Operations Management Just-in-Time and Lean Production
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Transcript Operations Management Just-in-Time and Lean Production
Operations
Management
Just-in-Time and Lean Production
Systems
Chapter 16
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Principles of Operations Management, 5e, and Operations
Management, 7e
16-1
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Outline
JUST-IN-TIME AND LEAN PRODUCTION
GLOBAL COMPANY PROFILE: GREEN GEAR
CYCLING
SUPPLIERS
Goals of JIT Partnerships
Concerns of Suppliers
JIT LAYOUT
Distance Reduction
Increased Flexibility
Impact on Employees
Reduced Space and Inventory
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Management, 7e
16-2
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Outline - Continued
INVENTORY
Reduce Variability
Reduce Inventory
Reduce Lot Sizes
Reduce Setup Costs
SCHEDULING
Level Schedules
Kanban
QUALITY
EMPLOYEE EMPOWERMENT
LEAN PRODUCTION
JIT IN SERVICES
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© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Learning Objectives
When you complete this supplement, you should
be able to :
Identify or Define:
Types of waste
Variability
Kanban
Just-in-Time (JIT) philosophy
Pull systems
Push systems
The goals of JIT partnerships
Lean Production
Describe or Explain:
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Introductory Quotation
Waste is ‘anything other than the
minimum amount of equipment,
materials, parts, space, and
worker’s time, which are absolutely
essential to add value to the
product.’
— Shoichiro Toyoda
President, Toyota
© 1995 Corel Corp.
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Green Gear Cycling
Designs and manufacturers high performance
travel bicycles (bike-in-a-suitcase!)
Strategy is mass customization with low inventory,
work cells, and elimination of machine setups.
Major focus on JIT and supply-chain
management.
Two lines with seven work cells
One day throughput time
Focus on quality
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Supplier – Production – Distribution
System
Supplier Distribution
Inventories
Productions Inventories
Raw Material
Inventory
Work-in-process
Inventory
Raw material
in-transit
Factory
Finished
Goods
Inventory
Customer
Distribution
Inventories
Retailer
Inventory
Orders
Component
Inventory
Sub-assembly
parts in-transit
Warehouse
Inventory
MRO
Inventory
Orders
Maintenance,
repair, and ordering
supplies in-transit
Purchasing
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Production and
Inventory Control
16-7
Shipping and
Traffic
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
What is Just-in-Time?
Management philosophy of continuous and forced
problem solving
Supplies and components are ‘pulled’ through
system to arrive where they are needed when they
are needed.
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Lean Production
Lean Production supplies customers with exactly
what the customer wants, when the customer
wants, without waste, through continuous
improvement.
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What Does Just-in-Time Do?
Attacks waste
Anything not adding value to the product
From the customer’s perspective
Exposes problems and bottlenecks caused by
variability
Deviation from optimum
Achieves streamlined production
By reducing inventory
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Types of Waste
Overproduction
Waiting
Transportation
Inefficient processing
Inventory
Unnecessary motion
Product defects
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© 1995
Corel
Corp.
16-11
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JIT Reduced Waste
at Hewlett-Packard
Waste Reduction (%)
Setup Time
20%
Scrap
30%
Finished Goods
Inventory
Space
30%
40%
Lead Time
50%
Raw Material
Inventory
Work-in-Process
Inventory
50%
82%
0%
20%
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40%
16-12
60%
80%
100%
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Push versus Pull
Push system: material is pushed into
downstream workstations regardless of whether
resources are available
Pull system: material is pulled to a workstation
just as it is needed
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JIT Contribution to Competitive
Advantage
Suppliers
reduced number of vendors
supportive supplier relationships
quality deliveries on time
Layout
work-cell layouts with testing at each step of the process
group technology
movable, changeable, flexible machinery
high level of workplace organization and neatness
reduced space for inventory
delivery direct to work areas
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JIT Contribution to Competitive
Advantage - Continued
Inventory
small lot sizes
low setup times
specialized bins for holding set number of parts
Scheduling
zero deviation from schedules
level schedules
suppliers informed of schedules
Kanban techniques
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JIT Contribution to Competitive
Advantage - Continued
Preventive Maintenance
scheduled
daily routine
operator involvement
Quality Production
statistical process control
quality by suppliers
quality within firm
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JIT Contribution to Competitive
Advantage - Continued
Employee Empowerment
empowered and cross-trained employees
few job classifications to ensure flexibility of employees
training support
Commitment
support of management, employees, and suppliers
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Results
Queue and delay reduction, speedier throughput, freed
assets, and winning orders
Quality improvement, reduces waste and wins orders
Cost reduction increases margin or reduces selling
price
Variability reductions in the workplace reduces waste
and wins orders
Rework reduction, reduces waste and wins orders
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Yielding
Faster response to the customer at lower cost and
higher quality
A competitive advantage!
