LEAN
OPERATiONSPresented By:
Group 7
Pearson Education, Inc. publishing as Prentice
Hall © 2011
Based on the textbook by Heizer and RenderMost of the figures from the book:
What is JIT?
• A corporate system designed to produce
output within the minimum lead time and
at the lowest total cost by continuously
identifying and eliminating all forms of
corporate waste and variance.
Looking Back
• JIT originated in Japan, post WWII
• Driven by a need survive after the
devastation caused by the war
• JIT gained worldwide prominence in the
1970s
• Toyota Motor Co. developed JIT
Toyota Motor Corp.
• Largest vehicle manufacturer
• Techniques of JIT, TPS and Lean
Operation
• Introduced by Taiichi Ohno
1 2
3
4
5
6
7
8
9
10
11
12
13
14
Main assembly complex Supplier
buildings surround
main
assembly
complex
Implementation of JIT and TPS at Toyota plant
Just-In-Time, TPS, andLean Operations
• JIT - continuous and forced problem solving via a focus on throughput and reduced inventory
• TPS -continuous improvement, respect for people, and standard work practices
• Lean production - supplies the customer with exact wants when the customer wants it without waste
Just In Time
Good production systems require that managers address three issues that are
pervasive and fundamental to operations management: eliminate waste, remove
variability, and improve throughput
Three Elements of JIT
Eliminate Waste
• Waste is anything that does not add value from the customer point of view
• Storage, inspection, delay, waiting in queues, and defective products do not add value and are 100% waste
The most dangerous
kind of waste is the
waste we do not
recognize
Ohno’s Seven Wastes
• Overproduction
• Queues
• Transportation
• Inventory
• Motion
• Over processing
• Defective products
Common Causes of Waste
• Layout (distance)
• Long setup time
• Incapable processes
• Poor maintenance
• Poor work methods
• Lack of training
• Inconsistent performance measures
• Ineffective production planning
• Lack of workplace organization
• Poor supply quality/reliability
Eliminate Waste
• Efficient, sustainable production minimizes inputs, reduces waste
• Traditional “housekeeping” has been expanded to the 5 Ss
The 5 Ss
• Sort/segregate – when in doubt, throw it out
• Simplify/straighten – methods analysis tools
• Shine/sweep – clean daily• Standardize – remove variations from
processes• Sustain/self-discipline – review work and
recognize progress
© 2011 Pearson Education,
Inc. publishing as Prentice
Hall
Two additional Ss
• Safety- build in good practices
• Support Maintenance- reduce variability
and unplanned downtime
Reducing Waste: Push Vs Pull
Material Flow
Information Flow
CustomerRaw
MaterialSupplier
FinalAssembly
PUSH
CustomerRaw
MaterialSupplier
FinalAssembly
PULL
Remove Variability
• JIT systems require managers to reduce variability caused by both internal and external factors
• Variability is any deviation from the optimum process
• Inventory hides variability
• Less variability results in less waste
Inventory is Evil
Sources of Variability
1. Incomplete or inaccurate drawings or specifications
2. Poor production processes resulting in incorrect quantities, late, or non-conforming units
3. Unknown customer demands
Improve Throughput
• The time it takes to move an order from receipt to delivery
• The time between the arrival of raw materials and the shipping of the finished order is called manufacturing cycle time
• A pull system increases throughput
Improve Throughput
• By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement
• Manufacturing cycle time is reduced
• Push systems dump orders on the downstream stations regardless of the need
JIT and Competitive Advantage
JIT and Competitive Advantage
© 2011 Pearson Education, Inc. publishing as
Prentice Hall
JIT Partnerships
• JIT partnerships exist when a supplier and purchaser work together to remove waste and drive down costs
• Four goals of JIT partnerships are:
• Removal of unnecessary activities
• Removal of in-plant inventory
• Removal of in-transit inventory
• Improved quality and reliability
JIT Partnerships
JIT Layout•Reduces another kind of waste -“Movement”
•Places material directly where needed
•Eg. Toyota
JIT Layout Tactics
• Build work cells for families of products
• Include a large number operations in a small area
• Minimize distance
• Design little space for inventory
• Improve employee communication
• Use poka-yoke (fail safe) devices
• Build flexible or movable equipment
• Cross-train workers to add flexibility
Concerns of Suppliers
• Diversification – ties to only one customer increases risk
• Scheduling – don’t believe customers can create a smooth schedule
• Changes – short lead times mean engineering or specification changes can create problems
• Quality – limited by capital budgets, processes, or technology
• Lot sizes – small lot sizes may transfer costs to suppliers
JIT Inventory•Why does extra inventory exist?
