Chapter 16 - Lean Systems • Focus on operations strategy, process, technology, quality, capacity, layout, supply chains, and inventory. • Operations systems that are designed to create efficient processes by taking a total systems perspective. • Known as zero inventory, synchronous manufacturing, stockless production, continuous flow, material as needed, and just-in-time (JIT). • The idea: eliminate waste by cutting unnecessary inventory and removing non-value added activities. Produce goods and services as needed and continuously improve operations.
JIT System Characteristics • Organization of resources, information flows, and decision rules that can enable an organization to realize the benefits of the JIT philosophy. • Focuses on reducing inefficiency and unproductive time in processes to improve continuously the process and the quality of the products or services produced. • Employee involvement is essential.
JIT System • JIT can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods). • JIT also involves the elimination of waste in production effort. • JIT also involves the timing of production resources (e.g., parts arrive at the next workstation “just in time”).
Operations Waste (1) Waste from overproduction (2) Waste of waiting time (3) Transportation waste (4) Inventory waste (5) Processing waste (6) Waste of motion (7) Waste from product defects
JIT System characteristics • “Push” materials flow – Production of an item begins in advance of customer needs. Management schedules the receipt of all raw materials and authorizes the start of production. • “Pull” materials flow – Customer demand activates production of an item. Workers can coordinate to keep inventory low: allows closer control of inventory and production for highly repetitive manufacturing processes.
JIT System characteristics • High Quality • JIT requires conformance to specifications and statistical TQM methods • Small lot sizes • Use lot sizes as small as possible • Reduces cycle inventory • Reduces lead times (decreases pipeline inventory) • Small lots allow for flexible scheduling
JIT System characteristics • Uniform Workstation Loads • Daily load on workstation should be uniform: assemble the same type and number of units each day. Uses capacity planning and line balancing to develop the master production schedule • Standardized components and work methods • Modularity – increases repeatability and increased employee efficiency • Standardization helps to achieve high-productivity and low inventory
JIT System characteristics • Flexible Workforce • Trained to perform more than one task • Help to relieve bottlenecks • Line Flows • Reduce frequency of setups: groups of machines and workers can be organized in a product layout and more advanced can be group technology (remember FMS). • Automated Production • Invest in automation to reduce operation costs and improve inefficiencies. Careful: ERP – 65% failure rate. • Preventative Maintenance
Continuous Improvement • TQM and SQC • Improve work methods to eliminate scrap • Improve with supplier quality as supplier certification • Continuously find methods to improve overall operations
Kanban “card” or “visible record” • The Japanese refer to Kanban as a simple parts-movement system that depends on cards and boxes/containers to take parts from one work station to another on a production line. Kanban stands for Kan- card, Ban- signal. The essence of the Kanban concept is that a supplier or the warehouse should only deliver components to the production line as and when they are needed, so that there is no storage in the production area. Within this system, workstations located along production lines only produce/deliver desired components when they receive a card and an empty container, indicating that more parts will be needed in production
Kanban Following advantages of Kanban over the traditional push system: 1 A simple and understandable process2 Provides quick and precise information3 Low costs associated with the transfer of information4 Provides quick response to changes5 Limit of over-capacity in processes6 Avoids overproduction7 Is minimizing waste8 Control can be maintained9 Delegates responsibility to line workers
Kanban Operating Rules • Each container must have a card • Assembly line withdraws materials from a cell (pull method) • Containers of parts are removed from the storage area always with a card • Containers always have the same number of parts • Total production should not exceed the total amount authorized on the kanbans in the system
How many containers • The number of containers determines the amount of authorized inventory. • Determine the number of units to be held by each container (EOQ) • Determine the number of containers flowing back and forth between supplier and user stations • The number of containers flowing back and forth between stations directly affects the quantities of WIP and safety stock inventories. Need to measure average lead time needed to produce a container of parts. The lead time is a function of the processing timer per container at the supply station, the wait time during production, and time required for materials handling.
How many containers • The number of containers equals the average demand during lead time plus some safety stock to account for unexpected circumstances divided by the number of number of units in one container.
JIT II • Supplier is brought into the plant to be an active member of the purchasing office • Vendor-managed inventories • Fosters close relationships • Benefits to customer and supplier
Implementation issues • Organizational considerations • Human costs – improve loss of autonomy with introduction of teams • Cooperation and trust • Reward systems • Process considerations • Usually requires changes in process layouts to cell layout • Inventory and Scheduling • Must use small lot sizes – this requires more setups – if can not decrease setup time, results in larger inventories which offsets advantages of JIT • Purchasing and logistics – if can not arrange frequent, small shipments, inventory costs can not be realized