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JIT/Lean Production

JIT/Lean Production. Chapter Objectives. Be able to: Describe what JIT/Lean is and differentiate between the Lean philosophy and kanban systems. Discuss the Lean perspective on waste and describe the eight major forms of waste, or muda , in an organization.

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JIT/Lean Production

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  1. JIT/Lean Production

  2. Chapter Objectives Be able to: • Describe what JIT/Lean is and differentiate between the Lean philosophy and kanban systems. • Discuss the Lean perspective on waste and describe the eight major forms of waste, or muda, in an organization. • Discuss the Lean perspective on inventory and describe how a kanban system helps control inventory levels and synchronize the flow of goods and materials across a supply chain. • Describe how the concepts of the Lean supply chain and Lean Six Sigma represent natural extensions of the Lean philosophy. • Explain how a two-card kanban system works. • Calculate the number of kanban cards needed in a simple production environment. • Show how MRP and kanban can be linked together and illustrate the process using a numerical example. © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  3. 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 © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  4. 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” © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  5. 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 © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  6. 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 © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  7. Just-in-Time Repetitive production system in which processing and movement of materials and goods occur just as they are needed

  8. Pre-JIT: Traditional Mass Production © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  9. Post-JIT: “Lean Production” Tighter coordination along the supply chain Goods are pulled along  only make and ship what is needed © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  10. JIT Goals(throughout the supply chain) • Eliminate disruptions • Make the system flexible • Reduce setup times and lead times • Minimize inventory • Eliminate waste © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  11. Waste Definition: Waste is ‘anything other than the minimum amount of equipment, materials, parts, space, and workers’ time, which are absolutely essential to add value to the product.’ — Shoichiro Toyoda President, Toyota © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  12. Forms of Waste:(‘muda’ in Japanese) • Overproduction • Waiting • Unnecessary movement • Wrong process • Unnecessary inventory • Excess motion • Defects • Underutilization of employees © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  13. 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 © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  14. Lean Perspective Process of reducing inventory leads to reduction of the other “wastes” and exposes problems in order of severity (‘water and rocks’ analogy) © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  15. Lean Six Sigma & Supply Chain in Lean Environment • Six Sigma methodology combines well with Lean goals, helps address the ‘rocks’ as they become exposed when reducing inventory. • Supply chain choices affect many of the ‘wastes’. Supplier variances such as lead time and quality create need for safety stock — a direction opposite reduction of inventory goals © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  16. Examples of Eliminating “Wastes” Big Bob’s Automotive Axles: Wheels bought from outside supplier Axles made and assembled in house © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  17. BEFORE: Shipping in Wheels Truck Cost: $500 (from Peoria) Maximum load of wheels: 10,000 Weekly demand of wheels: 500 © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  18. AFTER: Shipping in Wheels Truck Cost: $50 (from Burlington) Maximum load of wheels: 500 Weekly demand of wheels: 500 What wastes have been reduced? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  19. BEFORE: Making Axles(Different lengths) © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  20. BEFORE: Making Axles(Oops!) What is the outcome of detecting defective axles at the end? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  21. After: Making Axles I(Different lengths) © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  22. After: Making Axles II(More improvements) What wastes have been reduced? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  23. Building Blocks of JIT • Product design • Standard parts • Modular design • Quality • Process design • Personnel and organizational elements • Manufacturing planning and control © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  24. Process Design • “Focused Factories” • Group Technology • Simplified layouts with little storage space • Jidoka andPoka-Yoke • Minimum setups © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  25. Multi-Task Work Cells 500 chairs per hour Seats Assembly Packing Legs Slats Backposts Planning takes place for one area: What does the BOM look like? What about lead times? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  26. Personnel and Organizational Elements • Workers as assets • Cross-trained workers • Greater responsibility at lower levels • Leaders as facilitators, not order givers © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  27. Classic Organizational View © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  28. JIT Organization View © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  29. Planning and Control Systems • “Small” JIT • Stable and level schedules • Mixed Model Scheduling • “Pull” versus “Push” • Kanban Systems © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  30. Kanban Uses simple visual signals to control production  “pull” processing • Examples: • empty slot in hamburger chute • empty space on floor • kanban card © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  31. 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? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  32. 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. © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  33. 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? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  34. How Many Kanbans? y = number of kanban cards D = demand per unit of time T = lead time C = container capacity X = safety factor © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  35. Example • Hourly demand = 300 units • Lead time = 3 hours • Each container holds 300 units • Assuming no variation in lead-time or demand (x = 0): y = (300  3) / 300 = 3 kanban cards © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  36. Example: 8:00 AM © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  37. One Hour Later at 9:00 AM © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  38. Extended Out Further . . . © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  39. Note: • For a kanban system to work, we NEED CONSISTENT demand across the work centers • Example - think “McDonald’s” • How do we ensure this? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  40. Mixed Model Sequencing Largest integer that divides evenly into daily requirement is 10: A: 40 / 10 = 4 B: 40 / 10 = 4 C: 10 / 10 = 1 Mixed model sequence: A-B-A-B-A-B-A-B-C © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  41. Mini-Quiz: Mixed Model Scheduling and Establishing Kanbans What would sequence be if NO minimum job size? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  42. Sequence with Minimum of 5: 60 / 4 = 15 D’s 20 / 4 = 5 E’s 30 / 4 = 7.5F’s 5D - 7F - 5D - 5D - 5E - 5D - 8F - 5D - 5D - 5E Sequence of 55 (27.5×2) © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  43. Kanbans Required: Product D Hourly Requirements = 60/8 = 7.5 Lead time = 2 hours Container size = 2 units Safety factor = 10% © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  44. Kanban Cards Required: Implications? Impact of container size? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  45. Implementing JIT What about automation? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  46. Putting the Squeeze on Resources . . . © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

  47. Case Study in JIT/Lean Production A Bumpy Road for Toyota

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