Just-in-Time and Lean Production Systems

1. Just-in-Time and Lean Production Systems Professor Ahmadi

2. Introductory Quotation Waste is anything other than the minimum amount of equipment, materials, parts, space, and worker’s time, which are absolutely essential to add value to the product. Shoichiro Toyoda President, Toyota

3. Types of Waste • Overproduction • Waiting • Transportation • Inefficient processing • Inventory • Unnecessary motion • Product defects

4. What is Just-in-Time? • Management philosophy of continuous and forced problem solving • Supplies and components are ‘pulled’ through system to arrive where they are needed when they are needed. What Does Just-in-Time Do? • Attacks waste • Anything not adding value to the product • From the customer’s perspective • Exposes problems and bottlenecks caused by variability • Deviation from optimum • Achieves streamlined production • By reducing inventory

5. Push versus Pull • Push system: material is pushedinto downstream workstations regardless of whether resources are available • Pull system: material is pulled to a workstation just as it is needed

6. JIT Contribution to Competitive Advantage • Suppliers • reduced number of vendors • supportive supplier relationships • quality deliveries on time • Layout • work-cell layouts with testing at each step of the process • movable, changeable, flexible machinery • high level of workplace organization and neatness • reduced space for inventory • delivery direct to work areas

7. JIT Contribution to Competitive Advantage - Continued • Inventory • small lot sizes • low setup times • specialized bins for holding set number of parts • Scheduling • zero deviation from schedules • level schedules • suppliers informed of schedules • Kanban techniques

8. JIT Contribution to Competitive Advantage - Continued • Preventive Maintenance • scheduled • daily routine • operator involvement • Quality Production • statistical process control • quality by suppliers • quality within firm

9. JIT Contribution to Competitive Advantage - Continued • Employee Empowerment • empowered and cross-trained employees • few job classifications to ensure flexibility of employees • training support • Commitment • support of management, employees, and suppliers

10. Results • Queue and delay reduction, speedier throughput, freed assets • Quality improvement, reduces waste and wins orders • Cost reduction which reduces selling price • Variability reductions in the workplace reduces waste • Rework reduction, reduces waste and wins orders • Faster response to the customer at lower cost and higher quality, which leads to: A competitive advantage!

11. Suppliers Employee Empowerment Layout JIT Quality Inventory Preventive Maintenance Scheduling Just-in-TimeSuccess Factors

12. Suppliers Goals of JIT Partnership with Suppliers • JIT partnerships eliminate • Unnecessary activities • In - plant inventory • In - transit inventory • Poor suppliers

13. Goals of JIT partnerships • Elimination of unnecessary activities • Elimination of in-plant inventory • Elimination of in-transit inventory • Elimination of poor suppliers

14. Concerns of Suppliers • Diversification • Poor customer scheduling • Frequent engineering changes • Quality assurance • Small lot sizes • Physical proximity

15. Layout • JIT objective: Reduce movement of people and material • Movement is waste! • JIT requires • Work cells for product families • Moveable or changeable machines • Short distances • Little space for inventory • Delivery directly to work areas

16. Inventory • Traditional: inventory exists in case problems arise • JIT objective: eliminate inventory • JIT requires • Small lot sizes • Low setup time • Containers for fixed number of parts • JIT inventory: Minimum inventory to keep system running

17. Q = 2DS H(1 - d/p) 2DS H(1 - d/p) (3,200,000)(0.6) 800,000 (Q2)(H)(1 - d/p) 2D Q2 = S = = = $2.40 Lot Size Example(See page 635 of your textbook) D = Annual demand = 400,000 units d = Daily demand = 400,000/250 = 1,600 per day p = Daily production rate = 4,000 units Q = EOQ desired = 400 H = Holding cost = $20 per unit S = Setup cost (to be determined)

18. JIT Inventory Tactics • Use a pull system to move inventory • Reduce lot size • Reduce setup time • Develop Just-in-Time delivery systems with suppliers • Deliver directly to point of use • Perform-to-schedule • Reduce setup time

19. JIT Scheduling Tactics • Communicate the schedule to suppliers • Make level schedules • Perform to schedule • Eliminate waste • Produce in small lots • Use kanbans • Make each operation produce a perfect part

20. Kanban • Japanese word for card • Pronounced ‘kahn-bahn’ (not ‘can-ban’) • Authorizes production from downstream operations • ‘Pulls’ material through plant • May be a card, flag, verbal signal etc. • Used often with fixed-size containers • Add or remove containers to change production rate

21. Kanban: Additional Points • When producer and user are not in visual contact, a card may be used; otherwise, a light, flag, or empty spot on the floor may work. • Because a pull station may require several re-supply components, several Kanban pull techniques can be used at the same station. • Usually, each card controls a specific quantity of parts, although multiple card systems can be used if the producing cell produces several components or the lot size is different from the move size. • In an MRP system, the schedule can be thought of as a “build” authorization and the Kanban as a type of “pull” system that initiates the actual production.

22. Kanban: Additional Points - Continued • The Kanban cards provide direct control (limit) on the amount of work-in-process between cells. • If there is an intermediate storage area, a two-card system may be used; one card circulates between user and storage area, and the other circulates between the storage area and the producing area.

23. Demand during Safety lead time + stock Size of container Number of kanbans = The Number of Cardsor Containers • Need to know the lead time needed to produce a container of parts • Need to know the amount of safety stock needed

24. 1,000 + 250 250 Number of kanbans = = 5 Number of Kanbans Example(See page 640 of your textbook) Daily demand = 500 cakes Production lead time = 2 days (wait time + material handling time + processing time) Safety stock = 1/2 day Container size = 250 cakes Demand during lead time = 2 days x 500 cakes = 1,000

25. Quality • JIT reduces inventory • JIT limits number defects with small lots • JIT requires TQM • Statistical process control • Worker involvement • Inspect own work • Quality circles • Immediate feedback

26. JIT Quality Tactics • Use statistical process control • Empower employees • Build failsafe methods (checklists, etc.) • Provide immediate feedback

27. Employee Empowerment • Get employees involved in product & process improvements • Employees know job best! • JIT requires • Empowerment • Cross-training • Training support • Few job classifications

28. Lean Production Lean Production supplies customers with exactly what the customer wants, when the customer wants, without waste, through continuous improvement.

29. Attributes of Lean Producers • use JIT to eliminate virtually all inventory • build systems to help employees produce a perfect part every time • reduce space requirements • develop close relationships with suppliers • educate suppliers • eliminate all but value-added activities • make jobs more challenging • reduce the number of job classes and build worker flexibility