operations management 2

Chapter 14

jit and lean Operations

Teaching Notes

JIT seems to be one of the most popular subjects for the students. Some are a bit skeptical at first, but most are fascinated by this Japanese approach to repetitive production.

It has been said by some Japanese that the system has its roots in Henry Ford’s assembly line. In fact, some interesting parallels and comparisons can be made between JIT systems and production lines.

Perhaps the most challenging aspect of presenting JIT is where to start; that is, which elements to present first, and then, which order to present to remaining elements.

It is important that students understand the difference between “romantic JIT” and “pragmatic JIT” because many times students can fall into the same trap that the senior management has fallen into. Students may also see JIT as a quick fix to many problems without realizing that there are no quick and easy solutions to these problems. It needs to be stressed to the students that it may take years to perfect a JIT system by implementing various techniques related to machine changeovers, layout design, product simplification, quality training and preventive maintenance.

Answers to Discussion and Review Questions

1. Reduce downtime due to changeovers by reducing changeover time: JIT concentrates on reduction on setup times so that the lot size can be reduced. Of course, reduction of the lot size will result in reduction of the inventories and also increase productive time as a result of less time being allocated to changeovers. This approach is different than the traditional manufacturing approach where the main goal is to balance the trade-off between the changeover (setup) cost and cost of carrying inventory.

Use preventive maintenance on key equipment to reduce breakdowns and downtime: Utilization of preventive maintenance can reduce breakdowns and downtime. Even though preventive maintenance is also part of traditional manufacturing systems, the manufacturing systems utilizing JIT will spend more money to ensure that breakdowns are avoided so that downtime is not experienced. Avoiding downtime will enable the company to reduce work-in-process (WIP) inventories because since we are not concerned about breakdowns, we do not need to maintain as much WIP, leading to reduced inventories and reduced waste.

Cross train workers so they can help when bottlenecks occur or other workers are absent. Train workers to handle equipment adjustments and minor repairs: The name of the game is flexibility. Cross-training workers to handle different tasks will improve the flexibility of the system. The added flexibility will assist the company in a wide variety of ways. For example, if the cross-trained worker can assist a bottleneck work center, then the system throughput will increase and the work-in-process inventories can be reduced. If the trained workers can handle the minor repairs, then the repair crew does not have to be called. The ability of the worker to fix the equipment on-line not only improves the efficiency, but also reduces potential inventory buildup and saves the cost of the repair crew fixing the machine. Since it takes time for the repair crew to get to the location of the troubled machine, the machine can be put back into operation faster if the employee on-line can fix it. In traditional manufacturing systems, training employees to perform tasks other than what their primary responsibility indicates, can be viewed as a waste and unnecessary added cost.

Use many small units of capacity. Many small cells make it easier to shift capacity temporarily and to add or subtract capacity than a few units of large capacity: Utilization of small units of capacity adds more flexibility to the system and reduces the chance of wasted capacity in the form of idle time. Remember, the goal of JIT is to reduce any form of waste. If the capacity comes in large chunks, there is a greater probability of the machines and equipment not being used if the demand is lower than expected. However, if the capacity is added in small increments, then there is more flexibility and chance of idle time on machines and equipment is less because we only added a little extra capacity and we will add more if the demand warrants it. This approach is very different than the traditional manufacturing system, where the goal is to minimize cost and therefore to improve efficiency. If we do not consider the flexibility aspect, buying capacity in large chunks and making it available for use may be less expensive than utilizing small units of capacity. Therefore in traditional manufacturing systems, capacity in large chunks is preferred to capacity in small chunks because it is viewed as being less costly (on a per unit basis) and more efficient.

Use off-line buffer: Store infrequently-used safety stock away from production areas to decrease congestion and to avoid continually turning it over. In JIT systems, this is also consistent with the elimination of waste.

Reserve capacity for important customers: Since in a JIT system it is promoted to add capacity in small chunks, there may be a greater chance of running out of capacity than the traditional manufacturing system. Therefore, it is critical to reserve capacity for important customers to maintain a desirable service level. In traditional manufacturing systems, it may not be crucial to reserve capacity for important customers because there may already be additional idle capacity available since traditionally, capacity is added in large chunks.

2. The ultimate goals of JIT are to improve customer service and to improve operational efficiency through improved balanced flow through the workstations. In order to achieve these goals, JIT has the following supporting goals: elimination of waste and disruptions, reduction of inventories, reduction in setup times and lead times and increased flexibility of the system to be able to produce a wider variety of products. The building blocks of JIT are: product design, process design, organizational elements and manufacturing planning and control (see Figure 16–3 for more details).

