15 1 Lean Operations JustInTime Nigel Slack Stuart

15. 1 Lean Operations & Just-In-Time © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 2 Chapter Coverage • What are lean operations and JIT? • Differences between traditional approach and JIT • Disadvantage of JIT • Lean philosophy of operations • JIT techniques • JIT planning and control © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 3 Lean operations: Is the philosophy of moving towards zero order to develop an operation that is: 1) 2) 3) 4) waste in faster, more dependable, produces higher quality products and service, and operates at low cost. Founded on doing the simple things well, on gradually doing them better and reducing waste every step of the way. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 4 Just In Time, JIT: 1) JIT is an approach of producing goods and services exactly when they are needed. 2) Minimum inventory if not zero 3) Customers wait 4) Encourages efficiency 5) Quality not sacrificed © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 5 JIT definitions: (textbook definitions) • JIT aims to meet demand instantly, with perfect quality and no waste more fully: • improved overall productivity and elimination of waste • cost-effective production and delivery of only the necessary quantity of parts at the right quality, at the right time and place, while using a minimum amount of facilities, equipment, materials and human resources • JIT is dependent on the balance between the supplier’s flexibility and the user’s flexibility • it is accomplished through the application of elements which require total employee involvement and team-work • a key philosophy of JIT is simplification © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 6 Differences between traditional approach and JIT Traditional approach vs. JIT Traditional approach JIT 1) Buffer inventory between each stage act as insulation and gives some degree of independence from upstream stages. 2) More buffer better insulation. 3) Stage A experience breakdown, Stage B can continue producing for some time. 4) Stage C can continue for longer time. 5) Problems in Stage A is not spread throughout. 1) Parts are produced as they are ordered – no buffer inventory. 2) Stage A experience breakdown, immediately all stages will have to stop. 3) Problems in Stage A is apparent to all and becomes everybody's responsibility. 4) Improves the chances of problem being solved. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Cont… Operations Management, 4 E: Chapter 15

15. 7 Cont… Traditional approach vs. JIT Traditional approach 6) 7) JIT Problems are confined within the 5) stage and go unnoticed for a period of time. Seek efficiency by protecting each part of the operation from disruption. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Seek efficiency through exposure of system problems, making problems more evident and change the ‘motivational structure’ of the whole system towards solving the problem. Operations Management, 4 E: Chapter 15

15. 8 Traditional approach: stage A buffer inventory stage B © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 buffer inventory stage C Operations Management, 4 E: Chapter 15

15. 9 JIT approach: orders stage A orders stage B deliveries © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 stage C deliveries Operations Management, 4 E: Chapter 15

15. 10 Disadvantage of JIT: • • The main sacrifice of JIT is low capital utilization (see Fig 15. 10). Why is capital utilization in JIT systems low? i. ii. • Produce only when needed. Any stoppage will affect the rest of the system causing complete stoppage. JIT argument - No point producing output just for its own sake, it is counter productive because extra inventory hides problems and hinders improvement. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 11 JIT APPROACH focus on producing only when needed TRADITIONAL APPROACH focus on high capacity utilization more production at each stage fewer stoppages lower capacity utilization, but more stoppages because of problems high inventory means less chance of problems being exposed and solved extra production goes into inventory because of continuing stoppages at stages © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 low inventory so problems are exposed and solved no surplus production goes into inventory Disadvantage of JIT: Low capacity utilization Operations Management, 4 E: Chapter 15

15. 12 The problem with inventory productivity problems WIP Defective materials Scrap Rework Downtime Reduce the level of inventory (water) to reveal the operations’ problems WIP Defective materials productivity problems Scrap Rework Downtime © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 13 Lean philosophy of operations: 1. Eliminate waste 2. The involvement of everyone 3. Continuous improvement © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 14 Eliminate Waste: • • • Waste can be defined as an activity which does not add value. Identifying waste is the first step towards elimination. The seven types of waste are: 1. 2. 3. 4. Over production Waiting time Transport Process © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 5. Inventory 6. Motion 7. Defective goods Operations Management, 4 E: Chapter 15

