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

Operations Management 6th Edition

R. Dan Reid & Nada R. Sanders

Learning Objectives

 Explain the core beliefs of the just-in-time (JIT) philosophy.

 Describe the elements of JIT.

 Explain the key elements of JIT manufacturing.

 Explain the elements of total quality management (TGM) and their role in JIT.

Learning Objectives - cont'd

 Describe the role of people in JIT and why respect for people is so important.

 Describe the benefi ts of JIT.

 Discuss the implementation process of a successful JIT system.

 Describe the impact of JIT on service and manufacturing organizations.

Just-in-Time (JIT)

 JIT philosophy means getting the right quantity of goods at the right place and the right time

 JIT exceeds the concept of inventory reduction; it is an all-encompassing philosophy geared to eliminate waste, anything that does not add value

 A broad JIT view – or lean production/lean systems - is one that encompasses the entire organization

Philosophy of JIT

 JIT originated in Japan at Toyota Motor Co, fueled by a need to survive the devastation post WWII

 JIT gained worldwide prominence in the 1970s

 Often termed “Lean Production” or “Lean Systems”

 Broad view that entire organization has the same goal - to serve customers

Defining beliefs of JIT

 Everyone should have a broad view of the organization and work toward the same goal, which is serving the customer

 JIT is built on simplicity - simpler is better

 Continuous improvement – often using kaizen blitz

 Visibility – all waste must be visible to be identified and eliminated

 Flexibility - to adapt to changes in environment

Three Elements of JIT 7

Three Elements of JIT - cont'd

 JIT manufacturing  focuses on production system to achieve value-added

manufacturing

 TQM  is an integrated effort designed to improve quality

performance at every level

 Respect for people  rests on the philosophy that human resources are an

essential part of JIT philosophy

Role of Inventory Reduction

 Inventory = Lead Time (less is better)

 Inventory hides problems

Elements of JIT Manufacturing

 JIT Manufacturing is a philosophy of value-added manufacturing

 Achieved by focusing on these elements:  Inventory reduction - exposes problems

 Kanbans & pull production systems

 Small lots sizes & quick setups

 Uniform plant loading

 Flexible resources

 Efficient facility layouts

JIT Manufacturing: The Pull System 11

Number of Kanbans Required

SDT  N

N = number of containers D = demand rate at the withdraw station T = lead time from supply station C = container size S = safety stock

down?or up round:Question

containers kanban 4.4 25

10(200)(.5)

SDT N

bottles 10.5)0.10(200)(d)(T)0.10(deman S

containerper bottles 25C

hour .5minutes 30T

hourper bottles 200D

:Solution

 











Computing the Number of Kanbans: an aspirin manufacturer has converted to JIT manufacturing using kanban containers. They must determine the number of containers at the bottle filling operation which fills at a rate of 200 per hour. Each

container holds 25 bottles, it takes 30 minutes to receive more bottles, safety stock is 10% of demand during LT.

Tip: round up = would provide additional slack round down = need to make improvements in operations

Variations on Kanban Production

 Kanban boxes  space on factory floor for storing supplies

 Flags (signal kanban)  used to indicate when supplies need to be ordered

 Supplier kanbans  brings filled containers to point of usage in factory/picks up

empty containers

Small Lot Sizes & Quick Setups

 Small lots mean less average inventory and shorten manufacturing lead time

 Small lots with shorter setup times increase flexibility to respond to demand changes

 Strive for single digit setups- < 10 minutes  Setup reduction process is well-documented

 External setup- do as much preparation while present job is still running; thus can be performed while machine is still running

 Internal setup- simplify, eliminate, shorten steps involved with location, clamping, & adjustments; requires the machine to be stopped in order to be performed

 Ultimate goal is single unit lot sizes

Uniform Plant Loading

 A “level” schedule is developed so that the same mix of products is made every day in small quantities

 Leveling the schedule can have big impact along whole supply chain

Flexible Resources

 Moveable, general purpose equipment:  Portable equipment with plug in power/air

 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

Facility Layouts

 Workstations in close physical proximity to reduce transport & movement

 Streamlined flow of material

 Often use:

 Cell Manufacturing  Placement of dissimilar machines and equipment together to produce

a family of products with similar processing requirements

 U-shaped lines  allows material handler to quickly drop off materials & pick up

finished work; flexibility

TQM

 Product versus process

 Quality in JIT is centered on building quality into the process

 Quality at the source - sequential inspection

 Jidoka - authority to stop line

 Poka-yoke - fail-safe all processes

 Preventative Maintenance:

 Regular inspections and maintenance to keep machines operational  Costly, yes but less expensive than

unexpected machine breakage.