•“Just In Case”
•cover problems
•Just-in-time Inventory
•Minimum inventory to keep a perfect system
running
JIT Inventory•JIT Inventory Tactics
•Four tactics
• Reduce Inventory
• Reduce Lot Size
•Reduce Variability
• Reduce Setup Costs
4 1
23
•Inventory hides variability &
problems
•Analogy with the lake full of
rocks
Inventory level
Process downtimeScrap
Setup time
Late deliveries
Quality problems
Water:Inventory Flow
Rocks:Problems
•Uncovering of the “rocks”
•Reveals problems,
variability
•Management clears the
lake
Inventory level
Process downtimeScrap
Setup time
Late deliveries
Quality problems Problems
revealed
No problems No inventory
Inventory level
Process downtime removed
No scrap
Setup time
reducedLate
deliveries
Quality problems removed
•Key to JIT:
“Good product in small lot
sizes”
•Reduces Inventory Costs
Q2 When average order size = 100average inventory is 50
200 –
100 –
Inve
nto
ry
Time
Q1 When average order size = 200average inventory is 100
Lowering the order size Increases the Order size Decreases Inventory
•Ideal Situation
•Lot Sizes of ONE pulled from ONE process to the
next
•But, unrealistic
•Small lot sizes possible but Single lot size not
feasible
•Two necessary changes:
•Improve Material Handling
•Reduce Setup time
•EOQ for Desired Setup time
Lot Size Example: Crate Furniture Inc.
D = Annual demand = 400,000 unitsd = Daily demand = 400,000/250 = 1,600 per dayp = Daily production rate = 4,000 unitsQ = EOQ desired = 400H = Holding cost = $20 per unitS = Setup cost (to be determined)
Q =2DS
H(1 - d/p)Q2 =
2DSH(1 - d/p)
S = = = $2.40(Q2)(H)(1 - d/p)
2D
(3,200,000)(0.6)
800,000
Setup time = $2.40/($30/hour) = 0.08 hr = 4.8 minutes
• High setup costs encourage large lot sizes
Ultimate Solution: Reducing setup costs
Reduces lot size & average inventory
Reduces Optimum order size
Holding cost
T2
S2
Setup cost curves (S1, S2)
T1
S1
Co
st
Lot size
Sum of ordering and holding costs
• Setup time can be reduced through preparation prior to shutdown and changeover
• Reduced Setup times=A major JIT Component
• Setup Costs highly correlated with Setup time
© 2011 Pearson Education, Inc. publishing as Prentice Hall
Reduce Setup Times
Figure 16.6
Use one-touch system to eliminate adjustments (save 10 minutes)
Step 4
Step 5Training operators and standardizing work procedures (save 2 minutes)
Step 2
Move material closer and improve material handling (save
20 minutes)
Step 1
Separate setup into preparation and actual setup, doing as much as possible while the machine/process
is operating (save 30 minutes)
Step 3
Standardize and improve tooling (save
15 minutes)
Initial Setup Time 90 min —
60 min —
45 min —
25 min —
15 min —13 min —
—Repeat cycle until subminute setup is achieved
Step 6
JIT Scheduling
• Better Scheduling
Organization
• Supports JIT1
• Improves ability to meet customer orders 2
• Drives down inventory3
• Allows smaller lot sizes4
• Reduces work-in-process5
JIT Scheduling: Example Ford Motor Company
Ford communicates its schedules to bumper
Polycon Industries
Schedule describes: Style and color of the bumper for
each vehicle
It transmits the information to
Polycon Warehouse personnel
PW Personnel load the bumpers onto conveyors
leading to the loading dock
Bumpers are then trucked to ford plant
JIT Scheduling: Two major tools
Level Schedules
Kanban
1. Level Schedules: Jelly Bean Scheduling
• Technique processes frequent small batches
