ORG MAN FINAL PAPER

Learning Objectives

After completing this chapter, you should be able to:

• Understand the relationship among just-in-time, lean systems, and the Toyota Production System.

• Explain the basic concepts of just-in-time (JIT).

• Describe the “pull” system.

• Explain how JIT simplifies a firm’s operations.

• Discuss the relationship between JIT and planning.

• Apply the concept of JIT to service operations.

• Discuss strategic planning and JIT.

11 .Thinkstock/iStockphoto

Just-in-Time and Lean Systems

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CHAPTER 11Section 11.2 Fundamental Concepts of JIT

11.1 Foundations of Just-in-Time and Lean

The Japanese automaker Toyota is often credited with the conceptual development of just-in-time (JIT) production, but the roots of this system can be found in the development and application of the assembly line where work is organized in a con- tinuous flow, and inventory and wasteful activities are removed. Toyota claims that the original concept of JIT was used by Henry Ford, who applied these concepts to improve automobile assembly more than 100 years ago. While the United States grew lax in its application of these concepts after World War II, the Japanese grasped these ideas, merged them with Deming’s (1986) and Juran’s (1988) quality management, and incorporated this approach into its supply chains. This was called the Toyota Production System, and it is the basis for JIT. JIT is used by many organizations throughout the world, including GM, Apple, and IBM. The basic techniques underlying JIT have now evolved into the concept known as lean systems, which was conceptualized by Womack and Jones (1990). It is reasonable to argue the development of JIT and lean stand on the shoulders of the Toyota Production System and the Ford Motor Company. Today, JIT and lean systems are being implemented through the entire supply chain, making these techniques powerful tools for cutting costs, reducing time, and improving quality.

When the success of Japanese companies first brought attention to JIT, many people outside of Japan immediately classified it as an inventory control system. JIT was often referred to under other names, including “stockless production” and “zero inventories.” Lowering levels of inventory is one possible approach to implementation, but JIT can also be much more than another system for controlling inventory. Some companies that are strong believers in the entire JIT philosophy find it amounts to a philosophy of how an entire company should operate. Thus, JIT is defined as a philosophy of operation that seeks to maximize efficiency and eliminate waste in any form. In its broadest sense, JIT influences all parts of a company, including purchasing, engineering, marketing, person- nel, and quality control, and can determine the relationships among the company, its sup- pliers, and its customers. The benefits of JIT can carry far beyond cost savings due to reduced inventories, extending into a company’s strategic planning. Today, this broader view of JIT is often referred to as lean manufacturing, lean thinking, lean systems, or, simply, lean.

11.2 Fundamental Concepts of JIT

Experts disagree on the key components of JIT because implementation can range from a very narrow emphasis focusing on inventory control or shop floor schedul-ing to a broad organizational philosophy. The following items are generally accepted components of JIT.

Generating Flow Inventory represents a huge capital investment that ties up money a company could put to other uses. By decreasing inventory investments, a company could free up capital to purchase better equipment, develop new product lines, or give its employees raises. Any unnecessary inventory deprives a company of more beneficial ways to use the money.

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CHAPTER 11Section 11.2 Fundamental Concepts of JIT

.Digital Vision/Thinkstock

Oil refineries use a continuous flow process in which work-in- process inventories are kept to a minimum, and material flows smoothly from one processing step to the next.

For an automobile manufac- turer, eliminating unnecessary inventory may mean that no inventory of tires would be kept in stock. Instead, the four tires for a car would arrive at the moment they must be mounted on the rims, just before being put on the car as it rolls down the assembly line. No inventory of tires is required. Further, there would be no inventory of any other parts for the car. Instead, parts would be delivered from suppliers or from the manufac- turing operation for those parts only when needed and only in the quantity needed for that car. Throughout the entire opera- tion, there would be no unnec- essary inventory—only work-in-process inventory destined for immediate use at the next processing operation.

How would this work in theory? A worker finishes a radiator part and immediately hands it to another worker, who combines that part with others to produce an assembled radia- tor. As soon as the radiator is finished, it gets handed to another worker, who puts it on an automobile rolling down the assembly line. All along the way, the same thing happens as parts and subassemblies are produced only when needed and only in the quantities needed for immediate use.

JIT allows materials to flow in an assembly process similar to a continuous flow process, such as at an oil refinery. At a refinery, work-in-process inventories are kept to a mini- mum, and material flows smoothly from one processing step to the next. The difference is that a company’s objective with JIT is to make this smooth, uninterrupted flow move from the last tier in the supply chain to the final customers.

Figure 11.1 presents a useful analogy. In this figure, parts, materials, subassemblies, and final products are likened to water. If there are many pools in which this water can collect as inventory, then the flow will not be smooth and swift, but will be like a series of quiet, stagnant ponds, as shown at the top of Figure 11.1. An objective of JIT is to eliminate these ponds and produce a smooth, rapid flow—like the mountain stream shown at the bottom of the figure.

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CHAPTER 11Section 11.2 Fundamental Concepts of JIT

Figure 11.1: Water analogy of JIT

Stagnant Ponds without JIT

Smooth Flow with JIT

Inventory Inventory Inventory

Suppliers

Customers

Customers

Raw materials, parts, subassemblies

Suppliers

This same concept applies to most service operations. For example, when a university processes an application to its graduate school, the paperwork, whether it is paper or electronic, follows a path for review and approval. In a poorly designed process, the paperwork suffers delays waiting for additional information or decisions to be made. In a well-designed flow process, the parts of the organization work together in a coordinated manner to make this decision quickly. There are only a few hours of real work to process, review, and approve or reject an application. In a poorly designed process, this can often take months from the time the application is received until the decision is made.

Simplified Production Processes Eliminating inventory is often much more difficult than it may seem. A certain machine may take five hours to readjust (set-up time) whenever the company switches from mak- ing one part to making another. If only one unit is made at a time, more time will probably be spent readjusting the machine than making parts. The answer to this problem is to sim- plify—either by buying a more general-purpose machine that can easily be changed from making one part to making another, or by simplifying the readjustment process in some way. Companies that use JIT often have many general-purpose machines and have devel- oped simple ways of switching them from making one part to making another. Often, this set-up time can be reduced to less than a minute. Some companies have eliminated set-up time altogether by using one simple machine for each part, instead of trying to do all parts on one complex, multipurpose machine.

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CHAPTER 11Section 11.2 Fundamental Concepts of JIT

Another problem encountered in JIT has to do with the movement of materials. In the previous section, one worker handed a finished radiator part to another worker, who assembled the finished radiator. But, what if those workers are on opposite sides of the plant and an elaborate automated handling system has been used to move the radiator? A large amount of inventory builds up in the factory. Again, the answer is to simplify the process by moving the workers so they are in close proximity. This eliminates the need for an expensive material handling system and reduces the level of inventory. Many com- panies implementing JIT have eliminated complex material-handling systems and rear- ranged the plant so that workers could simply move parts by hand from one operation to the next.

