Transcript Chapter 15
Chapter 15 Just-In-Time and Lean Production
JIT In Services
Competition on speed & quality
Multifunctional department store workers
Work cells at fast-food restaurants
Just-in-time publishing for textbooks - on demand publishing a growing industry
Construction firms receiving material just as needed
What is JIT ?
Producing only what is needed, when it is needed
A philosophy
An integrated management system
JIT’s mandate: Eliminate all waste
Lean Operations: Best Implementation is Toyota Production System • TPS is a production
management
through continuous improvement system that aims for the “ideal” • Includes, but goes way beyond JIT. Pillars: – Synchronization • • Reduce transfer batch sizes • Level load production
Pull
production control systems (vs.
push
):
Kanban
• Quality at source • Layout: Cellular operations – Continuous Improvement (Kaizen): through visibility & empowerment ....
Basic Elements of JIT
1.
2.
3.
4.
5.
6.
Flexible resources Cellular layouts Pull production system Kanban production control Small-lot production Quick setups 7.
8.
Uniform production levels Quality at the source 9.
Total productive maintenance 10. Supplier networks
Toyota’s waste elimination in Operations
1. Overproduction 2. Waiting 3. Inessential handling 4. Non-value adding processing 5. Inventory in excess of immediate needs 6. Inessential motion 7. Correction necessitated by defects
Other Important Points
• Only make what you need • only buy what you need,when you need it • SMED – single minute exchange of dies • continuous process improvement • as the level of the water lowers, new problems or inefficiencies are identified
Reducing waste: Increase Problem Visibility Lower the Water to Expose the Rocks
Missed Due Dates Too Much Space Late Deliveries Poor Quality Too much paperwork Scrap & Rework 100% inspection Engineering Change Orders Long queues Machine Downtime
Waste in Operations
Waste in Operations
Waste in Operations
Flexible Resources
Multifunctional workers
General purpose machines
Study operators & improve operations
The Push System
• Pre-planned issues of supplies/merchandise regardless of customer demand criteria • Creates excess and shortages • not efficient over the long run
The Pull System
Material is pulled through the system when needed
Reversal of traditional push system where material is pushed according to a schedule
Forces cooperation Prevent over and underproduction
Kanban Production Control System
Kanban card indicates standard quantity of production
Derived from two-bin inventory system
Kanban maintains discipline of pull production
Production kanban authorizes production
Withdrawal kanban authorizes movement of goods
A Sample Kanban
The Origin of Kanban
a) Two-bin inventory system system Bin 1 Bin 2 Reorder card Q - R
R
b) Kanban inventory Kanban Q = order quantity R = reorder point - demand during lead time
R
Types of Kanbans
Bin Kanban - when bin is empty replenish
Kanban Square
Marked area designed to hold items
Signal Kanban
Triangular kanban used to signal production at the previous workstation
Material Kanban
Used to order material in advance of a process
Supplier Kanbans
Rotate between the factory and suppliers
Small-Lot Production
In theory:
Requires less space & capital investment
Moves processes closer together
Makes quality problems easier to detect
Makes processes more dependent on each other
Components of Lead Time
Processing time
Reduce number of items or improve efficiency
Move time
Reduce distances, simplify movements, standardize routings
Waiting time
Better scheduling, sufficient capacity
Setup time
Generally the biggest bottleneck
SMED Principles
1. Separate internal setup from external setup 2. Convert internal setup to external setup 3. Streamline all aspects of setup 4. Perform setup activities in parallel or eliminate them entirely
Common Techniques for Reducing Setup Time
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Preset Buttons/settings Quick fasteners Reduce tool requirements Locator pins Guides to prevent misalignment Standardization Easier movement
Uniform Production
Results from smoothing production requirements
Kanban systems can handle +/- 10% demand changes
Smooths demand across planning horizon
Mixed-model assembly steadies component production
Quality at the Source
Jidoka is authority to stop production line
Andon lights signal quality problems Undercapacity scheduling allows for planning, problem solving & maintenance
Visual control makes problems visible Poka-yoke prevents defects (mistake proof the system)
Visual Control
In use at Harley-Davidson and at Opal Plant - Russelsheim
Visual Control
Kaizen
Continuous improvement Requires total employment involvement
Essence of JIT is willingness of workers to
Spot quality problems
Halt production when necessary
Generate ideas for improvement
Analyze problems
Perform different functions
Total Productive Maintenance (TPM)
Commercial industry answer to PMCS
Breakdown maintenance
Repairs to make failed machine operational
Preventive maintenance
System of periodic inspection & maintenance to keep machines operating
TPM combines preventive maintenance & total quality concepts
TPM Requires Management to:
Design products that can be easily produced on existing machines
Design machines for easier operation, changeover, maintenance
Train & retrain workers to operate machines Purchase machines that maximize productive potential
Design preventive maintenance plan spanning life of machine
Goals of JIT
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2.
3.
4.
5.
6.
7.
Reduced inventory where?
Improved quality Lower costs Reduced space requirements Shorter lead time Increased productivity Greater flexibility 8.
Better relations with 9.
suppliers Simplified scheduling and control activities 10. Increased capacity 11. Better use of human resources 12. More product variety 13. Continuous Process Improvement
JIT Implementation
Use JIT to finely tune an operating system
Somewhat different in USA than Japan
JIT is still evolving
JIT as an inventory reduction program isn’t for everyone - JIT as a CPI program is!
Some systems need Just-in Case inventory
Reverse Logistics: Important or Irritant?
Estimated $100 billion industry in 2006
“In an ideal world, reverse logistics would not exist.” Jim Whalen, “In Through the Out Door,” Warehousing Management, March 2001
“Now, more than ever, reverse logistics is seen as being important.”
