Just-in-time

1. Just-in-time

2. Supply Networks • organisations connected by server-client links - upstream/downstream - that service processes & activities (operations) bringing added value to each client & ultimately the end customer. Supply Chain Performance • Delivery, Quality, Time, Cost

3. Flows of products, services & information Supply side Demand side second-tier suppliers first-tier suppliers first-tier customers second-tier customers Company B Up stream Down stream Company C X X X X X For Company A Internal supply network Immediate supply network Total supply network

4. Just in Time • History - Japan • 1980s conclusion • Japanese industry worked “smart” - JIT • Western industry worked JUST IN CASE • Think of JIT as minimum stock production • Type of relationship: close & intimate? JIT • internal JIT - in client-server stream • external JIT

5. Japanese experience Waste in operations from • overproduction • waiting time • transportation • inventory waste • processing • motion/movement • product defects • concentrate effort on shop floor • CQI focus • staff ownership of problems

6. Minimizing Waste: Inventory Hides Problems identify defects from a supplier early in the process saves the downstream work Machine downtime Scrap Vendor Change delinquencies Work in orders process queues Engineering design Design (banks) redundancies backlogs identify defective work from upstream stations, saves the downstream work Decision Paperwork Inspection backlogs backlog backlogs

7. 7 From Aggregate to MPS to MRP1 Aggregate Plan (product groups) MRP2 Firm orders Forecast random orders Master production schedule (MPS) Design changes Time-phased plan how many + when we will build each end item. JIT Bill of material Inventory record MRP1 Stock movements Reports

8. Material Requirements Planning & JIT • backdrop to JIT • dependent demand (depends on known orders) • info. system to determine • no. of parts, components, materials needed • scheduling - when • orders for materials should be released, • based on lead times. • batches to be ordered/produced/delivered etc

9. Operating an MRP System • Should MRP carry “safety stock”? • How much “safety stock” should be carried? • Issue of “safety lead time” • Danger of “informal” system driving out the “formal” system • Expansion of MRP to other functions (finance, HRM, etc.) of business • JIT - and the supplier-client partnership • shared information systems to "call" contractually agreed stock/materials

10. participation • industrial engineering/basics • continuing improvement • TQM • reducing set up times • smaller lot/order sizes sizes • stable environment • supply partnership Requires Just-In-Time (JIT) • a system for high-volume production with minimal inventory (raw materials, WIP, finished goods). • involves • timed arrivals @ workstation JIT • reduced ‘buffer’ stocks • no waste in production system • a “Pull” system thru the plant • a management philosophy • expose problems & bottlenecks • Take away ‘security blanket” • streamlined production • factory & warehouse networks

11. Suppliers & JIT • Suppliers are crucial • Supplier gets • Long-term guaranteed contract • Steady demand • E-procurement involvement (minimal paperwork) • Buyer gets • Quality comp[onents • Guaranteed delivery times • Good prices • Supplier selection • Close to plant • Quality product • Good labour relations • Fewer suppliers (keiretsu)

12. Call (Kanban) & Pull Call (Kanban) & Pull Fabric Fabric Fabric Fabric JIT and Demand-Pull Supplier Call (Kanban) & Pull Subass Supplier Final Assembly Customer Subass Supplier Supplier

13. Bin Bin Bin Bin Client Server Streaming Avoid too much material stocks & WIP Increase materials coordination & movement Supplier's local warehouse Call for more Saw Materials warehouse Call for more Finished Goods Warehouse JIT deliveries Lathe Grinder Bin Bin Customer

14. What is kanban? • developed at Toyota 1950s to manage line material flows. • Kanban ( Kan=card, Ban= signal ) • simple movement system • “cards” to signal & communicate reorder information • boxes/containers to take “lots” of parts from one work station to another (client-server). • Server only delivers components to client work station as & when needed (called/pulled). • minimise storage in the production area. • Workstations only produce/deliver components when called (they receive card + empty container). • The work-station produces enough to fill the container • Kanban = an authorization to produce more inventory • We thus limit the amount of inventory in process.