Most companies using traditional purchasing methods will buy large quantities from their suppliers once every month or every couple of months. These transactions usually involve much paperwork, such as purchase requisitions, packing slips, bills of lading, and invoices for each order. A company using JIT, which sometimes places orders with suppli- ers several times per day, would be deluged in paperwork under this traditional approach to purchasing. Many companies have used blanket purchase requisitions, which authorize a vendor to supply a certain total quantity spread out over a certain time to avoid such a problem. Individual orders may be initiated by phone calls, electronic data interchange, or by some other method.

Uncovering Problems Buried by Inventory While inventory reduction is the most obvious aspect of JIT, its most valuable benefit is that it forces a company to uncover problems and inefficiencies in its operations. To see why, consider the electric power supplied to a home. The flow of electricity occurs only in response to a need for power, such as turning on a light. There is no inventory of electricity anywhere between the house and the generating plant; the electricity is supplied just in time. Now suppose that something occurs between the generating plant and the house— maybe a wire goes down or a transformer malfunctions. No matter what the problem, the homeowner becomes aware that something is wrong when there is no electricity. If this happens to enough people, the electric company will be deluged with calls; a crew will be dispatched immediately to find the problem and remedy it. The situation is very similar for a company operating under JIT. With little or no inventory, any problem that disrupts the flow of work will become immediately obvious to everyone as work centers must shut down for lack of materials. Attention will immediately focus on the problem, and all effort will be devoted to solving that problem. In addition, because it is realized that produc- tion will again be disrupted if the problem re-occurs, effort will be devoted to providing a long-term solution, not just a quick fix.

The water analogy used in Figure 11.1 also illustrates this point. As before, parts and materials are represented by water. But in this example, potential problems are the rocks below the water, as shown in Figure 11.2. Some of these rocks may be barely visible from the surface of the water. These are the problems that are present in the plant today. Other rocks may be totally obscured by the water. These rocks may represent quality problems, machine-breakdown problems, or any other problem that can disrupt production. If the water level is lowered, that is if inventory is removed, the rocks become visible, which means that these problems surface, and disrupt the flow in the plant. It is best to identify the problems first, remove them, and then decrease inventory.

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CHAPTER 11Section 11.2 Fundamental Concepts of JIT

Figure 11.2: Problems hidden by inventory

Rocks can be seen and removed when the water level is lowered

Inventory

An Emphasis on Quality Quality is one problem that can be especially disruptive in a JIT system. Refer to the exam- ple of the radiator assembly operation in an automobile factory. Suppose the worker mak- ing radiator parts turns out a defective part. When the next worker tries to assemble that part on the radiator, it won’t fit. This immediately causes a problem because there will now be no assembled radiator to put on the next car. The assembly line will come to a halt because of one bad part.

If these parts were produced in large batches, then the worker assembling radiators could place the bad part in the defective pile with other bad parts and reach into the batch for a good part. There would be no immediate signal that a problem exists and no incentive to change anything or to improve the process to avoid making defective parts. Production decisions that generate large amounts of work-in-process inventory allow a company to continue producing and never realize a quality problem exists. The company does not realize how much better and more efficiently it could be operating.

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CHAPTER 11Section 11.3 The JIT “Pull” System

Improvement as an Organizational Philosophy The objective of eliminating waste in any form is difficult to achieve. No company will ever reach the goal of eliminating all waste, but it remains a goal toward which compa- nies should continuously pursue. A company operating under JIT is constantly working to improve efficiency, reduce waste, and smooth the flow of materials. When working toward those ends, the company will uncover any problems and aim to find better ways to produce its products.

Companies that have been extremely successful with JIT have not stopped trying to improve. These companies extend some aspects of JIT to their suppliers—and to their cus- tomers—once their own systems have been put in place. Additionally, efforts have been undertaken to keep demand at the constant, uniform rate that is needed for a smooth flow from supplier to customer. Continuous improvement is also a component of total quality management.

11.3 The JIT “Pull” System

Although the differences and similarities between material requirements planning (MRP) and JIT are discussed in detail later in this chapter, there is one very important difference that is relevant here. Most traditional production systems, including MRP, use what is called a schedule “push” approach to move mate- rials through the system. A push system moves materials through the processing operations based on a schedule. An order to produce a part or product enters the system at a scheduled time, and is pushed from one work center to another according to that schedule.

MRP is an improved push system in the sense that each order release is based on requirements generated by the master schedule. Thus, materi- als are pushed through the system in an effort to meet that schedule. With MRP, decisions are made to ensure that the outcomes on the master sched- ule, which occur at some future time, are actually achieved.

JIT uses a “pull” system to move parts and mate- rials. Instead of pushing materials through pro- cessing based on a preplanned schedule, a pull system moves materials based on actual needs at successive work centers. Thus, if work center A provides parts to work center B, work center A will produce only in response to an actual need for

.Tim Hawley/Getty Images

Instead of pushing materials through processing based on a preplanned schedule, JIT uses a “pull” system moving parts and materials based on actual needs at successive work centers.

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CHAPTER 11Section 11.3 The JIT “Pull” System

more parts at workcenter B. This pull system concept starts with customer demand, which pulls finished products from the company. As those finished products are made, they pull the appropriate materials through processing. Materials and parts are also pulled from vendors and suppliers.

One way of comparing a push system and a pull system is with the analogy of a rope. The material moving through the various production processes is considered the rope. Under MRP, coils of rope (batches) are created at various machines and workcenters throughout the plant. MRP is used to ensure that all coils of the rope are moved forward through the processes at the appropriate time, preventing the coils from building up at any one spot. With JIT, the rope is not coiled, but remains as one long piece running through all pro- cesses. To move the rope forward, one simply has to pull on the end; there is no need to coordinate movement of coils because there are no coils, as shown in Figure 11.3. The key element of a pull system is some means for communicating backward through the pro- duction process whenever more parts or materials are needed at “downstream” workcen- ters. In some instances, workers can determine visually when the next workcenter needs to be supplied. Workcenters, however, are often too far apart physically for direct visual communication.

Figure 11.3: Push systems with MRP

Workcenter 1

Workcenter 3

Workcenter 2

Workcenter 4

Workcenter 5

Workcenter 1

Workcenter 3

Workcenter 2

Workcenter 4

Workcenter 5

Pull System with MRP

Pull System with JIT

Coordinate movement

of coils

Just pull on one end to

move the rope

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CHAPTER 11Section 11.3 The JIT “Pull” System

Kanban Systems Within a JIT system, there are several ways that pull signals can be communicated. One of the best known is a method developed by Toyota based on cards, or kanban (con-bon), as they are called in Japan. Kanban is a Japanese word that can refer to a sign or a marker and means “visible record.” (Note that the word kanban is like the word “sheep” in that the plural has no letter s on the end.) In the operations context, the word kanban refers strictly to a card that is used to signal the need for more materials, parts, or subassemblies at downstream operations (see Figure 11.4).

