Just-In-Time Philosophy

Just-In-Time Philosophy The philosophy of JIT can be traced back to Henry Ford, but formalized JIT originated in Japan as the Toyota Production System. W. Edwards Deming’s lesson of variability reduction was a huge influence. JIT is a long-term approach to process improvement. It uses timeliness as a lever to lower costs, improve quality and improve responsiveness. However, JIT requires enormous commitment. It took Toyota more than 25 years to get right! The focus of JIT is to improve the system of production by eliminating all forms of WASTE.

Just-in-Time • Downstream processes take parts from upstream as they need. • Get what you want • when you want it • in the quantity you want.

4. Just In Time-- What is It? • Just-in-Time: produce the right parts, at the right time, in the right quantity • Requires repetitive, not big volume • Batch size of one • Short transit times, keep 0.1 days of supply

Pull method of materials flow • Consistently high quality • Small lot sizes • Uniform workstation loads • Standardized components and work methods • Close supplier ties • Flexible workforce • Line flows • Automated production • Preventive maintenance Characteristics of Just-in-Time

Push versus Pull • Push system: material is pushedinto downstream workstations regardless of whether resources are available • Firms with processes that involve long lead times, a variety of products, customers who will not wait long for product use Push method.

Push versus Pull • Pull system: material is pulled to a workstation just as it is needed (customer demand activates the production of goods and services) • Firms that tend to have highly repetitive manufacturing processes and well-defined material flows use the pull method because it allows closer control of inventory and production at the workstations

From a a « push » to a « pull » System Work is pushed to the next station as it is completed S U P P L I E R S C U S T O M E R S

From a a « push » to a « pull » System A workstation pulls output as needed S U P P L I E R S C U S T O M E R S

Vendor Fab Sub Vendor Fab Final Assembly Customers Sub Fab Vendor Fab Vendor JIT Demand-Pull Logic Here the customer starts the process, pulling an inventory item from Final Assembly… Then sub-assembly work is pulled forward by that demand… The process continues throughout the entire production process and supply chain

Pull Versus Push Systems • A pull system uses signals to request production and delivery from upstream stations • Upstream stations only produce when signaled • System is used within the immediate production process and with suppliers

Pull Versus Push Systems • By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement • Manufacturing cycle time is reduced • Push systems dump orders on the downstream stations regardless of the need

Consistently high quality • Consistently meeting customer’s expectations. • Just-in-time systems seek to eliminate scrap and rework in order to achieve a uniform flow of materials • Use quality at the source which is having employees act as their quality inspectors such that never passing on defective units to the next process. • Poka-yoke (mistake proofing method) designing fail-safe systems to minimize human errors. Ex: design parts to be assembled in only one way- the correct way.

Small lot sizes • JIT systems maintain inventory with lot sizes that are as small as possible. • Small lot sizes have three benefits: • small lot sizes reduce cycle inventory which reduces the time and space involved in manufacturing and holding inventory. • small lot sizes help cut lead times then cutting pipeline and (WIP) inventory. (longer processing, longer inspection, defects delays)

Small lot sizes • Benefits of small lot sizes: 3) small lots help achieve a uniform operating system workload setup times must be reduced to realize the benefits of small-lot production.

Uniform Workstation Loads • Uniform loads can be achieved by assembling the same type and number of units each day, thus creating a uniform daily demand at all workstations • Two models of production • Line production: all daily requirements of a model are produced in one batch before another model is started • Mixed model assembly: mix of models in smaller lots in a sequence (set up times should be low)

Standardized Components and Work Methods • The standardization of components, called part commonality or modularity, increases repeatability. • each worker performs a standardized task , Productivity tends to increase.

Close Supplier Ties • JIT systems operate with very low levels of inventory, close relationships with suppliers are necessary. • Stock shipments must be frequent, have short lead times, arrive on schedule, and be of high quality • Purchasing managers focus on three areas: reducing the number of suppliers, using local suppliers, and improving supplier relations

Flexible Work Force • Workers in flexible work forces can be trained to perform more than one job. • Workers can be shifted among workstations to help relieve bottlenecks as they arise without resorting to inventory buffers--an important aspect of the uniform flow of JIT systems. • they can step in and do the job for those on vacation or out sick.

Line Flow Strategy • A line flow strategy can reduce the frequency of setups. • If volumes of specific products are large enough, groups of machines and workers can be organized into a product layout (line) to eliminate setups entirely. • If volume is insufficient to keep a line of similar products busy, group technology can be used to design small production lines that manufacture, in volume, families of components with common attributes

Preventive Maintenance • Because JIT emphasizes low inventory between workstations, unplanned machine downtime can be disruptive. • Preventive maintenance can reduce the frequency and duration of machine downtime. • One tactic is to make workers responsible for routinely maintaining their own equipment and develop employee pride in keeping their machines in top condition

Waste in Operations • Waste from overproduction (manufacturing an item before it is needed and with more quantities) this increase both inventory and lead time • Waste of waiting time (product is not moved and processed, poor materials flow, poor processes linkages this waiting may be 90 percent of LT) • Transportation waste (excessive movement and materials handling, risk of being damaged, lost, delayed, a cost for no added value • Inventory waste (a capital outlay that has not yet produced an income, excessive Inv hides shop floor problems, Increased inv is a result of overproduction and waiting)

Waste in Operations Processing waste (more work is done on a piece than what is required by the customer, high precision equipment when simple machine is sufficient, overutilization of expensive assets) Waste of motion (unnecessary efforts related to ergonomics like bending, stretching, reaching, lifting and walking) jobs with excessive motion should be redesigned Waste from product defects (quality defect results in scrap and rework and wasteful costs lost capacity, scheduling efforts, increased inspection, and loss of customer good will) Underutilization of people

