heizer om10 ch16-jit and lean operations

10/16/2010

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1616 JIT and Lean Operations

JIT and Lean Operations

16 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall

PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e Operations Management, 10e Principles of Operations Management, 8ePrinciples of Operations Management, 8e

PowerPoint slides by Jeff Heyl

OutlineOutlineGlobal Company Profile: Toyota Motor CorporationJust-in-Time, the Toyota Production System, and Lean


y ,Operations

Eliminate WasteRemove VariabilityImprove Throughput

Outline Outline –– ContinuedContinuedJust-in-Time

JIT PartnershipsConcerns of Suppliers

JIT Layout


JIT LayoutDistance ReductionIncreased FlexibilityImpact on EmployeesReduced Space and Inventory

Outline Outline –– ContinuedContinuedJIT Inventory

Reduce VariabilityReduce InventoryReduce Lot Sizes


Reduce Lot SizesReduce Setup Costs

JIT SchedulingLevel SchedulesKanban

Outline Outline –– ContinuedContinuedJIT QualityToyota Production System

Continuous ImprovementRespect for People


Respect for PeopleStandard Work Practices

Lean OperationsBuilding a Lean Organization

Lean Operations in Services

Learning ObjectivesLearning ObjectivesWhen you complete this chapter you When you complete this chapter you should be able to:should be able to:

1. Define just-in-time, TPS, and lean operations


operations2. Define the seven wastes and the

5 Ss3. Explain JIT partnerships4. Determine optimal setup time

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Learning ObjectivesLearning ObjectivesWhen you complete this chapter you When you complete this chapter you should be able to:should be able to:

5. Define kanban


6. Compute the required number of kanbans

7. Explain the principles of the Toyota Production System

Toyota Motor CorporationToyota Motor Corporation

Largest vehicle manufacturer in the world with annual sales of over 9 million vehiclesSuccess due to two techniques JIT


Success due to two techniques, JIT and TPSContinual problem solving is central to JITEliminating excess inventory makes problems immediately evident

Toyota Motor CorporationToyota Motor CorporationCentral to TPS is employee learning and a continuing effort to produce products under ideal conditionsRespect for people is fundamental


Small building but high levels of productionSubassemblies are transferred to the assembly line on a JIT basisHigh quality and low assembly time per vehicle

TPS ElementsTPS Elements


JIT/Lean OperationsJIT/Lean Operations

Good production systems require Good production systems require that managers address three issues that managers address three issues that are pervasive and fundamental that are pervasive and fundamental

to operations management:to operations management:


to operations management: to operations management: eliminate waste, remove variability, eliminate waste, remove variability,

and improve throughputand improve throughput

JustJust--InIn--Time, TPS, and Time, TPS, and Lean OperationsLean Operations

JIT is a philosophy of continuous and forced problem solving via a focus on throughput and reduced inventory


TPS emphasizes continuous improvement, respect for people, and standard work practicesLean production supplies the customer with their exact wants when the customer wants it without waste

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JustJust--InIn--Time, TPS, and Time, TPS, and Lean OperationsLean Operations

JIT emphasizes forced problem solvingTPS emphasizes employee


TPS emphasizes employee learning and empowerment in an assembly-line environmentLean operations emphasize understanding the customer

Eliminate WasteEliminate 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

Ohno’s Seven WastesOhno’s Seven WastesOverproductionQueuesTransportation


InventoryMotionOverprocessingDefective products

Eliminate WasteEliminate Waste

Other resources such as energy, water, and air are often wastedEfficient, sustainable production


minimizes inputs, reduces wasteTraditional “housekeeping” has been expanded to the 5 Ss

The 5 SsThe 5 SsSort/segregateSort/segregate – when in doubt, throw it outSimplify/straightenSimplify/straighten – methods analysis tools


Shine/sweepShine/sweep – clean dailyStandardizeStandardize – remove variations from processesSustain/selfSustain/self--disciplinediscipline – review work and recognize progress

The 5 SsThe 5 SsSort/segregateSort/segregate – when in doubt, throw it outSimplify/straightenSimplify/straighten – methods analysis toolsTwo additional Ss


Shine/sweepShine/sweep – clean dailyStandardizeStandardize – remove variations from processesSustain/selfSustain/self--disciplinediscipline – review work and recognize progress

Safety – build in good practicesSupport/maintenance – reduce variability and unplanned downtime

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Remove VariabilityRemove Variability

JIT systems require managers to reduce variability caused by both internal and external factorsV i bilit i d i ti f th


Variability is any deviation from the optimum processInventory hides variabilityLess variability results in less waste

Sources of VariabilitySources 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

Sources of VariabilitySources 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 ThroughputImprove ThroughputThe time it takes to move an order from receipt to deliveryThe time between the arrival of


raw materials and the shipping of the finished order is called manufacturing cycle timeA pull system increases throughput