Figure 11.4: Example of a kanban card

M.A.N.

PART NUMBER DESCRIPTION

CONTAINER

Ship To:

Card Seq.

HARLEY-DAVIDSON MOTOR CO. INC. 11700 W. Capitol Drive Milwaukee, WI 53201

QUANTITY

ROCKER ARM

PALLETAINER 800

3

17389 — 83A 903 DELIVERY TO

SHIPPING AUTHORIZATION

Standard Containers of Parts

Theoretically, the ideal situation with JIT is to produce one unit at a time. However, this usually is not possible. For instance, the travel time to and from a supplier may be much longer than the time between requirements for the part from that supplier, or there may be an imbalance in the production rate between a particular workcenter and the preceding workcenter that supplies it. In these and other cases, it is necessary to move containers of parts rather than single units. A kanban is most often associated either with the movement of a container of parts or with the production of parts to fill an empty container. Accord- ingly, two types of kanban are generally used, the conveyance kanban and the production kanban.

Conveyance Kanban

The conveyance kanban, or C-kanban, is an authorization to move a container of parts or materials. Without it, nothing can be moved. The way a C-kanban works is depicted in

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CHAPTER 11Section 11.3 The JIT “Pull” System

Figure 11.5. As the figure shows, any container with parts in it cannot be moved without the C-kanban attached.

Figure 11.5: Single kanban system

Step 1. Worker at workcenter 2 opens container of parts, removes C-kanban and places it in a box.

Step 2. Material handler takes C-kanban to workcenter 1 and puts it on a full container of parts.

Step 3. Material handler moves container with C-kanban to workcenter 2.

Step 4. When workcenter 2 empties a container, the empty container is taken back to workcenter 1 and step 1 is performed again.

Empty

From workcenter 1 to workcenter 2

Workcenter 1

Outbound stock point

Outbound stock point

Inbound stock point

Inbound stock point

Kanban box

Workcenter 2

Many companies, notably Kawasaki in the United States, use only the C-kanban. This sin- gle-card kanban system is still an effective way to control inventory. The number of full containers is limited by the number of C-kanban, and inventory at the using workcenter (work center 2 in Figure 11.5) can be replenished only when a container is emptied. Thus, that center 2 cannot possibly hoard extra parts. The feeding work center (work center 1) usually produces a schedule, which may be generated through MRP. This schedule is generally based on the expected day’s requirements for work center 2. However, limited storage space at work center 1 is used to shut off production at that work center if parts are not being used at the expected rate (for example, if work center 2 is shut down for some reason). In order for the single-card kanban system to work, the following rules must be observed:

1. Containers holding parts can be moved only when a card is attached. 2. Standard containers must always be used.

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CHAPTER 11Section 11.4 Effects of JIT on Production

Production Kanban

Some companies use a two-kanban system that combines the conveyance kanban with a production kanban. The production kanban, or P-kanban, is used to authorize the produc- tion of parts or subassemblies. The two-kanban system, which combines the C-kanban and the P-kanban, is known as a dual-card kanban system. Its major advantage over single- card kanban is that it allows greater control over production, as well as over inventory, because both production and withdrawal of inventory are directly connected to need. In contrast, a single-card system bases production on a plan, which may lead to excess inven- tory if actual need does not match the plan.

11.4 Effects of JIT on Production

The objective of JIT is to eliminate the pools of inventory and obtain a smooth, steady flow of materials from supplier to customer. Within a plant, that flow is much like creeks and rivulets that converge into streams—and streams that eventually con- verge into rivers. In this analogy, the streams could be made up of processing operations for individual parts. Those parts flow together into subassemblies, which are then even- tually joined together as finished products. The objective of JIT is to keep all those rivers and tributaries flowing smoothly without any pools of inventory. The following sections describe some ways to achieve that objective.

Highlight: ProMedica Uses Kanban to Manage Inventory at its Hospitals

ProMedica manages approximately two dozen hospitals in the Midwest, and it uses a two-bin kanban system to manage much of its inventory. This system is used for everything from bedding to bandage to surgical gowns. Pharmaceuticals and high-cost surgical items such as hip sockets are not part of this system, at least not yet.

The process works in the following way. Each item is stored at the hospital in two bins. A quick glance at the bins tells the order taker whenever one bin is empty and an order should be placed with Pro- Medica’s medical supplier, Seneca. The barcode on the bin is scanned, and the order is placed. The larger hospitals in the system receive two shipments each day from its medical supplier. As a result, the amount of on-hand inventory at hospitals is kept low. This is an advantage not only because inventory investment is reduced, but also because space is at a premium and the available space has very high opportunity costs. ProMedica is a good example of how JIT works in service businesses.

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CHAPTER 11Section 11.4 Effects of JIT on Production

Facility Layout The top of Figure 11.6 shows each part moving from one machine area to another. This requires a lot of material handling and also encourages the production of each part in large batches. But when the machines are rearranged, as shown at the bot- tom of Figure 11.6, each part can flow directly from one processing step to the next. This type of layout also allows the production of small batches because each group of machines is dedicated to just one part. Also, there will not be interference between two parts that must both be processed on the same machine. It is this type of interference that leads to long queues of parts to be processed. McDonald’s, Domino’s Pizza, and many other fast-food restaurants are organized as shown in the “After” part of the diagram in Figure 11.6. The key activities—shaping the crust, adding the top- pings, baking the pizza, and removing and box- ing it—flow smoothly with a minimum amount of set-up time, handling, and movement. The pro- cess flows efficiently and without waste because of the layout.

Figure 11.6: Rearranging machine layout for smoother flow

Part B

Part A

Part B Part A

After

Drill Mill

Mill Drill Mill Lathe

Lathe

Before

Drill dept. Lathe dept.

Milling dept.

.Thinkstock/iStockphoto

The flow within a plant can be compared to creeks that run into streams and eventually converge into rivers. Using this analogy, streams could be made up of processing operations for individual parts that flow together into subassemblies, which are then joined together as finished products.

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CHAPTER 11Section 11.4 Effects of JIT on Production

Reducing Set-up Time Set-up time is the time it takes to readjust a machine or group of machines after mak- ing one particular part until acceptable units of another part are produced. Set-up time may involve changing the tooling, adjusting the equipment, checking that the new part is being made to specifications, and then readjusting the equipment if it is not.

