Transcript Just-In-Time Manufacturing

A PowerPoint Presentation
By
MD. ABDUR RAZZAK
Just-In-Time
Manufacturing
Just-In-Time Manufacturing:
A Definition
• Uses a systems approach to develop
and operate a manufacturing system
• Organizes the production process so
that parts are available when they
are needed
• A method for optimizing processes
that involves continual reduction of
waste
Central Themes Surrounding
Just-In-Time
• Simplicity
• Quality
• Elimination of Waste
Just-In-Time
Techniques
• Inventory Reduction as a Tool
for Improvement
• Supplier Relationships
• Inventory “Pull”
• Uniform Plant Loading
Goals of Just-In-Time
Systems
• Design for Optimum Quality and Cost
• Minimize resources needed for Design and
Manufacturing
• Be Responsive to the Customers Needs
• Develop Trust and Open Relationships with
Suppliers and Customers
• Develop a Commitment to Improve the
Total Manufacturing System
Advantages of JIT
Manufacturing
• Materials Cost Savings
• Manufacturing Cost Savings
• Sales Cost Savings
Disadvantages of JustIn-Time Manufacturing
• Implementing thorough JIT procedures can
involve a major overhaul of your business
systems - it may be difficult and expensive
to introduce.
• JIT manufacturing also opens businesses to
a number of risks, notably those associated
with your supply chain. With no stocks to
fall back on, a minor disruption in supplies
to your business from just one supplier
could force production to cease at very
short notice.
A Real World Example
• PCs Just In Time Management:
Del Computer Corporation has finally tuned its Just-inTime system so that an order for a customized personal
computer that comes in over the internet at 9 AM. can be
on a delivery truck to the customer by 9 P.M. In addition,
Dell's low cost production system allows it to under price
its rivals by 10% to 15%. This combination has made Dell
the envy of the personal computer industry and has
enabled the company to grow at five times the industry
rate. How does the company's just in time system deliver
lower costs? "While machines from Compaq and IBM can
languish on dealer shelves for two months Dell does not
start ordering components and assembling computers
until an order is booked. That may sound like no biggie,
but the price of PC parts can fall rapidly in just a few
months. By ordering right before assembly, Dell figures it
s parts, on average, are 60 days newer than those in an
IBM or Compaq machine sold at the same time. That can
translate into a 6% profit advantage in components alone
Kanbans
• Learn what Kanbans are and
the different way the
terminology is used in
industry
• Understand how to setup a
kanban
• Understand how to
implement a kanban system
Kanban Definition
What is Kanban?
• Card system that controls production & inventory
• Visual “pull” system vs. a “black box” push system (ie - MRP)
Sheet
Metal
Kanban – No Cards
Final Assy
Weld
Paint
Sheet Metal
Kanban
Weld
Kanban
Milk Man
2 days supply
Based on current Mix
Bread Man
1 Week supply
1 day to
paint
Steps:
1. Final assy pulls from paint kanban.
2. Paint pulls from Weld kanban
3. Welder replenishes weld empties, pulls
from S/M Kanban
4. Paint replenishes paint kanban daily and
puts finished units back in Paint Kanban
5. Sheet metal replenishes S/M Kanban
once a week
Supplier Kanban With Cards
Supplier delivers Material
with Kanban cards from
yesterday attached and picks
up today's Kanban cards
Material
Withdrawal
Kanban Post
SIPLACE 80S
SMT Machines
Material Handler (Water
Spider) delivers material to
supermarket
Material Supermarket
Lean Materials Strategy Will Maximize Inventory
Turns Through Supplier Managed Inventories
Benefits of Kanban
• Primary
– Eliminate over-production, the #1 waste
– Produce only what is ordered, when ordered, &
quantity ordered
• Secondary
– Increase flexibility to meet customer demand
– Reduction in scheduling by Production Control &
Manufacturing
– Competitive advantage by sequencing shipments
to customers (what they want, when they want
it, in the order they want it!)
disadvantage of Kanban
• A breakdown in the Kanban
system can result in the entire
line shutting down.
• The throughput of a Kanban
system is not managed but is
instead a result of controlled
WIP and known cycle times.
Toyota Kanban Timeframe
• Took 12 years to flow down kanban within
Toyota
• It then took:
– 8 years to have 60% of first tier suppliers on
kanban
– 20 years to get 98% of first tier suppliers on
kanban
– Only approximately 50% of Toyota suppliers
are using kanban systems internally today
Total Quality Management (TQM) System:
• It is the process of individual & organizational
development the purpose of which is to increase
the level of satisfaction of all the stakeholders
•IS THE SET OF MANAGEMENT PROCESSES AND
SYSTEMS THAT CREATE DELIGHTED CUSTOMERS
THROUGH EMPOWERED EMPLOYEES, LEADING TO
HIGHER REVENUES & LOWER COST
COMPONENTS OF TQM
1.