• Many “always changing” small lots
A B CA AAB B B B B C
JIT Level Material-Use Approach
A CA AA B B B B B C CB B B BA A
Large-Lot Approach
Time
Freezing
• Not allowing changes
• Improves the performance
• The portion closest to the due dates
• Allows
– Production system to function
– Schedule to be met
2. Kanban: Only when ready
• “Kanban”-Japanese word for “card”
• Technique that uses “pull” system
• Match or nearly match the processing time
• Card=an authorization for the next container of material to be produced
• Empty containers
• Lights
• Flag or rag
• Colored golf balls
Signaling
devices to
control the
flow of
material
© 2011 Pearson Education, Inc. publishing as Prentice Hall
Kanban
1. User removes a standard sized container
2. Signal is seen by the producing department as authorization to replenish
Part numbers mark location
Signal marker on boxes
Figure 16.8
Work cell
Raw Material Supplier
Kanban
Purchased Parts
Supplier
Sub-assembly
Ship
Kanban
Kanban
Kanban
Kanban
Finished goods
Customer order
Final assembly
Kanban
Kanban
Number of Kanban Cards or Containers
• 1st – Set the size of each container
– Need to know the lead time needed to produce a container of parts
– Need to know the amount of Safety Stock needed
• 2nd – Calculate no of Kanbans
Example: No of Kanban: Hobbs Bakery
• Daily Demand =500 cakes
• Production Lead Time =2 days
• Safety Stock =0.5 days
• Container size =250 cakes
• Now, Demand during lead time =2 days x 500 cakes = 1,000
Quality
JIT cuts the cost of obtaining good
quality
JIT improves quality
Better quality means fewer
buffers=Easier-to use JIT system
•Strong Relationship between JIT & Quality
© 2011 Pearson Education, Inc. publishing as Prentice Hall
JIT Quality Tactics
Use statistical process control
Empower employees
Build fail-safe methods (poka-yoke, checklists, etc.)
Expose poor quality with small lot JIT
Provide immediate feedback
Table 16.4
• Continuous improvement
• Build an organizational culture and value system that stresses improvement of all processes
• Part of everyone’s job
• Respect for people
• People are treated as knowledge workers
• Engage mental and physical capabilities
• Empower employees
Toyota Production System
• Standard work practice
• Work shall be completely specified as to content, sequence, timing, and outcome
• Internal and external customer-supplier connection are direct
• Product and service flows must be simple and direct
• Any improvement must be made in accordance with the scientific method at the lowest possible level of the organization
Toyota Production System
Lean Operations
• Different from JIT in that it is externally focused on the customer
• Starts with understanding what the customer wants
• Optimize the entire process from the customer’s perspective
Building a Lean Organization
• Transitioning to a lean system can be difficult
• Lean systems tend to have the following attributes
• Use JIT techniques
• Build systems that help employees produce perfect parts
• Reduce space requirements
Building a Lean Organization
• Develop partnerships with suppliers
• Educate suppliers
• Eliminate all but value-added activities
• Develop employees
• Make jobs challenging
• Build worker flexibility
JIT in Services
The JIT techniques used in manufacturing are used in services
• Suppliers
• Layouts
• Inventory
• Scheduling
Group 7
THANK YOUANY QUESTIONS?