Set-up time is an important consideration in JIT because it may disrupt the smooth flow of materials. For example, a group technology (GT) production system may be used to make several different, but related, parts. The idea behind GT is that each part follows the same essential processing sequence. However, each part may require different tooling in the machines or a different machine setting. By keeping similar parts together, set-up time is reduced and the flow of materials is not interrupted. If excessive time is taken for the set up, then the flow of materials will be stopped—causing downstream processing operations to pause until the flow resumes. If “upstream” operations continue unchecked, unnecessary inventory will build up in the system, much as water builds up when a dam is placed across a river.

Thus, another objective in a JIT system is to reduce set-up time as much as possible. Com- panies should:

• Closely examine each set up to determine steps that can be eliminated or improved by changing the process.

• Prepare as much ahead of time as possible. All tools and equipment needed for the set up should be readily available in predetermined locations.

• Try to do as much set up as possible with the machine running. Stop the machine only when absolutely necessary.

• Use special equipment to shorten downtime whenever possible. • Practice and refine the set-up procedures. • Mark machine settings for quick adjustment.

Table 11.1 indicates the set-up time reductions that several companies have been able to achieve by using the procedures described above. These changes did not occur overnight, but their effects were dramatic. Some companies felt initially that it was not possible to reduce set-up times by such a large amount, but Table 11.1 shows what can be achieved with hard work and dedication.

Table 11.1: Set-up time reductions

Company Machine Original Set-up Time

Reduced Set-up Time

Toyo Kogyo Ring-gear cutter 8 hrs. 10 min.

Hitachi Die-casting machine 1.5 hrs. 5 min.

Omark Industries Punch press 4 hrs. 3 min.

General Electric Stamping press 50 min. 2 min.

Black & Decker Punch press 1 hr. 1 min.

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CHAPTER 11Section 11.4 Effects of JIT on Production

As companies have sought ways to reduce set-up times, one area that is receiving more attention is product design. In the past, design engineers tended to worry little about how the product was made. However, challenges concerning the ease of production have begun to attract the attention of designers, and set-up time reduction is one of those chal- lenges. It is may be possible to reduce set-up time, or even eliminate set ups altogether. A company can reduce the number of different parts used to produce a piece of equipment by using the same parts in different final products. For example, Black & Decker might use the same electric motor in several different drills and power saws. A company can also reduce differentiation among parts so the set-up time is greatly reduced.

Motorola and other companies that manufacture electronic products have found that set ups can be eliminated by using a common circuit board for different products. Previously, the automated equipment that inserts parts into the circuit boards needed an extensive set up every time it processed the board for a different product. These companies need to change only the components and insertion pattern, both of which are easy to modify, by using one common board with different components.

One question that may be asked at this point is: “How short must set-up time be?” The answer is that it depends. Some operations may have enough slack that the existing set- up time is not disrupting material flow. In those cases, nothing needs to change. In other operations, set-up time may cause problems. The goal is to try to understand what prob- lems would surface if inventory is removed from the system. If those problems involve set-up time on a machine, then that set-up time should be reduced.

Total Preventive Maintenance Equipment failure is another possible source of disruptions to the smooth flow in a JIT sys- tem. Machines that are not properly lubricated or maintained can produce defective parts without breaking down. To prevent either of these results from occurring, companies have adopted total preventive maintenance (TPM), also called total productive maintenance.

TPM involves three main components:

1. An emphasis on preventive maintenance: Efforts are undertaken to avoid equipment breakdowns by frequent inspection, lubrication, and the use of proper operating techniques.

2. The allocation of time each day for maintenance: Companies sometimes allow one entire shift for maintenance, or set aside specific time during each shift.

3. Operator responsibility for maintenance: Instead of assigning this responsibility to a maintenance department, operators are trained to perform all but the most com- plicated maintenance on the machines they operate.

Employee Empowerment Many companies, especially those that are highly unionized, find their workforce man- agement procedures complicate the operations function. Empowering employees to take more responsibility and exercise more authority in the workplace can eliminate many

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CHAPTER 11Section 11.5 Planning in JIT Systems

.Photodisc/Thinkstock

Many fast-food companies empower and engage employees by training them to do a variety of tasks in order to meet shifting demand patterns.

workforce management prob- lems. For example, if employees are able to perform more than one job, resources can be shifted as needed or one employee can operate several machines. Many fast-food restaurants use this approach to meet shifting demand patterns.

Employee empowerment also means training employees to work in small problem- solving groups and allowing those groups to solve problems asso- ciated with the production pro- cess. If the employees who must produce a good or service are the same employees who work to improve the production pro- cess, then the process is greatly simplified and better solutions will result.

11.5 Planning in JIT Systems

It may seem that JIT is a complete departure from the planning concepts introduced earlier in this text. Actually, companies that use JIT successfully follow most of the planning steps that were mentioned previously, from strategic planning to master scheduling. In addition, it is possible to combine JIT and MRP; but some changes must be made in the MRP planning and scheduling process under JIT.

Operations Planning and Master Scheduling Planning and scheduling are easier with JIT because requirements for parts and materials can be tied directly to each unit of the end item. If 50 units of the end item will be made during a given day, then enough parts and subassemblies must be ordered for that day to make the 50 units. Because JIT requires having only what is needed when it is needed, parts are usually not ordered in large batches. Instead, a steady stream of material in small batches is maintained at a rate that will match the production of end items.

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CHAPTER 11Section 11.5 Planning in JIT Systems

The Aggregate Plan

The aggregate production plan for a company using JIT is nearly the same as that for any other company that doesn’t use JIT, except that the JIT planning horizon may be some- what shorter. Production is generally planned by product families on a monthly basis for about one year into the future. This plan is used for determining general workforce requirements and overall capacity needs, as well as for ordering any parts or materials that have extremely long lead times.

The Master Schedule

The details of a master schedule for a company using JIT will be the same as that for most other companies that follow a master schedule. That is, planning is usually done in weekly time buckets and by individual end items or product options. The master schedule is usu- ally developed with a 2- to 3-month planning horizon instead of the 6- to 12-month hori- zon used for MRP. The master schedule is also frozen for approximately one month into the future under MRP, whereas this time period may be less with JIT due to the shorter lead times.

In an MRP environment, the master schedule is what drives the MRP derivation of planned order releases. However, in JIT, the pull system often eliminates this need for order release planning because parts and materials will be produced only in response to a downstream signal. The master schedule is used only when items with long lead times must be ordered. Thus, in a JIT system, the master schedule is primarily an intermediate step in reaching the final assembly schedule.

The Final Assembly Schedule The final assembly schedule is an exact statement of the final products that are to be assembled. The final assembly schedule is stated on a daily basis, but most often goes only about a week into the future. The final assembly schedule indicates the quantities of component parts that will be made each day, because lead times are usually short in a JIT environment. The JIT philosophy of eliminating unnecessary inventory has a major impact on the final assembly schedule. In addition to eliminating work-in-process inven- tory, it is important that any unnecessary finished-goods inventory be eliminated. How- ever, this is hard to do when a company makes more than one finished product.