2.
3.
4.
PRICE REDUCTION
CUSTOMER SATISFACTION
INVOLVEMENT OF EVERYONE
CONTINUOUS QUALITY
IMPROVEMENT
5. LEADERSHIP
The goal (1)
• The main goal of developing
TQM (Total Quality Management)
culture in the company is to
ensure the fulfilment of
customer needs and
expectations, even go beyond
the expectations.
Advantages of Total
Quality Management
•
•
•
•
Improves reputation- faults and
problems are spotted and sorted
quicker (zero defects)
Higher employee morale– workers
motivated by extra responsibility,
team work and involvement in
decisions of TQM
Lower costs – Decrease waste as
fewer defective products and no
need for separate
Quality Control inspectors
Disadvantages of Total Quality
Management
initial introduction costs- training workers and
disrupting current production whilst being
implemented
Benefits may not be seen for several years
Workers may be resistant to change – may feel less
secure in jobs
Real Business
Example
TQM is not just a big company phenomenon. Penril
DataComm is a maryland designer and producer of
data communications and equipment. Before
embarking on TQM, defect rates were so high that
the company was reworking or scrapping one third
of everything it made. Applying TQM techniques
resulted in an 81% decrease in defects, an 83%
decrease in failures in the first three months of use,
and a 73% decrease in first year warranty repairs.
TQM was credited with taking the company "from
the brink of financial disaster" to excellent financial
Practical work
• Development of self-assessment
method
• Implementation of the method+
interviews
• Problematic areas and analysis
Six Sigma Definitions
• “Six Sigma is a business improvement
approach that seeks to find and eliminate
causes of mistakes or defects in business
processes by focusing on process outputs
that are of critical importance to
customers.” (Snee, 2004).
• “Six Sigma is a useful management
philosophy and problem-solving
methodology but it is not a comprehensive
management system.
What is the Six Sigma Philosophy?
Science
 We don’t know what
we don’t know.
Six Sigma
 If we can’t measure
it, we really don’t
know much about it.
Art
 If we don’t know
much about it, we
can’t control it.
Magic
 If we can’t control
it, we are at the
mercy of chance.
Focus on the Customer!
What Is Six Sigma?
 Know
What’s Important
to the Customer (CTQ)
 Reduce
Defects (DPMO)
 Center Around
Target
(Mean)
 Reduce
Variation
(Standard Deviation)
GE Company Proprietary
November 1998
Process Philosophy
?
Which Business Function
Needs It?
SERVICE
ADMIN.
DESIGN
PURCH.
6 Sigma
Methods
QA
Marketing
MFG.
MAINT.
As long as there is a process that produces an output, whether it is
a manufactured product, data, an invoice, etc…, we can apply the
Six Sigma Breakthrough Strategy. For these processes to perform
to a customer standard they require correct inputs!!!
Advantages and Disadvantages of
Six Sigma
Six Sigma has its both advantages and disadvantages,
Following are some points which we have
examined:� Six Sigma aims to maximize customer
satisfaction and minimize defects - Globalization
and instant access to information, products and
services continue to change the way our customers
conduct business. Today's competitive environment
leaves no room for error. We must delight our
customers and relentlessly look for new ways to
exceed their expectations. This is why Six Sigma
Quality has become a part of our culture.
Advantages and
Disadvantages of Six
Sigma
In the sales field there is an old saying; "Eagles never fly with
doves. But to find angles you go through lots of doves." In today's
world there is so much information on turnover based on specific
industries so baseline the norm should be easy to come up with
unless your industry is very special. Getting a sigma value is very
easy as well with your current date on how your company is doing.
Change however may not be from a process improvement unless
management is willing to change as well.
� Research proves that firms that successfully implement Six
Sigma perform better in virtually every business category,
including return on sales, return on investment, employment
growth and stock value growth. The strategy that has to be applied
in today's educational arena is a thoughtful concern on the part of
the management to understand customer needs and strive to
reduce defects throughout all educational processes.
