Just-in-Time (JIT) and Lean Systems

1. Just-in-Time (JIT) and Lean Systems Chapter 7

2. MGMT 326 Capacity and Facilities Products & Processes Quality Assurance Planning & Control Foundations of Operations Managing Projects Managing Quality Introduction Strategy Product Design Statistical Process Control Process Design Just-in-Time & Lean Systems

3. Presentation Outline • The philosophy of JIT • 7 Elements of JIT Philosophy • Examples of waste • 3 key principles of JIT • JIT in services • Principles of lean processes (JIT) in services

4. Presentation Outline (2) • JIT in manufacturing • Inventory reduction • Cost of inventory • Kanban pull system • Small lot sizes and quick setups • Uniform plant loading • Flexible resources (people & equipment) • Efficient plant layouts

5. Presentation Outline (3) • Other topics in JIT and lean systems • Respect for people: the role of employees • The role of managers • Benefits of JIT and lean systems

6. Just-in-Time & Lean Systems • Just-in-time: an operations system for producing the right goods and services in the right place, at the right time, in a quality manner • Lean systems: A broad view of JIT that shows how the entire organization contributes to JIT production (of goods and services), customer service, and customer satisfaction • Value-adding activities • Necessary steps in completing a product or service • Customer service activities that increase the value of the service to customers

7. The Philosophy of JIT7 Elements of JIT Philosophy • All waste must be eliminated- non value items • Waste is any amount of a resource that is not required to produce and deliver a quality good or service when it is needed • Broad view that entire organization must focus on serving customers • Serving customers requires cooperation throughout the organization

8. The Philosophy of JIT (2) 7 Elements of JIT Philosophy (2) • JIT is built on simplicity - the simpler the better • Focuses on improving every operation- Kaizen • Install simple, visible control systems • Provide flexibility to produce different models/features The same philosophy also applies in Lean Systems

9. Producing items before they are needed Waiting time: high WIP, idle machines, or idle people Needless movement of materials or people Unneeded process steps Inventory Searching for materials, tools, etc. Defects People who are not challenged by their jobs and are not allowed to give input into decisions Examples of Waste

10. 3 Key Principles of JITand Lean Systems • Just-in-time processes • Total quality management • Respect for people

11. Elements of Lean Systemsin Services • Improved quality – consistency • Uniform facility loading when possible • Multifunctional workers • More efficient processes and shorter cycle time • Shorter setup times • Parallel processing • Clean, well-organized workplace • See pages 244-245 for details

12. Elements of JIT Manufacturing • Inventory reduction exposes problems • Kanbans & pull production systems • Small lots & quick setups • Uniform plant loading • Flexible resources • Efficient facility layouts (cellular layout)

13. Role of Inventory Reduction("Rocks in the Stream") • Inventory = Lead Time (less is better) • Inventory hides problems (Figure 7-2, page 225)

14. Cost Impact of InventoryFigure 7-2, page 225 • High inventory  high inventory holding costs • High inventory hides problems, and the company pays for the cost of the problems • In manufacturing, high inventory requires large lot sizes • Long manufacturing lead times • Harder to meet changing customer demand • Delays in introducing new or improved products

15. Reducing InventoryKanban Pull System (Figure 7-3, p. 229) • Production kanban: authorization to make a container of parts • No production can be done without a production kanban and an empty container • Withdrawal kanban: authorization to get a container of parts for use in the next process step • Work in process (WIP) inventory • WIP < (number of kanbans)(lot size) • Lot size = number of parts of a certain type produced at one time

16. Reducing InventorySmall Lot Sizes and Quick Setups • Benefits of small lot sizes • Shorter manufacturing lead time  Faster response to changes in customer demand • Lower inventory and inventory holding costs • Small lot sizes require more setups • Setups must be done more quickly and at lower costs. This is necessary • To ensure adequate capacity • To control setup costs • To avoid production delays

17. Inventory ReductionUniform Plant Loading • A “level” schedule is developed so that the same mix of products is made every day in small quantities • Leveling the schedule reduces inventory along the whole supply chain • SeeTable 7-1, page 233

18. JIT in ManufacturingFlexible Resources • Moveable, general purpose equipment: • Portable equipment with plug in power/air • E.g.: drills, lathes, printer-fax-copiers, etc. • Capable of being setup to do many different things with minimal setup time • Multifunctional workers: • Workers assume considerable responsibility • Cross-trained to perform several different duties • Trained to also be problem solvers

19. JIT in ManufacturingEffective Facility Layouts • Workstations in close physical proximity to reduce transport & movement • Streamlined flow of material • Often use: • Cellular Manufacturing (instead of process focus) – reduces WIP, transportation time and costs • U-shaped lines: (allows material handler to quickly drop off materials & pick up finished work)

20. Cellular Manufacturing Layout • Traditional process-focus layout: jumbled flow, long production lead time (cycle time), hard to schedule • Cellular manufacturing layout: each cell makes a family of parts or products with similar manufacturing requirements • Highly visible schedule, problems are apparent, easy to schedule, short production lead time • More flexible than assembly line. More efficient than batch production. • See Figure 7-6, page 235

21. JIT and TQMTQM = Total Quality Management • Build quality into all processes • Focus on continuous improvement - Kaizen • Quality at the source - immediate inspection • Jidoka (authority to stop line) • Poka-yoke (fail-safe all processes) • Preventive maintenance- scheduled • Work environment- everything in its place, a place for everything

22. Respect for People: The Role of Employees • Genuine and meaningful respect for associates • Willingness to develop cross-functional skills • Actively engage in problem-solving (quality circles) • Everyone is empowered • Everyone is responsible for quality: understand both internal and external customer needs

23. Respect for People: The Role of Employees • Associates gather performance data • Team approaches used for problem-solving • Many decisions are made from the bottom up • Everyone (in a manufacturing plant) is responsible for preventive maintenance

24. The Role of Management • Responsible for culture of mutual trust • Serve as coaches & facilitators • Support culture with appropriate incentive system including non-monetary • Responsible for developing workers • Provide multi-functional training • Facilitate teamwork

25. Benefits of JIT and Lean Systems • Smaller inventories • Shorter lead times • Improved quality • Reduced space requirements • Lower operations costs • Increased productivity • Greater product flexibility