3. The JIT philosophy is to emphasize continual effort to remove waste and inefficiency in a production process through small lot sizes, low inventories, high quality, and teamwork.

4. In order to implement JIT successfully, the following obstacles must be overcome.

a. Lack of management commitment;

b. Lack of worker/management cooperation;

c. Resistance or lack of long-term commitment by the suppliers.

5. a. Vendors can play a significant role in the success of just-in-time systems. Converting to, and operating under, a just-in-time system requires close cooperation between vendors and buyers. In such systems, vendors become “team” members. Vendors are expected to be flexible in delivery schedules, ship in small lot sizes, be reliable, have consistently high quality, and assist in problem solving. Without good vendor relations, much of this will not materialize.

	b.	Factor	Traditional	JIT
		Importance of price	major factor, high emphasis	one of several factors
		Length of relationship	often short	long-term
		Number of suppliers	many	few
		Attitude towards	adversarial	partner
		Location	low importance	nearness highly important

c. Vendors may be hesitant about JIT buyers for a number of reasons: The need to be flexible, to deliver in small lot sizes, to be closely tied to the needs of the buyer, cost, time, resistance of employees, etc.

6. Both assembly lines and just-in-time systems have little inventory as work moves from one operation to the next. In addition, machine breakdowns, quality problems, stockouts, and the like pose great hazards to the smooth operation of the system.

7. A kanban is a signal used in some JIT systems to authorize movement of materials or to authorize work. Hence, kanbans control movement of work in such systems. One important aspect of kanbans is that they provide “local” signals as opposed to centralized signals, and these are tied directly to the pull system used by JIT.

8. In a push system, as work is finished at a workstation, it is pushed on to the next station; the governing factor is the station completing the work. In a pull system, each station pulls work to it as needed; the movement of work is governed by the (internal) demand for the work. One consequence is that there is less chance for buildup of work-in-process inventory under a pull system.

9. The main benefits of a lean system are:

a. Reduced levels of work-in-process inventories, purchased goods and finished goods.

b. Reduced space requirements.

c. Increased quality and reduced scrap and rework.

d. Reduced manufacturing lead times.

e. Increased product flexibility (ability to change the product mix at a reasonably low cost).

10. Small lot sizes allow in-process inventory to be considerably less. This in turn reduces carrying costs, space requirements, and clutter in the workplace. Inspection and rework costs are less. Small lot sizes allow for more flexibility in scheduling. A risk with small lot sizes is not having enough when something goes wrong.

Taking Stock

1. Shifting from a traditional operations system to a lean manufacturing system requires the change of mind set on the part of the managers implementing this change. JIT/Lean systems will require smaller batch sizes, quick changeovers, reduction of work-in-process inventories, quick and flexible response time in deliveries from suppliers and fairly predictable demand for the end product. If the demand for the end product is highly variable or difficult to predict, then it becomes much more difficult to implement a truly lean system. The variability of demand will make the system much more unpredictable, which in turn may require the utilization of inventories to balance the supply demand mismatch. In addition, the lean system expects the operations on the factory floor to take place smoothly without machine breakdowns. Of course, in order to achieve smooth production, we not only need to invest in a strong maintenance and repair program, but also need to consider upgrading our machines and equipment. The machinery and equipment may also need to be adjusted or upgraded for the purposes of doing quick changeovers so that we can reduce the setup cost and ultimately reduce the batch sizes to achieve a smooth, flexible flow of material through the production operations and reduce the work-in-process inventory. In addition, reorganization of the facility to configure the system to better achieve a smooth flow of material.

The same concepts we have discussed in the above paragraph for manufacturing firms will also apply to service firms. However, for the service firms, the need for developing strong supplier networks with a lean system becomes a high priority. Revising equipment and process technology to process efficiently with high quality will also be an important consideration for a lean system. The downside of upgrading equipment and process technology is the cost. For example, the hospital may concentrate on reducing the operation room setup time to improve the operation room availability. In the process of evaluating the operation room availability, better scheduling, utilization of up-to-date equipment and more efficient use of personnel could enable to reduce both the operation setup and the actual operation time.

2. The change from a traditional system to a JIT/Lean system encompasses the entire firm. Therefore, if implemented correctly, the change to a lean system should affect the entire organization. Different personnel depending on their job responsibilities will be affected by the change to different degrees.