The approach that has been followed in traditional manufacturing systems is to make a large number of one product before switching over to another. It means that the inventory of each finished product will increase when that item is being produced, but then decrease again when other products are being made, as shown in Figure 11.7.

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CHAPTER 11Section 11.5 Planning in JIT Systems

.PR NEWSWIRE/AP Images

If a company makes several end items such as Apple’s different iPod models, it is desirable to distribute the production of each model evenly throughout each day.

Figure 11.7: Finished-goods inventory with long production runs

Product A being produced

Time

In v e

n to

ry o

f p

ro d

u c

t A

Other products being produced

This approach is inefficient because it leads to high levels of finished-goods inventory at some times and very low levels—with the possibility of being unable to satisfy customer demand—at other times. A better approach is to level the final assembly schedule. A level assembly schedule means that the number of units of each end product produced at a time is as small as possible, and that total daily production of each matches average daily demand during the scheduling horizon. That is, if the scheduling horizon is 20 working days, and demand during that period is expected to be 300 units, a level schedule would require that 15 units (300/20) be produced each day.

A level assembly schedule requires that the smallest reason- able number of units of each end product should be produced at a time. Thus, if 15 units of a prod- uct are to be made during a given day, those 15 units should be spread throughout the day. This even spread is achieved through mixed-model sequencing.

Mixed-Model Sequencing Mixed-model sequencing is a procedure for maintaining the uniform production required by a level assembly schedule. If a company makes several

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CHAPTER 11Section 11.5 Planning in JIT Systems

Problem

A company produces three products. Expected demand for each during the next 20 working days is as shown below:

Product Expected Demand Daily Requirements

A 420 420/20 5 21

B 280 280/20 5 14

C 140 140/20 5 7

The daily requirements are obtained by dividing expected demand over the planning horizon by the number of working days in the time horizon. To maintain a level schedule, the company needs to plan so that each product’s daily requirements will be produced every day, and evenly spread through- out the day, if possible. It is also desirable that a set sequence of products be made, and that this sequence be repeated throughout the day.

The trick in solving this problem is to find the largest integer that divides evenly into each prod- uct’s daily requirements. In this example, the number is seven. Thus, the company should develop a sequence that will be repeated seven times each working day.

Product Daily Requirements/7

A 21/7 5 3

B 14/7 5 2

C 7/7 5 1

The result of dividing the daily requirements for each product by the largest integer that divides into each evenly is the number of times each product must be repeated in the sequence. Thus, product A should appear three times, product B twice, and product C once. Developing the sequence takes some trial and error, but the following is one possibility that would satisfy the company’s objectives:

A-B-A-B-A-C

This sequence would be repeated seven times each day to produce the required 21 units of product A, 14 units of B, and seven units of C, while still leveling the assembly schedule. (continued)

different end items (different products or different models of the same product), it is desir- able to spread the production of each evenly throughout each day. However, in order to keep the system running as smoothly as possible, there should be some continuity in the sequencing of those end items. For example, if four different products (A, B, C, and D) are produced, then the ideal schedule would produce them in some sequence such as A-B- C-D and to repeat that same sequence throughout the day for each day in the planning horizon. But sometimes demand for one product will be greater than for others. In that case, the sequence may need to be varied somewhat.

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CHAPTER 11Section 11.5 Planning in JIT Systems

Calculating Cycle Times

The purpose of obtaining a level assembly schedule is to smooth out the production of each end item so that it will closely match demand. A level schedule also smoothes out the requirements for component parts that go into each finished product. This smoothing makes the pull system work better because demand for each part will be fairly uniform throughout the day, instead of occurring in batches, as if each finished product were made in large batches.

The flow of component parts must be adjusted to match the rate at which finished prod- ucts will be produced. For example, if one unit of product C is made every hour, it is not helpful to have a machine that makes parts for product C turning out one every two hours—or even one every half hour. The goal is to match the production rate of all com- ponents to the final assembly schedule. This is done through cycle times. Cycle time is a measure of how often a particular product is made. For example, automobile assembly lines usually have a cycle time of approximately one minute. One new car rolls off the line every minute. The cycle time of any product can be calculated as follows:

Cycle time 5 working time per day/units required per day

Problem (continued)

It should be noted in the above example that the mixed-model sequence produced is not the only one possible. Such a sequence would smooth out the production, but could also cause problems due to excessive changeovers. When the cycle time is short, it may be desirable to produce more than one unit of each end product at a time. Thus, the following sequence would also be acceptable for short cycle times:

A-A-A-B-B-C

There may be restrictions that justify producing even more units of each product at a time. For exam- ple, these products may be packed 10 per carton for final shipping. In such a case, it could be more efficient to produce 30 of A, 20 of B, and 10 of C at a time, instead of allowing partially filled shipping cartons sit idle. Regardless, the objective is to smooth out production by producing each item in the smallest reasonable quantities, given existing constraints.

Problem

For the preceding example, the cycle time is calculated by using the formula given above. Suppose the plant is in production for seven hours (420 minutes) each day, and it must produce a total of 42 units each day (21 of A, 14 of B, and 7 of C) to match daily demand. The cycle time will be:

420 minutes/42 units 5 10 minutes/unit (continued)

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CHAPTER 11Section 11.6 JIT in Service Operations

Problem (continued)

This calculation can be extended to each of the individual products in order to determine how often each unit will be produced, based on a mixed-model sequence.

Product Daily Requirements Cycle Time

A 21 420/21 5 20 minutes

B 14 420/14 5 30 minutes

C 7 420/7 5 60 minutes

This means that one product A will be produced every 20 minutes, on the average, throughout the day by using the completely level sequence developed in the preceding example. In order to make this possible, the people and machines that supply parts and subassemblies for product A must also be balanced to produce with a cycle time of 20 minutes. Likewise, the entire system must be coordinated to produce one product—either A, B, or C—every 10 minutes. In some cases, this may mean that set-up times must be reduced, or that more machines must be added. It can also mean that some machines will not produce at their capacity. It is much more desirable in a JIT system for machines to sit idle than to produce inventory that is not needed. Ideally, all resources should be used as efficiently as possible, which may mean finding ways to use the same machine to make sev- eral different parts. This increases the efficiency of the machine.

11.6 JIT in Service Operations

Although JIT originated in manufacturing, and most of the initial implementations occurred there, service organizations are now widely adopting many of its basic ideas. In fact, service organizations may have an advantage because of their lack of work-in-process and finished goods inventories. For example, retailers are focusing on maintaining smaller inventories by being able to replenish their inventory more quickly and in smaller quantities. Insurance companies are finding ways to eliminate unnecessary steps in their claims processing procedures so that customer claims are processed more quickly. Airlines are using yield management to level the demand for their flights. The JIT techniques that are most immediately relevant to services include elimination of waste in any form, such as unneeded steps in a process to review applications for insurance or improving the productivity of people who are reviewing mortgage applications.