Business Process
Reengineering
Business Process Reengineering Methodology …
Current
Products/Services
Future
Products/Services
Information
Current
Business
Processes
Technology
Skills
Current
Environments (AS-IS)
S
T
R
A
T
E
G
I
C
D
I
R
E
C
T
I
O
N
S
Information
Technology
Future
Business
Processes
Skills
Future
Environments (TO-BE)
Transition/Implementation (Change Management)
AIMCORP-Automated Information Management Corporation
BUSINESS PROCESS
REENGINEERING
• The search for, and
implementation of, radical
change in business processes to
achieve breakthrough results
• Synonyms: business process
redesign, business
transformation, process
innovation, business reinvention,
change integration
BPR: LESSONS LEARNED
• Get the strategy straight first
• Lead from the top
• Create a sense of urgency
• Design from the outside in
(customer)
BPR: STRATEGY*
• Stakeholder Assessment shareholders, customers, employees
• Determine which stakeholder
expectations should be met to gain
competitive advantage
• Determine how to redesign to meet
expectations
• Map out IT solutions to support
* Adapted from A.D. Little Inc.
Ford Motor Company
•Accounts Payable function
•500 people
•Most work on mistakes between
Purchase
Orders
Receiving
Documents
Invoices
Ford (cont)
Ford (cont)
Risks in BPR
•Advocates report failure rates of
50% to 70%
•Sutcliffe [1999] reviewed
difficulties
–Employee resistance to change
–Inadequate attention to employee
concerns
–Inappropriate staffing
–Inadequate technologies
(Constrained)
Reengineering Advantages
(cont)
• ERP provides the tool and
structure to facilitate change
• Proven and based on best
practices
• Forces change to happen
• ERP bounds the design
• Design is feasible and we know
it works (it’s been proven – in
other companies)
• Cheaper than clean slate
Common Benefits of BPR
• Enterprise integration
– Departments are consolidated
– Several jobs are combined into
one job
• Worker empowerment
– There is both horizontal and
vertical reorganization
– Handoffs are eliminated
– There are fewer rules and less
coordination is required
Common Benefits of BPR,
Cont’d
• Number of steps in a process
are reduced
– This is simplification
– Inspections, checks and controls
are reduced or eliminated
• The steps are performed in a
more natural order
The Theory of
Constraints
The Theory of Constraints (TOC) is a body of knowledge
that has been developed over the past twenty years by Dr
Eliyahu Goldratt.
This body of knowledge challenges many of the assumptions
about how we currently manage our businesses and
organisations
The Theory of Constraints is
based on the premise that:“Every real system, such as a
business, must have within it at
least one constraint. If this were
not the case then the system
could produce unlimited
amounts of whatever it was
striving for, profit in the case of a
business.……………….”
Types of Constraint
•
•
•
•
•
•
THE MARKET
CAPACITY
RESOURCES
SUPPLIERS
FINANCE
KNOWLEDGE OR
COMPETENCE
• POLICY
The Five Steps
Step 1:
Identify the system's constraint(s)
Step 2:
Decide how to exploit the
system’s
constraint(s)
Step 3:
Subordinate everything else to the
above
decision
Step 4:
Elevate the system’s constraint(s)
Step 5:
If in the previous step, a
constraint has been
broken go
back to step 1, but do not allow
inertia to become the system’s
‘TOC’ Applications
1. Production
2. Distribution and Supply
Chain
3. Financial Management
4. Marketing
5. Strategic Planning
6. Project Management
Evaluation of TOC
• Advantages
– Improves capacity decisions in the
short-run
– Avoids build up of inventory
– Aids in process understanding
– Avoids local optimization
– Improves communication between
departments
Evaluation of TOC
• Disadvantages
– Negative impact on nonconstrained areas
• Diverts attention from other areas that
may be the next constraint
• Temptation to reduce capacity
Evaluation of TOC
• Ignores long-run considerations
– Introduction of new products
– Continuous improvement in nonconstrained areas
• May lead organization away
from strategy
• Not a substitute for other
accounting methods
Real Business Example
The Lessons plant of Baxter International makes medical
products such as sterile bags. Management of the plant is
actually aware of the necessity to actively manage its
constraints. For example, when materials are a constraint,
management may go to a secondary vendor and purchase
material at a higher cost than normal. When a machine is the
constraint, a weekend shift is often added on the machine. If a
particular machine is chronically the constraint and
management has exhausted the possibilities of using it more
effectively, then additional capacity is purchased. For example
when the constraint was the plastic extruding machines, a new
extruding machine was ordered.
However even before the machine
arrived, management had
determined that the constraint
would shift to the blenders once the
new extruding capacity was added.
Therefore a new blender was already
planned. By thinking ahead and
focusing on the constraints,
management is able to increase the
plant's real capacity at the lowest
possible cost.
Questions?
business is a Journey,
not a Destination