JIT/Lean Production

1. JIT/Lean Production

2. Framingham (GM) 40.7 hours 130 defects 2 weeks Toyota Takaoka 16 hours 45 defects 2 hours Some Statistics from1986 ... • A comparison of: • assembly hours • defects per 100 cars • average inventory levels ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

3. Post World War II • Growing and rebuilding world economy • Demand > Supply • US Manufacturing: • Higher volumes • Capital substitution • “Breakthrough” improvements • “The production problem has been solved” ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

4. View from Japan • Very little capital • War-ravaged workforce • Little space • Poor or no raw materials • Lower demand levels • Little access to latest technologies  U.S. methods would not work ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

5. Japanese Approach to Operations • Maximize use of people • Simplify first, add technology second • Gradual, but continuous improvement • Minimize waste (including poor quality)  Led to the development of the approach known as Just-in-Time ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

6. Just-in-Time Repetitive production system in which processing and movement of materials and goods occur just as they are needed ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

7. Pre-JIT: Traditional Mass Production ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

8. Post-JIT: “Lean Production” Tighter coordination along the supply chain Goods are pulled along — only make and ship what is needed ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

9. JIT Goals(throughout the supply chain) • Eliminate disruptions • Make the system flexible • Reduce setup times and lead times • Minimize inventory • Eliminate waste ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

10. Waste Definition: Waste is ‘anything other than the minimum amount of equipment, materials, parts, space, and worker’s time, which are absolutely essential to add value to the product.’ — Shoichiro Toyoda President, Toyota ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

11. Forms of Waste: • Overproduction • Waiting time • Transportation • Processing • Inventory • Motion • Product Defects ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

12. Inventory as a Waste • Requires more storage space • Requires tracking and counting • Increases movement activity • Hides yield, scrap, and rework problems • Increases risk of loss from theft, damage, obsolescence ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

13. Examples of Eliminating “Wastes” Big Bob’s Automotive Axles: Wheels bought from outside supplier Axles made and assembled in house ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

14. BEFORE: Shipping in Wheels Truck Cost: $500 (from Peoria) Maximum load of wheels: 10,000 Weekly demand of wheels: 500 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

15. AFTER: Shipping in Wheels Truck Cost: $50 (from Burlington) Maximum load of wheels: 500 Weekly demand of wheels: 500 What wastes have been reduced? ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

16. Process Design • “Focused Factories” • Group Technology • Simplified layouts with little storage space • Jidoka andPoka-Yoke • Minimum setups ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

17. Personnel and Organizational Elements • Workers as assets • Cross-trained workers • Greater responsibility at lower levels • Leaders as facilitators, not order givers ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

18. Planning and Control Systems • “Small” JIT • Stable and level schedules • Mixed Model Scheduling • “Push” versus “Pull” • Kanban Systems ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

19. Kanban Uses simple visual signals to control production • Examples: • empty slot in hamburger chute • empty space on floor • kanban card ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

20. Kanban Example Workcenter B uses parts produced by Workcenter A How can we control the flow of materials so that B always has parts and A doesn’t overproduce? ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

21. Kanban card: Signal to produce When a container is opened by Workcenter B, its kanban card is removed and sent back to Workcenter A. This is a signal to Workcenter A to produce another box of parts. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

22. Empty Box: Signal to pull Empty box sent back. Signal to pull another full box into Workcenter B. Question: How many kanban cards here? Why? ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

23. How Many Kanbans? y = number of kanban cards D = demand per unit of time T = lead time C = container capacity X = fudge factor ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield