Just-in-Time and Lean Operations

1. Just-in-Time and Lean Operations

2. Developments of JIT and Lean Operations • 1960’s: Developed as Toyota Production System by Taiichi Ohno and his colleagues • 1970’s: U.S. and European auto makers began to apply JIT to improve quality and productivity • 1990’s and beyond: Expanded the JIT concept to streamline all types of operations

3. Definition of JIT • A set of techniques to increase productivity, improve quality, and reduce cost of an operations • A management philosophy to promote elimination of waste and continuous improvement of productivity

4. What Could Be the Expected Benefits of JIT?

5. Expected Benefits of JIT • Reduction in throughput times • Reduction in WIP • Improvement in quality • Improvement in productivity • Reduction in resource requirements • Improvement in customer satisfaction • improvements in return on assets

6. Main Elements of JIT • Elimination of waste • Quality at the source • Balanced and flexible work flow • Respect for people • Continuous improvement (Kaizen) • Simplification and visual control • Focus on customer needs • Partnerships with key suppliers

7. What is A “Waste?”

8. Wastes • Anything that exceeds the minimum resources needed for theappropriate value • Toyota’s seven deadly wastes: • Overproduction (excessive production resources) • Inventory • Waiting • Transportation • Processing • Motion • Defective parts

9. Why is Inventory Reduction Important?

10. Importance of Inventory Reduction • Inventory costs money - carrying costs, obsolescence costs, and opportunity costs • Inventory covers up problems and bottlenecks. • Inventory reduction forces organization and employees to eliminate sources of problems and work as a team.

11. Quality at the Source • Jidoka – autonomation (automatic detection of defects, e.g., Poka-yoke) • Employee empowerment • Statistical process control • Prevention orientation (elimination of root causes through PDSA cycle)

12. Balanced and Flexible Work Flow • Yo-i-don (ready, set, go) system • Stable production schedule • Set-up time reduction • Flow-shop and cellular layouts • Shojinka (flexible & multi-skilled workforce) • Teamwork • Total productive maintenance (TPM)

13. Respect for People • Productivity improvement needs employee support • Demonstrate by • providing cross-training opportunities • creating a safe and equitable work environment • encouraging people to achieve their potential by giving them greater responsibility and authority • promoting teamwork (formal and informal) • developing partnerships with unions

14. Continuous Improvement (Kaizen) • Employee suggestion system • Process improvement • 5S’s • Seiri - organization • Seiton - tidiness • Seiso - purity • Seiketsu - cleanliness • Shitsuke - discipline

15. Simplification and Visual Control • Standard and simple product designs • Andon boards • Kanban pull system • Flag systems • Music as signals • Performance display systems

16. Focus on Customer Needs • Customer needs determine the “value” of a product or service • Be responsive to customers needs (present and future) • Strive to “delight,” not just “satisfy” customers

17. Partnerships with Suppliers • Reduce number of suppliers • Use long-term contracts • Emphasize price, delivery, and services • Improve communication • Share information • Develop local just-in-time delivery • Provide technical support to suppliers

18. JIT Implementation • Top management commitment • Steering committee • Education program • Pilot project planning • Employee training • Pilot implementation • Pilot post mortem • Feedback to steering committee • Expansion to next project

19. Advancements in JIT (JIT II) • Backwards Integration of staff and line functions to suppliers (e.g., purchasing) • Requires EDI or web access to materials and logistics systems • On-site supplier representative(s) with transaction processing authority • Goal: link suppliers’ cycle to firm’s cycle to mutually reduce wait and move times

20. How Can JIT Be Applied to Non-Manufacturing Operations?

21. JIT for Non-Manufacturing Operations (Lean Operations) • Implement demand-pull operations • Eliminate unnecessary activities • Standardize process flows • Increase process flexibility • Reorganize physical layouts • Upgrade housekeeping and workplace organization

22. JIT for Non-Manufacturing Operations (Lean Operations) • Develop supplier partnership networks • Level work load • Organize problem-solving groups • Improve quality • Develop effective suggestion systems • Cross-train employees • Promote teamwork

23. What Are Toyota’s Secrets of Success?

24. Toyota’s Secrets of Success(Steve Spear, HBR, May 2004) • There is no substitute for direct observation • Proposed changes should always be structured as experiments • Workers and managers should experiment as frequently as possible • Managers should coach, not fix

25. Suggested Readings • Monden, Yasuhiro (1993). Toyota Production System: An Integrated Approach to Just-In-Time, 3rd edition, Institute of Industrial Engineers. • Womack, James P. and Jones, Daniel T. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation, The Free Press. • Jeffrey K. Liker (2004). The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer, McGraw-Hill.