Traditional Flow Production Process (stream of water) Suppliers Customers Inventory (stagnant ponds) Flow with JIT Material(water in stream) Suppliers Customers Streamlined Production

WIP Level • Less WIP means products go through system faster • reducing the WIP makes you more sensitive to problems, helps you find problems faster • Stream and Rocks analogy: • Inventory (WIP) is like water in a stream • It hides the rocks • Rocks force you to keep a lot of water (WIP) in the stream

Lowering Inventory Reduces Waste WIP hides problems

STOP Lowering Inventory Reduces Waste Reducing WIP makes problem very visible

Lowering Inventory Reduces Waste Reduce WIP again to find new problems

Process downtime Scrap Setup time Quality problems Late deliveries Reduce Variability Inventory level

Reduce Variability Inventory level Process downtime Scrap Setup time Quality problems Late deliveries

Causes of Variability Employees, machines, and suppliers produce units that do not conform to standards, are late, or are not the proper quantity Engineering drawings or specifications are inaccurate Production personnel try to produce before drawings or specifications are complete Customer demands are unknown

Variability Reduction • JIT systems require managers to reduce variability caused by both internal and external factors • Variability is any deviation from the optimum process • Inventory hides variability • Less variability results in less waste

Performance and WIP Level • Less WIP means products go through system faster • reducing the WIP makes you more sensitive to problems, helps you find problems faster • Stream and Rocks analogy: • Inventory (WIP) is like water in a stream • It hides the rocks • Rocks force you to keep a lot of water (WIP) in the stream

200 – 100 – Q1 When average order size = 200 average inventory is 100 Inventory Q2 When average order size = 100 average inventory is 50 Time Reduce Lot Sizes

Reducing Lot Sizes Increases the Number of Lots Customer orders 10 Lot size = 5 Lot 2 Lot 1 Lot size = 2 Lot 1 Lot 2 Lot 3 Lot 4 Lot 5

Reduce Lot Sizes • Ideal situation is to have lot sizes of one pulled from one process to the next • Often not feasible • Can use EOQ analysis to calculate desired setup time • Two key changes • Improve material handling • Reduce setup time

Initial Setup Time 90 min — Separate setup into preparation and actual setup, doing as much as possible while the machine/process is operating (save 30 minutes) Step 1 60 min — Move material closer and improve material handling (save 20 minutes) Step 2 45 min — Standardize and improve tooling (save 15 minutes) Step 3 25 min — Use one-touch system to eliminate adjustments (save 10 minutes) Step 4 15 min — Training operators and standardizing work procedures (save 2 minutes) 13 min — Step 5 Repeat cycle until subminute setup is achieved — Reduce Setup Times

Kanban • Japanese for ‘signboard’ • Method for implementing JIT • In order to produce, you need both material to work on, and an available kanban. • Each work station has a fixed # kanbans.

Kanban Flow of work • Worker 2 finishes a part, outbound moves over • 2 has a blue tag avaliable, so 2 gets another part to work on: • 2 takes off 1’s green tag giving it back to 1, and • puts on her blue tag and moves it into position. 2 3

Kanban Flow of work • When 3 finishes a part, • Finished parts move over one spot • He has to have a red tag available to put on, • He gets a part from 2’s outbound pile, • And gives the blue back to 2 2 3

Kanban Flow of work • When 3 finishes a part, • Finished parts move over one spot • He has to have a red tag available to put on, • He gets a part from 2’s outbound pile, • And gives the blue back to 2 • 3’s production will be taken by 4, offstage right. • Tag goes back into 3’s bin 2 3

Kanban • Red finishes his part next. • But 4 hasn’t freed up any of the red kanbans, so there is nothing for 3 to work on now. • 3 could maintain his machine, or see if 4 needs help 2 3 2 3

Demand during Safety lead time + stock Size of container Number of kanbans = The Number of Cardsor Containers • Need to know the lead time needed to produce a container of parts • Need to know the amount of safety stock needed

1,000 + 250 250 Number of kanbans = = 5 Number of Kanbans Example Daily demand = 500 cakes Production lead time = 2 days (wait time + material handling time + processing time) Safety stock = 1/2 day Container size = 250 cakes Demand during lead time = 2 days x 500 cakes = 1,000

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

JIT Level Material-Use Approach A A B B B C A A B B B C A A A A A A B B B B B B B B B C C C Large-Lot Approach Time Scheduling Small Lots

Minimizing Waste: Uniform Plant Loading Suppose we operate a production plant that produces a single product. The schedule of production for this product could be accomplished using either of the two plant loading schedules below. Not uniform Jan. Units Feb. Units Mar. Units Total 1,200 3,500 4,300 9,000 or Uniform Jan. Units Feb. Units Mar. Units Total 3,000 3,000 3,000 9,000 How does the uniform loading help save labor costs?

Mixed Batch Example • Company produces three products with a mixed model assembly line. • Operates 16 hours per day for 250 days/yr. • Determine the mixed model MPS for a daily batch. • Determine minimum batch MPS and the mix schedule for a day.

Calculations For every unit of #3 (minimum batch), we need twice as many #2 and 4 times As many #1 so for minimum batch: Produce during each day produce #1,1,1,1,2,2,3 - repeated 20 times

Characteristics of JIT Partnershps • Few, nearby suppliers • Supplier just like in-house upstream process • Long-term contract agreements • Steady supply rate • Frequent deliveries in small lots • Buyer helps suppliers meet quality • Suppliers use process control charts • Buyer schedules inbound freight

Just-In-Time Philosophy