Transcript No Slide Title

Topics To Be Covered
1. Some Thoughts on Production Management
2. What is Just-In-Time ?
3. How does EOQ Impact JIT ?
4. Motivation For EOQ
5. Impacts of Reducing Inventory
6. Requirements For JIT Implementation
7. Implementation of JIT
8. Things to Remember
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Thoughts on Production Management
(Fact or Myth?)
Large Batch Sizes Improve Production Efficiency.
• Fewer tool changes saves time
• Repetitive manual actions are most efficient
Having large amounts of inventory helps smooth production flow
• Meet unanticipated demand
• Supports production system when a machine breakdown occurs
• Demand can be met when lead time varies
• Promotes Inefficiency
• Buffers cover up problems
Statements are True, given that:
• Competition is limited
• Technology is dated
• Processes are NOT optimized
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JIT and Inventory Reduction
Lowering the level of inventory will reveal more Productivity Issues.
Success in JIT requires addressing the productivity issues while lowering
inventory.
Inventory
Productivity
Issues
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Impacts of Reducing Inventory
• Lower storage capacity requirements.
• Less money tied up in inventory.
• Less ability to accommodate unanticipated events.
•Address through increased flexibility
• Requires higher degree of accuracy & implementation of prediction
methods.
• Exposes production issues.
• inefficient processes
• equipment maintenance problems
• vendor reliability
• excessive scrap rate
• excessive rework rate
• product design problems
• Can we reduce inventory without a corresponding manufacturing change?
• Allows focus on “true” constraints of production flow.
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What is Just - In - Time ?
Simple Definition: A system that provides materials, parts and services when they
are needed and result in zero inventory.
Simple Definition implies that JIT is simply a matter of manufacturing producing or
receiving parts in a timely fashion. (JIT is more of an Event)
Simple Definition does not address how this timely delivery and minimal inventory is
achieved.
The obtaining of a zero inventory is not feasible in most cases.
Better or Preferred Definition: JIT is a collection of methods and attitudes that foster
continuous process improvement that results in minimal inventory while having the
flexibility to respond to changes in market conditions.
JIT is not:
1. A physical system
2. An inventory control system
3. A management approach for manufacturing
4. Only applicable to procured items
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JIT Goals
Focused on a Balanced System
• Eliminate Disruptions
• Make the system flexible by reducing setup times & lead times
• Eliminate Waste, Especially excess inventory
Reduction in Waste
• Excess inventory
• Overproduction
• Waiting time
• Unnecessary transporting
• Processing waste
• Inefficient work method
• Product defects
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JIT Foundations
Product Design
• Standard parts
• Modular design
• Highly capable production system
Process Design
• Small lot sizes
• Setup time reduction
• Manufacturing cells
• Limited Work - In- Process (WIP)
• Quality improvement
• Production Flexibility
• Use of Preventive Maintenance, Cross-train workers, Small sublots,
Off-line buffer, Reserve capacity
• Little inventory storage
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JIT Foundations (con’t)
Personnel/ Organization Elements
• View workers as assets
• Cross trained workers
• Continuous improvement
• Cost accounting
• Leadership / Project Management
Manufacturing Planning & Control
• Level loading
• Pull system instead of Push system
• Visual system (Kanban)
• Close vendor relationships
• Reduced transacting process
• Preventive maintenance & housekeeping
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JIT Foundations (con’t)
Activity Based Costing
• Form of Cost Accounting
•Track traceable hours per job
• Machine setups, inspection, machine hours, direct labor costs
movement of materials.
• Part cost based on % of activities they consume.
Vendor relationships
• Multi-tiered
• Quality (Inspection)
• Quantity
• Delivery Time
• Sole Source vs Multisource
• Pricing
Transaction types
• Logistics
• Balancing
• Quality
• Change
JIT II
Empowering suppliers to assume some of the responsibilities of a
company’s buyer
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Push Vs Pull System
Push System
MRP
Inputs
Outputs
1
2
3
4
Pull System
MRP
Inputs
Outputs
1
2
3
4
How do these two systems differ in terms of :
Communication, machine downtime, changes in demand,
Level loading
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How Does EOQ Impact JIT ?
• EOQ model focuses on savings due to the balance between holding and
order/setup costs. (Quantity Driven)
• EOQ model is a function of
• Demand (D)
• Ordering/Setup Costs (S)
• Holding Costs (h)
• Production Rate (P)
• If EOQ factors remain constant the optimal order size remains constant.
Which EOQ factors has the most impact on JIT? Why?
• How can you change the EOQ factor(s) to support JIT philosophy?
• Equipment example(s)
• Process example(s)
Is a “one unit” batch size feasible?
Why or Why not?
Production Quantity vs Transfer Quantities
Can they be different?
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Batch Sizing
1
Irv
Part A
2
3
Walt
Sam
Part B
Part C
Final Paint
Ethel
Finished part
Activity
Part A
Part B
Part C
Assembly
Prod Time
(Min)
1
1
1
1
Rate
100
100
100
100
Same Concept for
Mixed Model
Sequencing
4
Total
100
100
100
100
Time to
complete
100
200
300
400
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Motivation For JIT
What are the Benefits of JIT?
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•
•
•
•
•
Lower inventory costs.
Lower cycle time.
higher customer satisfaction.
more flexibility.
fewer losses of opportunity costs.
producing defect free & well-designed products.
What Obstacles Must be overcome?
• Variability in processes
• Variability in delivery
• High setup times
• High processing times
• Products not well designed for efficient manufacturing
• Use of Inferior materials
• Inefficient or improper manufacturing system design
• Improperly trained employees
• Communication in manufacturing systems
• Management may not be committed or willing to devote resources
• Workers & management may not display cooperative spirit
• Suppliers may resist change
• resource commitment, long term commitment, small delivery sizes,
shift of quality burden, engineering changes.
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Converting to a JIT System
1. Make sure top management is committed and aware of resource
requirements.
2. Study operations carefully, decide which parts will need effort.
3. Obtain Support & cooperation of workers
• training, setup reduction options, maintenance of equipment, cross
training, cooperation, problem solving, communication of what
JIT is and why, reassurance about job security.
4. Begin by trying to reduce setup times under current systems
5. Gradually convert operations.
• Begin at end and work backwards
• Do not begin to reduce inventory until major problems resolved in
each area.
6. Convert suppliers to JIT
7. Be prepared to encounter obstacles to conversion
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Downside of Conversion
1. Time to convert
2. Cost
3. Small lot sizes
4. Transacting costs
5. Traffic congestion
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JIT in Services
1. Eliminate disruptions
2. Make system flexible
3. Reduce setup times & processing times
4. Eliminate waste
5. Minimizing Work-In-process
6. Simplify the process
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Things to Remember….
• The problem did not occur over night so be patient on gaining
results.
• Change is always viewed with skepticism. (cultural barrier)
• One can learn from failure as well as success.
• Defining pilot project with a well defined set of metrics helps in
assessment of the benefits gained from JIT.
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