lecture 28 just-in-time manufacturing (continued) books introduction to materials management, sixth...
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Lecture 28
Just-in-Time Manufacturing (Continued)
Books• Introduction to Materials Management, Sixth Edition, J. R. Tony Arnold, P.E., CFPIM, CIRM, Fleming
College, Emeritus, Stephen N. Chapman, Ph.D., CFPIM, North Carolina State University, Lloyd M. Clive, P.E., CFPIM, Fleming College
• Operations Management for Competitive Advantage, 11th Edition, by Chase, Jacobs, and Aquilano, 2005, N.Y.: McGraw-Hill/Irwin.
• Operations Management, 11/E, Jay Heizer, Texas Lutheran University, Barry Render, Graduate School of Business, Rollins College, Prentice Hall
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Objectives
• JIT layout• Distance reduction• Increased flexibility• Inventory• Reduced variability• Reduced setup cost• JIT scheduling• Kanban• JIT quality tactics• Lean Operations
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JIT Layout
Reduce waste due to movement
JIT Layout Tactics
Build work cells for families of productsInclude a large number operations in a small areaMinimize distanceDesign little space for inventoryImprove employee communicationUse poka-yoke devicesBuild flexible or movable equipmentCross-train workers to add flexibility
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Distance Reduction
Large lots and long production lines with single-purpose machinery are being replaced by smaller flexible cells
Often U-shaped for shorter paths and improved communication
Often using group technology concepts
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Increased Flexibility
Cells designed to be rearranged as volume or designs change
Applicable in office environments as well as production settings
Facilitates both product and process improvement
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Impact on Employees
Employees are cross trained for flexibility and efficiency
Improved communications facilitate the passing on of important information about the process
With little or no inventory buffer, getting it right the first time is critical
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Reduced Space and Inventory
With reduced space, inventory must be in very small lots
Units are always moving because there is no storage
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Inventory
Inventory is at the minimum level necessary to keep operations running
JIT Inventory Tactics
Use a pull system to move inventoryReduce lot sizesDevelop just-in-time delivery systems with suppliersDeliver directly to point of usePerform to scheduleReduce setup timeUse group technology
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Reduce Variability
Inventory level
Process downtimeScrap
Setup time
Late deliveries
Quality problems
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Inventory level
Reduce Variability
Scrap
Setup time
Late deliveries
Quality problems
Process downtime
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Reduce Lot Sizes
200 –
100 –
Inve
ntor
y
Time
Q2 When average order size = 100average inventory is 50
Q1 When average order size = 200average inventory is 100
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Reduce Lot Sizes
Ideal situation is to have lot sizes of one pulled from one process to the next
Often not feasible Can use EOQ analysis to calculate
desired setup time Two key changes necessary
Improve material handlingReduce setup time
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Lot Size Example
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 = 2DSH(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
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Reduce Setup Costs
High setup costs encourage large lot sizes
Reducing setup costs reduces lot size and reduces average inventory
Setup time can be reduced through preparation prior to shutdown and changeover
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Lower Setup Costs
Sum of ordering and holding costs
Holding cost
Setup cost curves (S1, S2)T1
S1
T2
S2
Cos
t
Lot size
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Reduce Setup Times
Use one-touch system to eliminate adjustments (save 10 minutes)Step 4
Step 5Training operators and standardizing work procedures (save 2 minutes)
Initial Setup Time
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)
90 min —
60 min —
45 min —
25 min —
15 min —13 min —
—Repeat cycle until subminute setup is achieved
Step 6
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JIT Scheduling
Schedules must be communicated inside and outside the organization
Level schedules Process frequent small batches Freezing the schedule helps stability
Kanban Signals used in a pull system
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Better scheduling improves performance
JIT Scheduling Tactics
Communicate schedules to suppliersMake level schedulesFreeze part of the schedulePerform to scheduleSeek one-piece-make and one-piece moveEliminate wasteProduce in small lotsUse kanbansMake each operation produce a perfect part
JIT Scheduling
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Level Schedules
Process frequent small batches rather than a few large batches
Make and move small lots so the level schedule is economical
“Jelly bean” scheduling Freezing the schedule closest to the due dates can
improve performance
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Scheduling 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
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Kanban
When inventory is moved only as needed, it is referred to as a pull system and the ideal lot size is one. The Japanese call the signal to begin production a Kanban. (card or visual signal)
• Kanban “pulls” the material through the operation• Kanban places added emphasis on meeting
schedules and reducing the time and cost required by setups
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Kanban
Kanban is the Japanese word for card The card is an authorization for the next
container of material to be produced A sequence of kanbans
pulls material through the process
Many different sorts of signals are used, but the system is still called a kanban
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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
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Kanban
Work cell
Raw Material Supplier
Kanban
Purchased Parts
Supplier
Sub-assembly
Ship
Kanban
Kanban
Kanban
Kanban
Finished goods
Customer order
Final assembly
Kanban
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More Kanban
When the producer and user are not in visual contact, a card can be used
When the producer and user are in visual contact, a light or flag or empty spot on the floor may be adequate
Since several components may be required, several different kanban techniques may be employed
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More Kanban
Usually each card controls a specific quantity or parts
Multiple card systems may be used if there are several components or different lot sizes
In 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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More Kanban
Kanban cards provide a direct control and limit on the amount of work-in-process between cells
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
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The Number of Kanban Cardsor Containers
Need to know the lead time needed to produce a container of parts
Need to know the amount of safety stock needed
Number of kanbans(containers)
Demand during Safetylead time + stockSize of container=
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Number of Kanbans Example
Daily demand = 500 cakesProduction lead time = 2 days(Wait time + Material handling time + Processing time)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
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Advantage of Kanban
• Small batches allow a very limited amount of faulty material.
• Bad Aspects of Holding (Carrying) Inventory
M Poor qualityM ObsolesceneM DamageM Occupied spaceM Committed assets
MIncreased insuranceMIncreased material HandlingMIncreased accidents
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Advantages of Kanban
Allow only limited amount of faulty or delayed material
Problems are immediately evident Puts downward pressure on bad aspects
of inventory Standardized containers reduce weight,
disposal costs, wasted space, and labor
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Quality
Strong relationshipJIT cuts the cost of obtaining good
quality because JIT exposes poor qualityBecause lead times are shorter, quality
problems are exposed soonerBetter quality means fewer buffers and
allows simpler JIT systems to be used
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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
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Toyota Production System
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
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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
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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
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Building a Lean Organization
Transitioning to a lean system can be difficult
Lean systems tend to have the following attributes
Use JIT techniquesBuild systems that help employees
produce perfect partsReduce space requirements
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Building a Lean Organization
Develop partnerships with suppliers Educate suppliers Eliminate all but value-added
activities Develop employees Make jobs challenging Build worker flexibility
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JIT in Services
The JIT techniques used in manufacturing are used in servicesSuppliersLayouts InventoryScheduling
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End of Lecture 28