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16-19
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Just-in-Time
Success Factors
Employee
Empowerment
Quality
Suppliers
Layout
JIT
Preventive
Maintenance
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Inventory
Scheduling
16-20
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Characteristics of JIT Partnerships
Suppliers
Few
Nearby
Repeat business
Analysis and support to enable desirable suppliers to
become or stay price competitive
Competitive bidding mostly limited to new purchases
Buyer resists vertical integration and subsequent
wipeout of supplier business
Suppliers encouraged to extend JIT to their suppliers
(2nd and 3rd tier suppliers)
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Characteristics of JIT Partnerships
Quantities
Steady output rate
Frequent deliveries in small-lot quantities
Long-term contract agreements
Minimal
or no paperwork (use EDI or internet)
Delivery quantities fixed for whole contract term
Little or no permissible overage or underage
Suppliers package in exact quantities
Suppliers reduce their production lot sizes
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Characteristics of JIT Partnerships
Quality
Minimal product specifications imposed on
suppliers
Help suppliers meet quality requirements
Close relationship between buyers’ and
suppliers quality assurance people
Suppliers use poka-yoke and process control
charts instead of lot-sampling techniques
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Characteristics of JIT Partnerships
Shipping
Scheduling of inbound freight
Gain control by use of company-owned or
contract shipping and warehousing
Use of Advanced Shipping Notice (ASN)
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Goals of JIT partnerships
Elimination of unnecessary activities
Elimination of in-plant inventory
Elimination of in-transit inventory
Elimination of poor suppliers
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Concerns of Suppliers
Diversification
Poor customer scheduling
Frequent engineering changes
Quality assurance
Small lot sizes
Physical proximity
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Streamlined Production
Traditional Flow
Production Process
(stream of water)
Suppliers
Flow with JIT
Customers
Inventory (stagnant
ponds)
Suppliers
Material
(water in
stream)
Customers
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Layout
JIT objective: Reduce movement of people and
material
Movement is waste!
JIT requires
Work cells for product families
Moveable or changeable machines
Short distances
Little space for inventory
Delivery directly to work areas
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Work Cell versus
Process Layout
Process Layout
Lathe
Lathe
5
4
1
Saw
2
Saw
2
Heat
Treat
3
Press
Press
Work Cell
6
Saw
Press
Lathe
Lathe
Grinder
1
Grinder
Grinder
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Heat
Treat
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Inventory Hides Problems Just as
Water in a Lake Hides Rocks
Inventory level
Inventory level
Scrap
Setup
time
Process
downtime
Scrap
Setup
time
Quality
problems
Quality
problems
Late
deliveries
Late
deliveries
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Process
downtime
16-30
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Lowering Inventory
Reduces Waste
Work in process inventory level
(hides problems)
Unreliable
Vendors
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Capacity
Imbalances
Scrap
16-31
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Lowering Inventory
Reduces Waste
Reducing inventory reveals
problems so they can be solved.
Unreliable
Vendors
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WIP
Scrap
16-32
Capacity
Imbalances
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Lowering Inventory
Reduces Waste
Reducing inventory reveals
problems so they can be solved.
Unreliable
Vendors
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WIP
Scrap
16-33
Capacity
Imbalances
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Reducing Lot Sizes Increases the
Number of Lots
Customer
orders 10
Lot size = 5
Lot 2
Lot 1
Lot 1
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Lot size = 2
Lot 2 Lot 3 Lot 4
16-34
Lot 5
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Unless Setup Costs are Reduced
Cost
Setup Cost
New optimal
lot size
Original
optimal
lot size
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Lot Size
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Steps to Reduce Setup Time
90 min
Initial Setup Time
Step 1
Separate setup into preparation, and actual setup,
doing as much as possible while the
machine/process is running (save 30 minutes)
Step 2
Move material closer and improve
material handling (save 20 minutes)
Standardize and
improve tooling (save
Step 3
15 minutes)
Use one-touch system to
Training operators and Step 4
eliminate adjustments (save
standardizing work
10 minutes)
Step 5
procedures (save 2
60 min
45 min
25 min
15 min
13 min
minutes)
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Small versus Large Lots
JIT produces same amount in
same time if setup times are
lowered
JIT Small Lots
A
A
B
B
B
C
A
A
B
B
B
C
C
C
Time
Small lots also increase flexibility to meet
customer demands
Large-Lot Approach
A
A
A
A
B
B
B
B
B
B
Time
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Kanban
Japanese word for card
Pronounced ‘kahn-bahn’ (not ‘can-ban’)
Authorizes production from downstream operations
‘Pulls’ material through plant
May be a card, flag, verbal signal etc.
Used often with fixed-size containers
Add or remove containers to change production rate
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Diagram of Outbound Stockpoint
with Warning-Signal Marker
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Kanban Signals “Pull” Material
Through the Process
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JIT in Services
All the techniques
used in
manufacturing are
used in services
Suppliers
Layouts
Inventory
Scheduling
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Attributes of Lean Producers - They
use JIT to eliminate virtually all inventory
build systems to help employees product a perfect part
every time
reduce space requirements
develop close relationships with suppliers
educate suppliers
eliminate all but value-added activities
develop the workforce
make jobs more challenging
reduce the number of job classes and build worker
flexibility
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