3. The technology has had a profound affect on the implementation of JIT/Lean systems. The improvement in machine designs resulted in better performance of machines, which in turn resulted in fewer defects, less machine breakdowns, and less inventory. The use of robots in the implementation of the minimized setup times allowed companies to reduce their setup cost, resulting in smaller lot sizes and fewer inventories. The Internet, and e-mail improved and increased the speed of the communication lines between suppliers and their customers.

Critical Thinking Exercise

1. If there is one key factor to successful implementation of JIT/Lean systems, it involves the adaptation of holistic thinking. The holistic approach will not only assist in transforming the technical aspects of the firm, but also the company’s “culture” and subsequently, its management system. In addition, the firm must document and clarify its operations so that activities, connections and flow paths have built-in mechanisms to signal problems automatically. Since this process requires a significant buy-in by the majority of the employees, consensus building and developing respect for people become important factors. Training factory workers to be responsible for their own output and becoming their own inspectors supports the idea of quality at the source, which means, “to do it right the first time.” The company must focus on the elimination of all forms of waste. This can be accomplished by utilizing the following: minimization of setup times, uniform stable production plan, quality at the source, and development of a reliable supplier network.

2. Student answers will vary

Solutions

1.	N = ?	N =	DT(1 + X)
	D = 80 pieces per hour		C
	T = 75 min. = 1.25 hr.	=	80(1.25) (1.35)	= 3
	C = 45		45
	X = .35

2.	N = ?	N =	DT(1 + X)
	D = 100 pieces per hr.		C
	T = 105 min. = 1.75 hr.	=	100(1.75) (1.20)	= 2.917 [round to 3]
	C = 72		72
	X = .20

3.	N = ?	N =	DT(1 + X)
	D = 200 lb. per day		C
	T = 2/8 = .250 day	=	200(.250) (1.08)	= 2.7 [round to 3]
	C = 120 lb.		20
	X = .08

4. The smallest daily quantity evenly divisible into all four quantities is 3. Therefore, use three cycles.

	Product	Daily quantity	Units per cycle
	A	21	21/3 = 7
	B	12	12/3 = 4
	C	3	3/3 = 1
	D	15	15/3 = 5

5.

a. Cycle 1 2 3 4 A 6 6 5 5 B 3 3 3 3 C 1 1 1 1 D 4 4 5 5 E 2 2 2 2

b. Cycle 1 2 A 11 11 B 6 6 C 2 2 D 8 8 E 4 4

c. 4 cycles = lower inventory, more flexibility

2 cycles = fewer changeovers

6. The smallest daily quantity is 5. None of the other daily quantities are divisible by 5, however. Using five cycles and producing one unit of each product per cycle would leave some products, as shown in the following table. Hence, if five cycles are used, some extra units will have to be made in some cycles.

	Product	Daily quantity	Nearest multiple of 4 without exceeding daily quantity	Units short
	F	9	1	4
	G	8	1	3
	H	5	1	–
	K	6	1	1

One possibility would be:

Cycle	1	2	3	4	5
Pattern	F(2)–G–H–K	F(2)–G(2)–H–K	F(2)–G(2)–H–K	F(2)–G(2)–H–K	F–G–H–K(2)
Extra units(s)	F	F G	F G	F G	K

7. Net available time = 480 – 75 = 405. Takt time = 405/300 units per day = 1.35 minutes.

8. Net available time per shift = 480 – 90 = 390. Net time available per day is 780.

Cycle time = Takt time = 780/120 units per day = 6.5 minutes.

9. Net time available = 440 – 20 – 60 = 360 minutes. Takt time = 360/90 = 4 minutes.

Case: Level Operations

Assuming a five-day work week, the following weekly schedule should level the load across five weeks. Each row is arranged according to the sequence in which the products would be produced.

Weekly Production Schedule

	Model
Day	S7	S8	S9	S1	S2
Monday	2	4	1	5	4
Tuesday	(2 or 1)*	3	1	5	4
Wednesday	2	4	1	5	4
Thursday	2	3	1	5	4
Friday	2	4	1	4	(4 or 5)**

* First, third and fifth Tuesday, we plan to manufacture 2 units of S7, while second and fourth Tuesday we plan to manufacture only 1 unit of S7.

** First, third and fifth Friday, we plan to manufacture 4 units of S2, while second and fourth Friday we plan to manufacture 5 units of S2.