 Work environment

 perform maintenance as part of their regular work

 Care of equipment and well- trained workers are very important.

Respect for People

The Role of Employees:  Genuine and meaningful respect for employees

 Willingness to develop cross-functional skills

 Associates gather performance data; make production and quality decisions

 Bottom-round management

 consensus management by committees or teams

 Quality circles

 small volunteer teams that solve quality problems

 Everyone is responsible for Quality and preventive maintenance

Respect for People - cont’d

Lifetime Employment:

 Everyone feels secure/is empowered

 Everyone is responsible for quality: understand both internal and external customer needs

Respect for People cont’d

The Role of Management:  Responsible for culture of mutual trust  Serve as coaches & facilitators  Responsible for developing workers  Provide multi-functional training  Facilitate teamwork

 Support culture with appropriate incentive system including non-monetary

Respect for People - cont’d

Supplier Relationships

 Single-source suppliers

 Can supply entire family of parts; external factory

 Build long-term relationships with small number of

suppliers

 Suppliers locate near customer

 Fewer contracts

 Cost and information sharing

 Work together to certify processes

Benefits of JIT

 Reduction in inventories

 Improved quality

 Reduced space requirements

 Shorter lead times

 Lower production costs

 Increased productivity

 Increased machine utilization

 Greater flexibility

Implementing JIT

 Starts with a company shared vision of where it is and where it wants to go

 Management needs to create the right atmosphere

 Implementation needs a designated “Champion”

Implementing JIT – cont'd

Implement the sequence of seven steps: 1. Make quality improvements

2. Reorganize workplace

3. Reduce setup times

4. Reduce lot sizes & lead times

5. Implement layout changes

6. Switch to pull production

7. Develop relationship with suppliers

JIT in Services

Many JIT concepts also apply to Service companies  Improved quality such as timeliness, service consistency, and

courtesy

 Uniform facility loading to provide better service responsiveness

 Use of multifunction workers

 Reduction in cycle time

 Minimizing setup times and parallel processing

 Workplace organization

JIT & Lean Systems: How it all Fits Together

JIT: an overriding philosophy that affects all other business decisions

 Quality improvements (chs 5 & 6)  Partnering with suppliers (ch 4)  Changing job designs (ch 11)  Facility layout (ch 10)  Changes in production process (ch 3)  Changes in inventory (ch 12)

JIT Across the Organization

JIT eliminates organizational barriers and improves communications

 Accounting changes or relies on activity-based costing  Marketing by interfacing with the customers  Finance approves and evaluates financial investments  Information systems create the network of information

necessary for JIT to function

Chapter 7 Highlights

 JIT is a philosophy that was developed by the Toyota Motor Company in the mid-1970s. It has become the standard for many industries by focusing on simplicity, eliminating waste, taking a broad view of operations, visibility, and flexibility. Three key elements of this philosophy are JIT manufacturing, total quality management, and respect for people.

 JIT views waste as anything that does not add value.

Chapter 7 Highlights - cont’d

 Traditional manufacturing systems use “push” production; JIT uses “pull” production. Push systems anticipate future demand and produce in advance in order to have products in place when demand occurs. Pull systems work backwards. The last workstation in the production line requests the precise amounts of materials required.

Chapter 7 Highlights - cont'd

 JIT manufacturing is a coordinated production system that enables the right quantities of parts to arrive when/where they are needed. Key elements of JIT manufacturing are the pull system and kanban production, small lot sizes and quick setups, uniform plant loading, flexible resources, and streamlined layout.

Chapter 7 Highlights - cont'd

 TQM creates an organizational culture that defines quality as seen by the customer. The concepts of continuous improvement and quality at the source are integral to allowing for continual growth and the goal of identifying the causes of quality problems.

Chapter 7 Highlights - cont'd

 JIT considers people to be the organization’s most important resource.

 JIT is equally applicable in service organizations, particularly with the push toward time-based competition and the need to cut costs.

 JIT success is dependent on inter-functional coordination and effort.