15. Minimizing Waste: Kanban Control System withdrawal kanban Bin Part A Bin Part A Machine Center Assembly Line production kanban Material Flow Card (signal) Flow

16. What does a Kanban card look like? Kanban No. 5678990 part No: 66789X description 16ga. Copper Wire units Ft. reorder/lot qty 20 store location Row 12, Bin 6 supplier BICC supplier tel 0208-891-0121 supplier part RT45502 routing process Name/location of next proces Name/location of preceding process container type & capacity number of containers released • accurate data: correct part nos, quantities & measure'ts • visible - chart if material ordered & when • fool proof for no stockouts • minimum inventory • clear & complete info. to suppliers • link inventory directly to demand • Tie in with POP: issuing orders, receiving & authorising accounts payable

17. Expected demand during lead time + safety stock = k capacity of container + dL (1 S ) = C How many Kanbans? • Each container = minimum replenishment lot size. • Calculate lead time required to produce a "container" k = No. of kanbans in card set d = Average No. of units demanded over the period L = lead time to replenish order (same units of time as demand) S = Safety stock as % of demand during lead time C = Container size

18. Expected demand during lead time + safety stock = k size of container Example • A switch is assembled in batches of 4 units at an “upstream” work area. • delivered in a bin to a “downstream” control-panel assembly area that requires 5 switch assemblies/hour. • The switch assembly area can produce a bin of switch assemblies in 2 hours. • Safety stock = 10% of needed inventory. dL (1+S) 5(2)(1.1) = = = 2.75 or 3 C 4

19. JIT Requirements 1 Kanban Pull • Demand pull • Back flush • Reduce batch/lot sizes Work with suppliers • Reduce lead times • Frequent deliveries • Project usage requirements • Quality expectations Reduce inventory in • Stores • Transit • Carousels • Conveyors • calculation from MRP & EOQs

20. JIT Requirements 2 Quality • Worker responsibility • SQC • Enforce compliance • Fail-safe methods • Automatic inspection Stabilise Schedule • Level schedule • Under utilize capacity • Establish freeze windows People Focus • pay harmonisation • supportive unions • subcontractor networks • hands-on manager style • quality commitment & group involvement Operations Design • Link operations • Balance workstation capacities • Review layout for flow • Stress preventive maintenance • Reduce lot sizes • Reduce setup/changeover time

21. JIT Requirements 3 Problem-solving • Root problem • Long-term solution • Team contribution • Line-specialist cooperation • Learning • Measure performance • CQI • Monitor & report Product Design Improvement • DFM & process design • Modules & fewer parts • Quality standards • upgrade housekeeping • clarify process flows • revise equipment & process technologies

22. "Re-engineering" & Kanban Modern production methods • 1. Modular/cell production 9 group technology). • 2. Reduce set up, lead and waiting times between procedures. • 3. Flow-of-products-oriented layout of processes & machines layout. Products flow smoothly from start to finish, parts do not sit waiting to be worked on, forklift trucks do not travel kilometres to move parts from one area of the plant to another. • 4. Flexible manufacturing of mixed models • 5. Theory of Constraints - drum-rope-buffer (Goldratt). Building in extra redundancy. • 6. Total Preventive Maintenance, prevent machines from breaking down or malfunctioning during production time • 7. Team-Work & Autonomation (decision by worker to stop line) • 8. Kaizen: Continuous improvement • 9. Housekeeping

23. Down-side of Kanban • more complex in shared-resource situations e.g. upstream server makes several parts. Each needs a separate signalling card - so the up-stream station will receive random calls for different parts - creating a scheduling & queuing situation. • client request to make/send more must wait if other parts have to be made so buffer stocks are needed. • Kanban assumes stable repetitive production & is less suited to industries where mix &volumes fluctuate. • It doesn't eliminate variability, unpredictable & lengthy down times present problems. • Poor quality (scrap &rework) affect functioning even though these are exposed. Excess inventory does not mask these effects.

24. Further Information from • ProModel.com • http://www.dal.ca/~qhe/ie1352/KanbanPP.htm • www.google.com search on Kanban • Birmingham University PRISM - see Kanban Network (Ciardo & Tilgner) • MidWest Tool Com - Controlling Serial Production Lines Using Kanbans - download file. • Hugh Campbell - Kanban and MRP to Manage Purchased Parts and Materials • Kanban's - Simplicity at its best - Brian Willcox