Simplified Production Process Service operations often differ from manufacturing because customers are more directly involved, and are often active participants, in the production process. For example, ATMs allow customers to enter transaction information formerly entered by bank tellers. Because most customers are not trained employees, the process must be as simple and obvious as possible.

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CHAPTER 11Section 11.6 JIT in Service Operations

Uncovering Problems Buried by Inventory Despite that services often have no finished-goods inventory, they still may have inven- tories of supplies or even work-in-process, as with loan applications in a bank. Those inventories can hide problems just as easily as inventory in a factory can. In fact, recent studies have shown that responding quickly to customer requests is becoming an impor- tant order winner for service operations. Service organizations can work toward provid- ing the service when the customer wants it by uncovering problems through reduced inventory. Progressive Insurance has made great strides by reducing the time it takes to apply and receive approval for insurance. Quickly responding to the customer with a decision means a higher yield from the total number of applications because customers do not become disillusioned by the process and do not have as much time to consider other options. The forms, either paper or electronic, waiting to be processed are the service operations equivalent to inventory.

Value Stream Mapping Value stream mapping is a technique used to analyze the flow of materials, ideas, and information to understand how processes function. Each activity in the process is defined as value-added or non-value-added. For example, in health care, performing an ultra- sound that is needed to diagnose an illness adds value, or in a restaurant, grilling the main course adds value. Alternatively, if the person performing the ultrasound or preparing the food must make a trip to the storage closet or the refrigerator to secure items that should be available, those activities do not add value. That is, the patient or customer is willing to pay for the testing or the grilling because it has value for them. They see no value in taking the time to find items that are needed to do the work. Value stream mapping allows the organization to identify the non-value-adding activities or items and reduce or eliminate their impact on cost and time required to deliver the service, thereby delivering greater value to the customer.

Value stream mapping is useful for both manufacturing and service operations. In ser- vice operations, it allows organizations to understand how many different people and departments are involved, what their roles are, and how long tasks take to perform. The value stream map of the admissions process at a hospital could be an important tool for understanding the cost, efficiency, and customers’ satisfaction with this process. The basic steps are to:

1. Identify the product or service that should be mapped. 2. Draw a rough, current state, value stream map, which shows the current steps,

delays, and information flows required to deliver the target product or service. 3. Estimate the cost and timing at each point, as well as the value added. 4. Assess the current-state value stream map to understand its flow and points

where waste occurs to determine where processes can be improved. 5. Create a future-state value stream map using a team of people. 6. Prepare a plan to implement these improvements. 7. Work toward this future state.

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CHAPTER 11Section 11.7 Strategic Planning and JIT

11.7 Strategic Planning and JIT

Strategic planning is a vital element for any organization. The strategy is based on the firm’s strengths and weaknesses, the threats and opportunities in the external environment, and the type of product (goods and services) the company produces. The products are created by using the firm’s strengths in ways to cope with the threats and take advantage of the opportunities present in the environment. However, JIT offers some very special competitive opportunities to the company that uses it. Within this pro- cess, the firm attempts to mitigate its weaknesses or to transform them into strengths. The implementation of JIT or lean thinking is a way to help an organization build its capabili- ties, in many cases transforming weaknesses into strengths. The following list notes some of the opportunities:

• Elimination of waste • People utilization • Cost reduction • Quality and reliability • Product flexibility • Volume flexibility • Delivery dependability

Elimination of Waste Eliminating waste is a predecessor to JIT and lean thinking, and a fundamental com ponent of JIT (as well as the Toyota Pro duction System). An important step when eliminating waste is to identify which steps add value and which do not. One simple way to do this is to ask the customer which activities are valuable. A customer may be willing to pay a lawn care company for an extra service such as edging the driveway, or a manufacturer that adds a power wash cycle to its dish- washers. Customers are not willing to pay for delays when an employee is late and the rest of the lawn crew must wait or for building and storing dishwasher inventory.

Waste can be categorized in two ways as necessary, but non-value-added or pure waste. It is always difficult to determine the exact amount of each. For example, with current tech- nology some inventory is needed to make the system work. The dishwasher manufacturer will have some work-in-process inventory that is active in its assembly line because the dishwasher moves from station to station so that the line is filled with partially completed dishwashers. Also, some finished goods inventory is needed at the retail level so customers can evaluate the product and goods in transit between the manufacturer and the retailer. Companies must determine how much inventory is needed to make the current system work, and how the system can be changed to reduce the amount of inventory even further.

.Thinkstock/iStockphoto

Strategic planning is based on a firm’s strengths and weaknesses, the threats and opportunities in the external environment, and the type of product the company produces.

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CHAPTER 11Section 11.7 Strategic Planning and JIT

The following list includes seven areas of waste to consider:

1. Over-Production: producing more than customers demand. The most common cause is production of large batches of products because set-up time and costs are high. Rather than address the root cause and lower set-up time and costs, firms produce more than they currently need and store the rest for future use. This leads to all of the costs associated with storing inventory. In addition, the firms run the risk of storing inventory that is defective because the batch was not pro- duced according to specifications. Inventory may become obsolete when a part design changes before that inventory is consumed.

2. Waiting: occurs when a good is not being transported or processed. In manufac- turing operations prior to JIT, it was common for a part to be waiting for pro- cessing more than 90% of the time. In service operations, for example, patients wait for treatment in a medical center or emergency room, or customers wait for paperwork to be processed at an insurance company.

3. Transportation: moving a product or a patient from one point to another. Some part of transportation is essential, such as moving the partially completed dish- washer from one point in the assembly process to the next, or moving a patient to a treatment center or surgery. While it does not make sense with current technol- ogy to complete surgery in a patient’s room, there are ways to bring some treat- ments to the patient that lower costs and increase customer satisfaction.

4. Over-Processing: occurs when more work is done than is required by the cus- tomer. This includes using tools that are more precise, complex, or expensive than required. Customers are unwilling to pay for this extra service so they are either forced to pay more or to accept more than they want. One example is cable services that offer groups of channels that are bundled. People are forced to pay for channels they do not watch. Why should customers who don’t like or watch sports be required to pay for sports channels?

5. Inventory: represents items that are stored for future consumption. Much has already been discussed about inventory in this chapter and throughout the book.

6. Motion or Movement: activities that do not add value, such as excessive walking by a manufacturing employee or a service worker, or searching for items that are lost, such as paperwork. The time a machine operator wastes walking to the tool room or storage area for a fixture or a component could be far better utilized. Keeping needed items nearby helps to reduce this form of waste.

