MS 401 Production and Service Systems Operations Spring 2009-2010

1. MS 401 Production and Service Systems Operations Spring 2009-2010 Just-in-Time (JIT) Manufacturing Slide Set #14

2. What is Just-In-Time (JIT) ? “The more a company has, … the less likely they will have what they need” Taiichi Ohno • JIT is both a philosophy and a set of techniques • An integrated system related to different aspects of operations including manufacturing, scheduling, quality, product design, supplier relations, human resources and innovation • Related concepts • Toyota Production System (TPS) • Lean manufacturing • Recommended book: “The Toyota Way” by Jeffrey Liker

3. What is Just-In-Time (JIT) ? • History: Japanese companies’ desire to catch-up with their US competitors after WW II, with limited resources Main concepts • Production must flexibly adopt to • Required items must be produced in required quantities in required time • Waste should be identified and eliminated. Waste includes

4. Why Reduce Inventory? Capacity imbalance Unreliable suppliers Quality issues

5. JIT Methods Summary-1 • Synchronizing product flow with demand • pull system (kanban) • synchronized production with suppliers • Line balancing to reduce waste (Muda) • cross-trained workers Source: Cachon and Terwiesch 2006

6. JIT Methods Summary-2 • Quality methods to reduce defects • build in quality (tsukurikomi) • at every step rather than relying on inspection steps • worker involvement/ improvement (kaizen) • quality circles • structured problem solving (SPC, fish-bone diagrams etc.) • Human resource practices • lifetime employment • skill-development • empowerment Source: Cachon and Terwiesch 2006

7. JIT Building Blocks • Product design • Process design • Human / organizational elements • Manufacturing planning and control

8. Product Design • Standard parts • Modular design • Quality • Fewer bill of material (BOM) levels • Manufacturability in production cells

9. Process Design • Small lot sizes / setup time reduction • SMED: • Manufacturing cells • Limited work in process inventory • Quality improvement • Production flexibility • Production bandwidth • sufficient surge capacity

10. Process Design: SMED • Single Minute Exchange of Dies (SMED) • Smaller lot sizes • lower inventory • The methods • convert as much as possible • for example: pre-heat dyes • eliminate the needs for adjustment • for example, dies constructed to can fit only in the correct position • standardize the external setup routine

11. Inbound Stock Outbound Stock Process Design: U-type Manufacturing Cells • Concentrate on material velocity • smooth and fast flow from one machine to the next • the aim is to make detailed tracking unnecessary • Operator can monitor the cell without too much walking

12. Human / Organizational Elements • Workers as assets • Whole person • hiring “people”, not their “muscles” • Cross-trained workers • wider job definitions • Flexible labor • Continuous learning and improvement • Accounting and performance measurement • Leadership and project management

13. Manufacturing Planning and Control • Level loading • Pull systems • Visual systems • kanban • Close supplier relationships • continuous delivery (supplier factories located nearby) • tiered supplier network • Reduced transaction processing

14. MPC: Mixed Model Production • Toyota: Operations are adjusted on a monthly basis such that the same sequence of cars will be produced every day • A common part needs to be produced with a • A part used only in Model-A needs to be produced with • Determine the number of workers and machines to achieve the required cycle times in part production Source: Just in time production controlled by Kanban”, HBS

15. The Firm Supplier Tiered Supplier Network First Tier Supplier Supplier Supplier Second Tier Suppliers Supplier Supplier Supplier Supplier Third Tier Suppliers

16. Summary: JIT Goals and Building Blocks Ultimate Goal A balanced and rapid flow Supporting Goals Reduce setup and lead times Eliminate disruptions Eliminate waste Make the system flexible Minimize inventories Building Blocks Product Design Process Design Human Factors MPC

17. Push vs. Pull Production Systems • Push system: A workcenterpushes its part output to the downstream workcenter as they are completed, according to a production plan • Pull system: When a workcenterneeds parts for production, it pullsthem from its upstream workcenter

18. Kanban Systems • Kanban is the Japanese word for card • Once a “balanced” production system is established, kanbans are used to transmit information on • when to transfer parts to the downstream workcenter • when to produce a (small) lot of parts to replace the transferred parts • Kanban does not have to be a card (can be any visual signal) • A manual and visual production control system • not production planning

19. Each container must have a card • A container cannot be moved forward until authorized by the receipt of a move card • A container of parts cannot be produced until authorized by a production card Two-card Kanban System

20. Two-card Kanban System 2) Request of WC-3 is sent from stock, production card is detached 6) Request of WC-2 is sent from stock, production card is detached 4) WC-2 production uses raw materials from stock, move card is detached WC-1 WC-2 5) Detached move card sent to WC-1 with an empty container 3) Detached production card authorizes production at WC-2 1) Request of WC-3 arrives as a move card with an empty container

21. How Many Kanban Card Sets? • The trade-off: • more kanbans mean • fewer kanbans mean • Number of kanbans can be decreased over time to • The number of kanbans limit the “demand fluctuation” that one workcenter can place on its upstream workcenter

22. Heijunka Box with Kanbans Time intervals (such as 30 minutes) Used to achieve Source: http://en.wikipedia.org/wiki/File:Heijunka_2.JPG

23. Shortcomings of MRP • costly to set up • difficult to train workers • realized lead time depends on the congestion in the system • to be on the safe side, MRP considers a large leadtime • causing the orders to be released too early, leading to high inventory • the shop floor can be more flexible than MRP • MRP promises more precision than it can provide

24. Shortcomings of JIT • Requires • not applicable to job-shop or continuous production • Practical issues • setup times might be difficult to reduce • suppliers may not be located close by • moving products in small batches may not be possible • Vulnerable to risks due to low inventory • shutdowns, demand surges etc. • Hybrid approach: MRP for planning, JIT for scheduling

25. MPC and JIT “production control” rather than “production planning”

26. An Alternative: Optimized Production Technology (OPT) • Neither MRP nor JIT would be effective in the presence of significant “bottlenecks” • For such environments, Optimized Production Technology (OPT) approach is applicable • Popularized by the book “The Goal” by E. Goldratt • The Theory of Constraints (TOC) philosophy