Dale Rogers, Going Backwards, 1999
Reverse Logistics - What is it?
The Army’s Definition The return of serviceable supplies that are surplus to the needs of the unit or are unserviceable and in need of rebuild or remanufacturing to return the item to a serviceable status
Reverse Logistics - What is it?
The Commercial Perspective
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Reverse Logistics is the process of moving products from their typical final destination to another point, for the purpose of capturing value otherwise unavailable, or for the proper disposal of the products.
Typical Reverse Logistics Activities
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Processing returned merchandise damaged, seasonal, restock, salvage, recall, or excess inventory
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Recycling packaging materials/containers
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Reconditioning, refurbishing, remanufacturing Disposition of obsolete stuff Hazmat recovery
Why Reverse Logistics?
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Competitive advantage Customer service - Very Important: 57% - Important: 18% - Somewhat/unimportant:23%
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Bottom line profits
Reverse Logistics - New Problem?
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Sherman Montgomery Ward’s - 1894 Recycling/remanufacturing in 1940s World War II - 77,000,000 square feet of storage across Europe with over $6.3 billion in excess stuff
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Salvage and reuse of clothing and shoes in the Pacific Theater World War II
Key Dates in Reverse Logistics
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World War II – the advent of refurbished automobile parts due to shortages 1984 - Tylenol Scare - Johnson and Johnson 1991 - German ordinance that put teeth in environmental reverse pipeline Summer 1996 – UK Packaging and Packaging Waste Legislation 1998 - first real study of reverse logistics in the US - University of Nevada, Reno 2001 – EU goal of 50-65% recovering or recycling of packaging waste
Reverse Logistics
A US Army Perspective
Operation Iraqi Freedom
The US Army moved the equivalent of 150 Wal-Mart Supercenters to Kuwait in a matter of a few months
Military Operations and Excess “In battle, troops get temperamental and ask for things which they really do not need. However, where humanly possible, their requests, no matter how unreasonable, should be answered.” George S. Patton, Jr.
Jane’s Defence Weekly
“Recent report (Aug 2003): There is a 40 hectare (~100 acres) area in Kuwait with items waiting to be retrograded back to the US.”
Does this create a problem?
From GAO Audit Report
From GAO Audit Report
Reverse Logistics
The Commercial Perspective
Reverse Logistics
• • •
Rate of returns?
Cost to process a return?
Time to get the item back on the shelf if resaleable?
Costs - above the cost of the item
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Merchandise credits to the customers.
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The transportation costs of moving the items from the retail stores to the central returns distribution center.
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The repackaging of the serviceable items for resale.
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The cost of warehousing the items awaiting disposition.
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The cost of disposing of items that are unserviceable, damaged, or obsolete.
Costs
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Process inbound shipment at a major distribution center = 1.1 days
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Process inbound return shipment = 8.5 days Cost of lost sales Wal-Mart: Christmas 2003 returns = 4 Days of Supply for all of Wal-Mart = 2000 Containers PalmOne - 25% return rate on PDAs
More Costs
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Hoover - $40 Million per year Cost of processing $85 per item Unnamed Distribution Company $700K items on reverse auction
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2001 - over $60 billion in returns; $52 billion excess to systems; $40 billion to process
Is it a problem?
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Estimate of 2004 holiday returns: $13.2 billion % of estimated 2004/2005 holiday returns: 25% Wal-Mart: $6 Billion in annual returns = 17,000 truck loads (>46 trucks a day) Electronics: $10 Billion annually in returns Personal Computers: $1.5 Billion annually = approximately $95 per PC sold 79% of returned PCs have no defects Home Depot ~ $10 million in returns in the stores alone Local Wal-Mart ~ $1 million a month in returns
Is it a Problem?
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European influence – spread to US - Green Laws Estee Lauder - $60 million a year into land fills FORTUNE 500 Company - $200 million over their $300 million budget for returns Same Provider - 40,000 products returned per month; 55% no faults noted K-Mart - $980 million in returns 1999 Warranty vice paid repairs
More consequences
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Increased Customer Wait Times Loss of Confidence in the Supply System
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Multiple orders for the same items Excess supplies in the forward pipeline Increase in “stuff” in the reverse pipeline
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Constipated supply chain
Impact?
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Every resaleable item that is in the reverse supply chain results in a potential stock out or “zero balance” at the next level of supply.
Creates a “stockout” do-loop
Results?
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This potential for a stock out results in additional parts on the shelves at each location to prevent a stock out from occurring.
More stocks = “larger logistics footprint” = the need for larger distribution centers and returns centers.
Six Symptoms (Continued) 5. The total cost of the returns process is unknown.
6. Customers lose confidence in the repair activities.
Reverse Logistics
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According to the Reverse Logistics Executive Council, the percent increase in costs for processing a return, as compared to a forward sale, is an astounding 200-300%. “In the U.S. alone, the cost is an annual $100 billion.” Forbes, March 2005 Typically, as many as 8-12 more steps per item in the reverse pipeline than items in the forward pipeline
“The truth is, for one reason or another, materials do come back and it is up to those involved in the warehouse to effectively recover as much of the cost for these items as possible.”
- Whalen, “In Through the Out Door”
RFID and Returns
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Visibility Tracking Component tracking Data Warehouse on what, why, when Altered products Not for every product
Impacts of Reverse Logistics
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Forecasting Carrying costs Processing costs Warehousing Distribution Transportation Personnel Marketing
Upcoming
• Chapters 14, 16, 4 • 4 May – no class