7. Defects: things such as scrap or rework that add cost, but no value. Defects can include goods or services that do not meet specifications, such as a house entry door that does not close without sticking, or a carpet cleaning company that must return because the job was not completed properly.

People Utilization Companies using JIT depend heavily on their employees to solve problems, but utiliza- tion of people extends even further. For instance, maintaining the smooth flow of materi- als often means that one employee may have to operate several different machines. This cross training leads to greater worker utilization. Likewise, companies using JIT examine closely any areas where waste may be present. One such area in many companies is the office staff. Efforts are usually made to find ways that managerial jobs can be combined or even eliminated—something few companies have done in the past.

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CHAPTER 11Section 11.7 Strategic Planning and JIT

Cost Reduction The JIT philosophy of avoiding waste leads logically to cost reduction. Although the cost savings associated with inventory reduction have often received the most notice, other savings may be more substantial. For instance, total quality control can reduce material costs substantially and save on the labor costs that may have been used to make defective products. A level schedule avoids costly overtime by evenly loading the plant. Likewise, extensive machine maintenance means that downtime will be eliminated, repair costs will be lower, and equipment will last longer. Overall, companies using JIT have been able to achieve much lower costs than their competitors.

Quality and Reliability Total quality management is something that can have several payoffs. In a JIT system, the goal is to eliminate all defects, which means lower costs because scrap is nearly eliminated. At the same time, customers will be happier because they will be getting higher quality products that are likely to last longer. Producing higher quality products also means fewer returned items and fewer warranty repairs, which also will result in reduced costs. The goal of constant improvement will eventually lead to production of a product that gives the customer greater value at a lower price.

Product Flexibility JIT production provides a company considerable flexibility in several ways. Producing to a level schedule means that each product is produced each day. Changes in customer demand can usually be accommodated quickly because the system is already designed to change from making one product to making another quite easily. Such is often not the case with companies that make long production runs of each product. Low work-in-process inventories also provide added flexibility. With minimal inventories in the pipeline, compa- nies can quickly switch to making different parts.

Volume Flexibility It may seem contrary to the goal of using a level assembly schedule to smooth production to argue that companies using JIT have more flexibility to change their volumes. Success- ful JIT implementation leads companies to a position in which they have greater capabil- ity to respond to sudden surges or drops in demand. Part of this flexibility is related to low inventories. A company with very little work-in-process inventory can quickly stop its production in response to a drop in demand. The ability to respond when demand increases is a result of the smooth material flows in a JIT system. Smooth flows generally mean that machines and people are being employed at a steady, uniform pace. When it is necessary to increase output, it is possible to quicken that pace.

Delivery Dependability All of the strategic aspects of JIT mentioned in this text help contribute to delivery depend- ability. Improved quality will mean that shipments to customers are not delayed because of quality problems in the product or because of delays caused by defective parts. Product and volume flexibility means that the company is better able to respond when customers suddenly change the size or product mix of their orders.

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CHAPTER 11Chapter Summary

11.8 Lean Systems

The term lean systems is often used to describe many of the aspects of JIT. In fact, many people view JIT and lean systems as interchangeable terms that mean the same thing. Others tend to view JIT as a component of lean systems. One reason for the latter viewpoint is that JIT often is defined narrowly as consisting of only the pull (kanban) system described in this chapter. However, if one takes a broader view of JIT, then it is similar to lean systems.

Current trends tend to view lean systems as extending beyond JIT, and encompassing the entire supply chain. While JIT was initially applied to a company and its immediate suppliers, lean systems extended many of the basic concepts of JIT over the entire supply chain. This is primarily a matter of perspective and application. Both lean systems and JIT can focus on eliminating non-value-added activities from the entire supply chain. The series of activities that add value, through the entire supply chain from raw materials to the final consumer, are referred to as the value stream. Lean systems focus on applying the basic ideas of JIT to this entire value stream.

Chapter Summary

• JIT and lean are closely related ideas that were built on the Toyota Production System and Ford Motor Company’s efforts to apply the assembly line concepts to car production more than 100 years ago.

• JIT is a philosophy of constant effort to eliminate waste and reduce costs. • JIT is classified as a “pull” system because materials are pulled through process-

ing operations as they are needed. This includes standardizing containers and using kanban.

• The fundamental concepts of JIT include implementing flow production, simpli- fying processes, uncovering problems hidden by inventory, emphasizing quality, and continuous improvement.

• There are many ways to simplify the production process using JIT including reorganizing the facility layout, reducing set-up time, applying total preventive maintenance, and empowering employees.

• Planning the JIT system requires organizations to produce each product fre- quently rather than to produce them in large batches and satisfy demand from inventory.

• JIT is very useful in service operations. Some service operations such as restau- rant and wholesale and retail operations have a great deal of inventory and can benefit from that facet of JIT. Other service providers have limited inventory, mostly as secondary items such as supplies. These firms can benefit from other aspects of process improvement. Value stream maps show the points where value is added.

• JIT is related to the strategic planning process because JIT can eliminate waste as well as improve productivity, people utilization, cost competitiveness, quality and reliability, product flexibility, volume flexibility, and delivery dependability. These are important strengths that should be considered as the strategic plan is developed.

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CHAPTER 11Case Studies

Case Studies

Southern Gear Company The Southern Gear Company manufactures transmissions and speed reducers used in various farm machinery and industrial equipment. The company has been working on implementing MRP for the past three years, but has not achieved the success for which it had hoped. It is now Monday morning as we join the company’s executive committee during its weekly meeting.

Barry Renter (vice-president of manufacturing): “Look, I know we haven’t achieved the results with MRP that we had expected. But, I think that’s because we haven’t been able to bring inventory under control. We still don’t have more than 90% accuracy in our inven- tory records, and that means that we’ve run out of parts when the MRP said we should have had enough. That’s why I think JIT can help us. It’s a way to eliminate the need to maintain accurate inventory records.”

Dave Ashley (vice-president of marketing): “But Barry, how can we possibly change to JIT when our customer orders jump all over the place? You know as well as I do that one problem we’ve had in implementing MRP is freezing the master schedule. Our customers expect us to meet their every whim, and they expect to be able to change their orders at the last min- ute. I just don’t think we can achieve the level schedule that I understand JIT requires.”

Al Simone (president and CEO): “Dave’s got a point, Barry. I think one of our strong points has been that we’re willing to respond quickly to customer demand even though we haven’t always been able to do so because of parts shortages. In any case, with 20 different products and 200 possible variations of those products, I think we’re forced to stick with MRP. We’re getting some significant offshore competition that’s offering lower prices than we are. I’m not sure I want to scrap a $1 million MRP system to try JIT.”

