n 4. Focuses on improving every operation- Kaizen n n Continuous improvement: An organization is never perfect and can always be improved in some way 5. Install simple visible control systems n n Encourages empl. to think about problems->simple sol. Make all waste visible: open and clean floor space 6. Flexibility to produce different models/features n n Able to change volume Able to produce variety of products

Three Elements of JIT

I. Elements of JIT Manufact. n n n 1. Inventory reduction exposes problems 2. Kanbans & pull production systems 3. Small lots & quick setups 4. Uniform plant loading 5. Flexible resources 6. Efficient facility layouts

1. Role of Inventory Reduction n n Inventory = Lead Time (less is better) Inventory hides problems

2. The Pull System

2. The Pull System n n The amount produced at any one time is the amount in one container Kanban cards coordinate the pull production system: n n Production cannot take place unless a container is empty and a production kanban has authorized production A full container cannot be withdrawn unless a withdrawal kanban authorizes it

Number of Kanbans Required N = number of containers D = demand rate at the withdraw station T = lead time from supply station C = container size S = safety stock = % of D*T (percent of demand during lead time)

Computing the No. of Kanbans: an aspirin manufacturer has converted to JIT manufacturing using kanban containers. They wish to determine the no. of containers at the bottle filling operation which fills at a rate of 200 per hour. Each container holds 25 bottles, it takes 30 minutes to receive more bottles, safety stock is 10% of demand during LT. Round down: improvemen. in the op. needed; Round up: excess inventory

3. Small Lot Sizes & Quick Setups n n n Small lots mean less average inventory and shorten manufacturing lead time Small lots with shorter setup times increase flexibility to respond to demand changes Strive for single digit setups- < 10 minutes n n The goal: set up time = 0 sec. and lot size = 1 Setup reduction process is well-documented n n External tasks- do as much preparation while present job is still running Internal tasks- simplify, eliminate, shorten steps involved with location, clamping, & adjustments

4. Uniform Plant Loading n n A “level” schedule is developed so that the same mix of products is made every day in small quantities Leveling the schedule can have big impact along whole supply chain

5. Flexible Resources n Moveable, general purpose equipment: n n Portable equipment with plug in power/air E. g. : drills, lathes, printer-fax-copiers, etc. Capable of being setup to do many different things with minimal setup time Multifunctional workers: n n n Workers assume considerable responsibility Cross-trained to perform several different duties Trained to also be problem solvers

6. Effective Facility Layouts n n n Workstations in close physical proximity to reduce transport & movement Streamlined flow of material Often use: n n Cellular Manufacturing (instead of process focus) U-shaped lines: (allows material handler to quickly drop off materials & pick up finished work)

Traditional Process Focused Layout n Jumbled flows, long cycles, difficult to schedule

JIT Cellular Manufacturing n Product focused cells, flexible equipment, high visibility, easy to schedule, short cycles

II. JIT and TQM- Partners n n n n Build quality into all processes Focus on continuous improvement - Kaizen Quality at the source- sequential inspection Jidoka (authority to stop line) Poka-yoke (fail-safe all processes, i. e. prevent defects from occurring: “foolproof”) Preventive maintenance- scheduled Work environment- everything in its place, a place for everything

III. Respect for People: The Role of Employees n n n n n Genuine and meaningful respect for associates Willingness to develop cross-functional skills Actively engage in problem-solving (quality circles) Everyone is empowered Everyone is responsible for quality: understand both internal and external customer needs Associates gather performance data Team approaches used for problem-solving Decisions made from bottom-up Everyone is responsible for preventive maintenance

The Role of Management n n n Responsible for culture of mutual trust Serve as coaches & facilitators Support culture with appropriate incentive system including non-monetary Responsible for developing workers Provide multi-functional training Facilitate teamwork

Supplier Relationships and JIT n Use single-source suppliers when possible n Build long-term relationships n Work together to certify processes n Co-locate facilities to reduce transport if possible n Stabilize delivery schedules n Share cost & other information n Early involvement during new product designs

Benefits of JIT n n n n Smaller inventories Shorter lead times Improved quality Reduced space requirements Lower production costs Increased productivity Greater flexibility

Implementing JIT n n n Implementation needs a designated “Champion” Make quality improvements Reorganize workplace n n Reduce setup times Reduce lot sizes & lead times Implement layout changes n n n Remove clutter & minimize storage Cellular manufacturing & close proximity Switch to pull production Extend methods to suppliers

JIT - Problems n n Companies that use JIT have experienced a variety of problems. n Production systems need to be not only reliable, but also flexible to switching “on the fly” to meet an unexpected production change. Typical problems involve: n equipment downtime n the coordination and timing of subassembly production n setup losses n lack of supply reliability n use of forecasts in production (push, not pull system)

JIT - Problems (example) One of the factories of Aisin, a brake-part supplier of Toyota that accounted for 80% of Toyota’s purchased brake-parts, was destroyed by fire. This fire was a major problem since the supplier had only a three day supply of parts in its warehouse. At the time, both Toyota and Aisin were using all of their plants at full capacity. It was estimated that Toyota might miss selling 50, 000 cars as a result of the fire.

JIT in Services n n n Most of the JIT concepts apply equally to Service companies Cellular layouts, product focused, & flexible employees shorten response times Service inventory, “paperwork”, should be eliminated, simplified, examined for “waste” “Fail-safe” all processes from Orders-Payment Team based organizations

JIT in Services n n Mc. Donald’s has implemented JIT in their program “Made for You. ” This program, which was implemented a few years ago in the restaurants, consists of a making food to order. It consists of computerized kitchens with the use of some robotic technology. For example, machines dump fries into a basket, lower the basket into the oil and then remove the fries when done. The company revamped its point of service software, toasters, prep tables and holding bins. The prep tables were redesigned for a smooth, more efficient, work flows. The easiest aspects of JIT to apply in services are the use of multifunction workers, cycle time reductions, setup time reductions, parallel processing, and workplace reorganization.

Chapter 07 problems n Problem 2: n a. n n n D = 10 thermostats per hour T = 30 minutes = ½ hour C = 5 thermostats per container N = = = 1 Kanban (D*T)/C = 10*0. 5/5 b. n S = 2 thermostats n N = = = 1. 4 Kanbans (D*T +S)/C = (5 + 2)/5

Chapter 07 problems n Problem 4: n n n n a. D = (50 units/hour)(1 hour/60 minutes) = 0. 8333 units/minute T = 30 minutes C = 10 per container N = (0. 8333)(30)/10 = 2. 5 containers b. As the system improves, the cycle time decreases, hence the lead time T decreases, and therefore the number N = (DT + S)/C of containers needed decreases (N may be rounded down to 2)

Chapter 07 problems n n n Problem 6: T = 30+5 min. to transport = 35 min. C = 20 units per container N = 5 containers S = 20% of the demand during lead time =. 2(DT) n n n N = (DT + S)/C --> NC = DT + S --> DT = NC - S = NC - %DT DT + %DT = NC (1+%)DT = NC --> D = NC/(1+%)T D = NC/1. 2 T = 5(20)/(1. 2*35) = 2. 38 units per minute =142. 86 units per hour