Improve ThroughputImprove Throughput

By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement


continual improvementManufacturing cycle time is reducedPush systems dump orders on the downstream stations regardless of the need

JustJust--InIn--Time (JIT)Time (JIT)Powerful strategy for improving operationsMaterials arrive where they are needed when they are needed


neededIdentifying problems and driving out waste reduces costs and variability and improves throughputRequires a meaningful buyer-supplier relationship

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JIT and Competitive JIT and Competitive AdvantageAdvantage

16 - 25© 2011 Pearson Education, Inc. publishing as Prentice HallFigure 16.1

JIT and Competitive JIT and Competitive AdvantageAdvantage

16 - 26© 2011 Pearson Education, Inc. publishing as Prentice HallFigure 16.1

JIT PartnershipsJIT PartnershipsJIT 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 activitiesRemoval of in-plant inventoryRemoval of in-transit inventoryImproved quality and reliability

JIT PartnershipsJIT Partnerships


Figure 16.2

Concerns of SuppliersConcerns of SuppliersDiversificationDiversification – ties to only one customer increases riskSchedulingScheduling – don’t believe customers can create a smooth scheduleLead timeLead time – short lead times mean


Lead timeLead time – short lead times mean engineering or specification changes can create problemsQualityQuality – limited by capital budgets, processes, or technologyLot sizesLot sizes – small lot sizes may transfer costs to suppliers

JIT LayoutJIT LayoutReduce waste due to movement

JIT Layout TacticsBuild work cells for families of productsInclude a large number operations in a small area


Table 16.1

Minimize distanceDesign little space for inventoryImprove employee communicationUse poka-yoke devicesBuild flexible or movable equipmentCross-train workers to add flexibility

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Distance ReductionDistance ReductionLarge lots and long production lines with single-purpose machinery are being replaced by smaller flexible cells


smaller flexible cellsOften U-shaped for shorter paths and improved communicationOften using group technology concepts

Increased FlexibilityIncreased Flexibility

Cells designed to be rearranged as volume or designs changeApplicable in office environments


Applicable in office environments as well as production settingsFacilitates both product and process improvement

Impact on EmployeesImpact on EmployeesEmployees may be cross trained for flexibility and efficiencyImproved communications facilitate the passing on of


facilitate the passing on of important information about the processWith little or no inventory buffer, getting it right the first time is critical

Reduced Space and Reduced Space and InventoryInventory

With reduced space, inventory must be in very small lots


yUnits are always moving because there is no storage

JIT InventoryJIT InventoryInventory is at the minimum level necessary to keep operations runningJIT Inventory TacticsUse a pull system to move inventory


Table 16.2

p y yReduce lot sizesDevelop just-in-time delivery systems with suppliersDeliver directly to point of usePerform to scheduleReduce setup timeUse group technology

Reduce VariabilityReduce Variability

Inventory level


Process downtimeScrap

Setup time

Late deliveries

Quality problems

Figure 16.3

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Inventory level



Figure 16.3

Process downtimeScrap

Setup time

Late deliveries

Quality problems

Inventory level



Figure 16.3

Process downtime removed

No scrap

Setup time

reducedLate

deliveries

Quality problems removed

Reduce InventoryReduce InventoryReducing inventory uncovers the “rocks”Problems are exposed


Ultimately there will be virtually no inventory and no problemsShingo says “Inventory is evil”

Reduce Lot SizesReduce Lot Sizes

200 –

ento

ry

Q2 When average order size = 100i t i 50

Q1 When average order size = 200average inventory is 100


Figure 16.4

100 –Inve

Time

average inventory is 50

Reduce Lot SizesReduce Lot SizesIdeal situation is to have lot sizes of one pulled from one process to the nextOften not feasible


Can use EOQ analysis to calculate desired setup timeTwo key changes necessary

Improve material handlingReduce setup time

Lot Size ExampleLot Size ExampleD = 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 S t t (t b d t i d)


S = Setup cost (to be determined)

Q = 2DSH(1 - d/p) Q2 = 2DS

H(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

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Reduce Setup CostsReduce Setup Costs

High setup costs encourage large lot sizesReducing setup costs reduces lot


g psize and reduces average inventorySetup time can be reduced through preparation prior to shutdown and changeover

Lower Setup CostsLower Setup Costs

Sum of ordering and holding costs

Holding cost

st


Figure 16.5

Setup cost curves (S1, S2)T1

S1

T2

S2

Cos

Lot size

Reduce Setup TimesReduce Setup TimesInitial Setup Time

M t i l l d

Step 1

Separate setup into preparation and actual setup, doing as much as possible while the

machine/process is operating (save 30 minutes)

90 min —

60 min —


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 2Move material closer and improve material handling

(save 20 minutes)

Step 3Standardize and improve tooling

(save 15 minutes)

45 min —

25 min —

15 min —13 min —

—Repeat cycle until subminute setup is achievedStep 6

JIT SchedulingJIT SchedulingSchedules must be communicated inside and outside the organizationLevel schedules