Barry: “I don’t think we have to scrap MRP. All I’m suggesting is that we continue using MRP for planning, but implement some aspects of JIT such as the kanban system. I also think we could benefit from changing to group technology. I’ve been looking at the bills of materials and routings. Even though we produce 200 different possible end items, we make those from only 50 different main parts, and many of those parts follow the same processing sequence. Part of our problem in controlling inventory has been tracking it through the long queues in the job shop. Group technology could simplify things for us.”

1. Based on the information given, would JIT be appropriate for Southern Gear? 2. Could JIT help to alleviate the problem of being unable to satisfy customer orders

on short notice? 3. Is Barry Renter correct to suggest that MRP can be used in conjunction with JIT?

If so, how would MRP function? 4. What additional information would you like to have before making a decision? 5. Which step should Southern Gear undertake first if it decides to implement JIT?

Steel Office Products Steel Office Products makes four different types of steel filing cabinets: a 3-drawer letter size, a 5-drawer letter size, a 3-drawer legal size, and a 5-drawer legal size. The company currently uses the layout shown in the first illustration below to make these products. However, plans are under way to switch to JIT production.

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CHAPTER 11Case Studies

Each filing cabinet is assembled from three basic parts: cabinet, the drawers, and the guides on which the drawers slide, as shown in the second illustration below. All cabinets use the same guides. Both letter-size cabinets use the same drawers, as do both legal-size cabinets. However, each product has its own cabinet.

Finished-goods warehouse

Inspection

F in

a l a s s e m

b ly

Guide assembly

Shear Press

Shear Press

Welding dept.

Tool crib

Painting dept.

Receiving and

raw material storage

Drawer Guide

Rollers

Cabinet

Basic Parts for Filing Cabinet

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CHAPTER 11Case Studies

The guides (two per drawer) have rollers (two per guide) on which the drawers slide. These rollers are purchased from an outside supplier, but all other component parts are made internally, using sheet steel that is purchased from a supplier. The sequence of pro- cessing operations for each part is listed below. There is no difference in production times between legal-size and letter-size, or between 3-drawer and 5-drawer cabinets, but a set up must be performed each time the switch is made from one to the other. The following tables show the operation sequence and the processing time for each part in minutes per unit.

CABINET

Operation Set up Run

Shear 5 0.5

Press 60 1

Weld 20 3

Paint 45 3

DRAWER

Operation Set up Run

Shear 3 0.4

Press 50 0.8

Weld 10 2

Paint 45 1

GUIDES

Operation Set up Run

Shear 2 0.3

Press 20 0.5

Assemble 5 2

The plant operates five days per week, eight hours per day, and expects to continue this schedule. Weekly demand for the products is fairly constant at an average rate of 80 five- drawer letter-size units, 50 three-drawer letter-size units, 40 five-drawer legal-size units, and 30 three-drawer legal-size units.

1. What mixed-model sequence should be used to continue this average? 2. What is the cycle time for each product? 3. Based on these cycle times, will there be any problems with the processing times

shown above? If so, what changes must be made? 4. Can you identify any other changes that should be made to help implement JIT?

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CHAPTER 11Problems

Discussion Questions

1. List the aspects of JIT that result from elimination of excess inventory. 2. Which aspects of a fast-food restaurant are done just-in-time? Which are func-

tions similar to batch production? 3. In general, would you say that service organizations operate in a just-in-time

mode? Why or why not? 4. Define a pull system and a push system, and explain their differences. 5. Develop a list of companies or industries that may best benefit from the results

that JIT produces. 6. Are there any companies or industries for which JIT would be totally inappropri-

ate? Why? 7. Explain the use of the C-kanban in a single-card system and the use of the

C-kanban and the P-kanban in a dual-card system. 8. What are some ways a production process can be simplified? Explain each. 9. Describe at least two ways that quality control is important in JIT. 10. Find an article about a company outside Japan that uses JIT, and determine

whether any modifications have been made to fit local culture or business practices.

11. Discuss how the lean manufacturing concept of a value stream may relate to the water analogies of JIT.

12. The term lean manufacturing appears to indicate that related ideas are not appli- cable to services. Is that true?

13. What is the relationship between strategic planning and JIT? 14. Explain value stream mapping.

Problems

1. A manufacturer of televisions produces three different models: X, Y, and Z. Demand over the next month is expected to be 400 units for model X, 200 units for model Y, and 100 for model Z. There will be 20 working days in the month. Develop a mixed-model sequence.

2. Refer to Problem One. Suppose that the company has eight working hours each day. Calculate cycle times for the three different television models.

3. An automobile manufacturer makes two-door sedans, four-door sedans, convert- ibles, and station wagons. Customer demand for the next 25 production days is expected to be 400 two-door sedans, 300 four-door sedans, 300 convertibles, and 200 station wagons. Develop a mixed-model sequence that will level the assem- bly schedule and satisfy daily demand.

4. Refer to Problem Two. If the automobile manufacturer runs the plant seven hours each day, calculate cycle time for each type of car.

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CHAPTER 11Key Terms

Key Terms

conveyance kanban (C-kanban) A kanban that authorizes the movement of materials from one location to another.

cycle time A measure of how quickly a product is made. It is the amount of time from the start of a task until the worker or machine is ready to start the next task. In an assembly, it is the time between the nth vehicle being produced and the nth+1 vehicle.

dual-card kanban system A pull system that uses both C-kanban and P-kanban to carefully control WIP inventory.

just-in-time (JIT) Can be used as a basis for planning and scheduling, yet is more properly viewed as a strategy for designing manufacturing systems that are responsive to customer requirements. Applying JIT forces a re-examination of operating philosophy. The JIT philosophy focuses on reducing lead times, reduc- ing set-up times and improving product quality to minimize raw material, work-in- process and finished goods inventory.

kanban A Japanese word meaning “visible record.” In manufacturing, it is a card or marker that is used to indicate when more materials are needed in a pull system.

lean systems Extends many of the basic concepts of JIT over the entire supply chain. While both lean systems and JIT can focus on eliminating non-value-added activities from the entire supply chain, lean systems focuses on applying the basic ideas of JIT to the entire value stream.

level assembly schedule A final assembly schedule that involves producing a speci- fied sequence of products so that produc- tion of each is matched with expected daily demand.

mixed-model sequencing The production of different products in small batches on the same equipment following a repeating cycle.

production kanban (P-kanban) A kanban that authorizes the production of more parts in a pull system.

pull system An approach to manufactur- ing in which materials are pulled through processing based on actual requirements for those materials.

push system An approach to manufactur- ing that forces materials through process- ing based on a schedule.

set-up time The time needed to prepare a machine to process a job.

single-card kanban system A pull system that uses only the C-kanban. Actual pro- duction may be scheduled using MRP.

total preventive maintenance An approach to equipment maintenance that emphasizes prevention of breakdowns, maintenance each day, and operator responsibility for maintenance.

value stream mapping A technique used to analyze and design the flow of materi- als, ideas, and information to understand how processes for making products function.

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