Transcript Operations Management Just-in-Time and Lean Production

Operations
Management
Just-in-Time and Lean Production
Systems
Chapter 16
Transparency Masters to accompany Heizer/Render –
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

Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-3
© 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:
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-4
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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.
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-5
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-6
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
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.
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-8
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Lean Production
 Lean Production supplies customers with exactly
what the customer wants, when the customer
wants, without waste, through continuous
improvement.
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-9
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-10
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Types of Waste
 Overproduction
 Waiting
 Transportation
 Inefficient processing
 Inventory
 Unnecessary motion
 Product defects
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
© 1995
Corel
Corp.
16-11
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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%
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
40%
16-12
60%
80%
100%
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-13
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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

Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-14
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-15
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
JIT Contribution to Competitive
Advantage - Continued
 Preventive Maintenance
scheduled
 daily routine
 operator involvement

 Quality Production



statistical process control
quality by suppliers
quality within firm
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-16
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-17
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-18
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Yielding
Faster response to the customer at lower cost and
higher quality
A competitive advantage!
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-19
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Just-in-Time
Success Factors
Employee
Empowerment
Quality
Suppliers
Layout
JIT
Preventive
Maintenance
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
Inventory
Scheduling
16-20
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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)
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-21
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-22
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-23
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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)
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-24
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Goals of JIT partnerships
Elimination of unnecessary activities
Elimination of in-plant inventory
Elimination of in-transit inventory
Elimination of poor suppliers
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-25
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Concerns of Suppliers
 Diversification
 Poor customer scheduling
 Frequent engineering changes
 Quality assurance
 Small lot sizes
 Physical proximity
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-26
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Streamlined Production
Traditional Flow
Production Process
(stream of water)
Suppliers
Flow with JIT
Customers
Inventory (stagnant
ponds)
Suppliers
Material
(water in
stream)
Customers
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-27
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-28
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-29
Heat
Treat
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
Process
downtime
16-30
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Lowering Inventory
Reduces Waste
Work in process inventory level
(hides problems)
Unreliable
Vendors
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
Capacity
Imbalances
Scrap
16-31
© 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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
WIP
Scrap
16-33
Capacity
Imbalances
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Reducing Lot Sizes Increases the
Number of Lots
Customer
orders 10
Lot size = 5
Lot 2
Lot 1
Lot 1
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
Lot size = 2
Lot 2 Lot 3 Lot 4
16-34
Lot 5
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Unless Setup Costs are Reduced
Cost
Setup Cost
New optimal
lot size
Original
optimal
lot size
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
Lot Size
16-35
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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)
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-36
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-37
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-38
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Diagram of Outbound Stockpoint
with Warning-Signal Marker
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-39
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Kanban Signals “Pull” Material
Through the Process
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-40
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
JIT in Services
All the techniques
used in
manufacturing are
used in services
Suppliers
Layouts
Inventory
Scheduling
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-41
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
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
Transparency Masters to accompany Heizer/Render –
Principles of Operations Management, 5e, and Operations
Management, 7e
16-42
© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458