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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

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

Number of Kanbans Required

N = number of containers

D = demand rate at the withdraw station

T = lead time from supply station

C = container size

S = safety stock

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:

Make quality improvements

Reorganize workplace

Reduce setup times

Reduce lot sizes & lead times

Implement layout changes

Switch to pull production

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.

down?

round

Question

containers

kanban

4.4

(200)(.5)

bottles

.5)

0.10(200)(

d)(T)

0.10(deman

container

per

bottles

hour

minutes

hour

per

bottles

200

Solution