Process frequent small batches


Process frequent small batchesFreezing the schedule helps stability

KanbanSignals used in a pull system

Table 16.3

Better scheduling improves performanceJIT SchedulingJIT Scheduling

JIT Scheduling TacticsCommunicate schedules to suppliersMake level schedulesF t f th h d l


Freeze part of the schedulePerform to scheduleSeek one-piece-make and one-piece moveEliminate wasteProduce in small lotsUse kanbansMake each operation produce a perfect part

Level SchedulesLevel Schedules

Process frequent small batches rather than a few large batchesMake and move small lots so the l l h d l i i l


level schedule is economical“Jelly bean” schedulingFreezing the schedule closest to the due dates can improve performance

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Scheduling Small LotsScheduling Small Lots

A B CA AAB B B B B CJIT Level Material-Use Approach


A CA AA B B B B B C CB B B BA A

Large-Lot Approach

TimeFigure 16.7

KanbanKanbanKanban is the Japanese word for cardThe card is an authorization for the next container of material to be producedA sequence of kanbans


qpulls material through the processMany different sorts of signals are used, but the system is still called a kanban

KanbanKanban1. User removes a

standard sized container

2. Signal is seen by the producing


the producing department as authorization to replenish

Part numbers mark location

Signal marker on boxes

Figure 16.8

KanbanKanban

Final assembly

Work cell

Material/Parts Supplier Finished

goodsCustomer

order


Figure 16.9

KanbanKanban

Kanban

More KanbanMore Kanban

When the producer and user are not in visual contact, a card can be usedWhen the producer and user are in visual contact a light or flag or empty


visual contact, a light or flag or empty spot on the floor may be adequateSince several components may be required, several different kanban techniques may be employed


Usually each card controls a specific quantity or partsMultiple card systems may be used if there are several components or


there are several components or different lot sizesIn an MRP system, the schedule can be thought of as a build authorization and the kanban a type of pull system that initiates actual production

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Kanban cards provide a direct control and limit on the amount of work-in-process between cellsIf there is an immediate storage area a


If there is an immediate storage area, a two-card system can be used with one card circulating between the user and storage area and the other between the storage area and the producer

The Number of Kanban CardsThe Number of Kanban Cardsor Containersor Containers

Need to know the lead time needed to produce a container of partsNeed to know the amount of safety


stock needed

Number of kanbans(containers)

Demand during Safetylead time + stockSize of container=

Number of Kanbans ExampleNumber of Kanbans ExampleDaily demand = 500 cakesProduction lead time = 2 days(Wait time + Material handling time + Processing time)


g )Safety stock = 1/2 dayContainer size = 250 cakes

Demand during lead time = 2 days x 500 cakes = 1,000

Number of kanbans = = 51,000 + 250

250

Advantages of KanbanAdvantages of Kanban

Allow only limited amount of faulty or delayed materialProblems are immediately evident


Puts downward pressure on bad aspects of inventoryStandardized containers reduce weight, disposal costs, wasted space, and labor

JIT QualityJIT Quality

Strong relationshipJIT cuts the cost of obtaining good quality because JIT exposes poor quality


qualityBecause lead times are shorter, quality problems are exposed soonerBetter quality means fewer buffers and allows simpler JIT systems to be used

JIT Quality TacticsJIT Quality Tactics

Use statistical process controlEmpower employeesBuild fail-safe methods (poka-


Build fail safe methods (pokayoke, checklists, etc.)Expose poor quality with small lot JITProvide immediate feedback

Table 16.4

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Toyota Production SystemToyota Production SystemContinuous improvement

Build an organizational culture and value system that stresses improvement of all processes, kaizenPart of everyone’s job


y jRespect for people

People are treated as knowledge workersEngage mental and physical capabilitiesEmpower employees

Toyota Production SystemToyota Production System

Standard work practiceWork shall be completely specified as to content, sequence, timing, and outcomeInternal and external customer-supplier

i di


connection are directProduct and service flows must be simple and directAny improvement must be made in accordance with the scientific method at the lowest possible level of the organization

Lean OperationsLean Operations

Different from JIT in that it is externally focused on the customerStarts with understanding what the


Starts with understanding what the customer wantsOptimize the entire process from the customer’s perspective

Building a Lean OrganizationBuilding a Lean Organization

Transitioning to a lean system can be difficultLean systems tend to have the following attributes


following attributesUse JIT techniquesBuild systems that help employees produce perfect partsReduce space requirements

Building a Lean OrganizationBuilding a Lean Organization

Develop partnerships with suppliersEducate suppliersEliminate all but value-added acti ities


activitiesDevelop employeesMake jobs challengingBuild worker flexibility

Lean Operations in ServicesLean Operations in Services

The JIT techniques used in manufacturing are used in services

Suppliers


LayoutsInventoryScheduling

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