15. 15 1. Over production – producing more than is immediately needed by the next process in the operation – greatest source of waste. 2. Waiting times – Machine and labour waiting time are considered waste and they are measure in terms of machine efficiency and labour efficiency. 3. Transport – Moving materials around the plant and together with the double and triple handling of WIP, does not add value. Layout changes which bring processes closer together, improvement in transport methods and workplace organization can reduce waste. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 16 4. Process – the process itself can be a source of waste. For example, some operations may only exist because of poor component design. 5. Inventory – all inventory should be a target for elimination. However, it is only by tackling the causes of inventory that it can be reduced. 6. Motion – an operator may look busy but sometimes no value is being added by the work. Simplification of work is a rich source of reduction in the waste of motion. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 17 7. Defective goods – quality waste is often very significant in operation, even if actual measure of quality are limited. Total cost of quality are much greater than what meets the eye. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 18 The involvement of everyone: • Lean approach to people management is called respect-for-humans system. • It encourages: – Team based problem solving – Job enrichment – less monotonous, more responsibility, rewarding – Job rotation – change department, stage, function, cell – Multi-tasking • Its intention: – High degree of personal responsibility leads to ownership of job © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 19 Continuous improvement: • Lean objectives are expressed in ideals such as “to eliminate waste completely” • Can never be fully achieved • Require continuous improvement to move closer. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 20 JIT techniques: 1) Adopt basic working practices: a. Discipline – comply to work standards that are in place for the safety of staff and the environment, and for the quality of the product. b. Flexibility – give more responsibility to those capable even if it is beyond he’s grade. c. Equality – discard unfair and divisive personnel policies e. g. uniforms and pay structure d. Autonomy – delegate decision making responsibilities to personnel involve in direct activity © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 21 Cont… e. f. Development of personnel – staff training Quality of working life – e. g. involvement in decision making, security of employment, enjoyment and working area facilities g. Creativity – some enjoy not just doing a job successfully by improving it for the next time. h. Total people involvement – take part in selection of new recruit, spending improvement budget, quality issues, etc. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 22 Cont… 2) Design for ease of processing: – – – Design determines 70% – 80% of production cost Design improvement can reduce product cost and make more efficient production process. Example: reduce number of components, use better or cheaper material. 3) Emphasize operations focus: – – – Concept of simplicity, repetition and experience breed competence. Focus processes on manageable sets of products, technologies, volumes and markets Structure operations objective so that they are consistent and coherent © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 23 Cont… 4) Use small simple machines: – – – Use several small machines rather than one big one. Can produce few different components at a given time instead of batch by batch production. More robust, mobile, layout flexibility and reduce investment risk. 5) Layout for smooth flow: – – Long process routes provide opportunity for delay, inventory build up, adds no value to the product and slow down cycle time Workstations are close together, use U shaped line, use cell layout. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 24 6) Cont… Adopt Total Productive Maintenance (TPM): Unreliable processes create waste, for example, waiting time, delays in downstream operations. In a JIT system: operators taught to care for processes: maintenance personnel’s role changes: emphasis: © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 operate correctly detect problems lubricate, clean, adjust collect data training operators long-term planned maintenance condition monitoring operator involvement care for equipment ensuring total reliability Operations Management, 4 E: Chapter 15

15. 25 Cont… 8) Reduce set-up times: – Set-up time is the time taken to changeover the process from one activity to the next. During this time operation seizes. It is reduced by cutting out: • time taken to search for tools and equipment, • Pre-preparation of tasks which delay changeover and • Constant practice of set-up routines 9) Ensure visibility: – – More transparent operation is easier for staff to share in its management and improvement. Problems are easily detected and information becomes simple, fast and visual. 10) Adopt JIT through the supply chain: – Expand JIT culture to key suppliers © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 26 JIT planning and control • JIT planning and control is based on the principle of a ‘pull system’ • What are ‘push’ planning and control & ‘pull’ planning and control? © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 27 Push philosophies of planning and control PUSH CONTROL CENTRAL OPS. PLANNING AND CONTROL SYSTEM Instruction on what to make and where to send it Work centre FORECAST OR DEMAND • Signal ‘pushes’ work through the process • Activities are scheduled by means of a central system and completed in line with central instructions • No consideration for succeeding stages’ requirements • High inventory © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 28 Pull philosophies of planning and control PULL CONTROL Work centre Delivery Request Work centre Delivery DEMAND Delivery • Signal ‘pulls’ work only when required. • Only customer can trigger movement – sets the work pace. • Lesser chances of inventory build-up. • JIT favored. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 29 Kanban control • • It is a system used of JIT planning and control. Based on the ‘pull’ planning and control. Kanban is the Japanese word for card or signal. Card or signal used by customer stage to instruct supplier stage to send more materials. Cont… © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 30 Cont… Kanban control • Three types of Kanban: 1. The move or conveyor kanban – Signals a previous stage that material can be withdrawn from inventory. 2. The production kanban – Signals a production process to start producing a part to be place in inventory. 3. The vendor kanban – Signals an external supplier to send material to a stage. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 31 Cont… Kanban control • • Receipt of kanban triggers movement, production or supply of one unit. Two kanbans → two units Kanban comes in different form – empty container, verbal instruction, color tokens, etc… Two kanban procedure: – – Single-card system: either move or vendor kanban Dual-card system: use move and production kanban © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 32 Work centre A Work centre B m m Stage A m m m Stage B Output stock Full standard container m Move kanban Kanban holding box © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 m m m Output stock Empty standard container Flow path for standard containers Flow path for move kanban Operations Management, 4 E: Chapter 15

15. 33 • Each stage has a work center and an area for holding inventory. • Loop 1: Stage B requires more parts → withdraw a container from output stock of stage A → empty container is kanban and sent to stage A work center → signal for stage A to start production • Loop 2: Move kanban taken from holding box to output stock point → signal to move a full container from stage A to stage B. © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 34 Kanban rules: • Each container must have a kanban card indicating part number and description, user and maker location, and quantity. • The parts are always pulled by the user or customer. • No parts are started without a kanban. • All containers contain exactly their number of parts. • No defective parts may be sent to the user or customer. • The maker can only produce enough parts to make up what has been withdrawn. • The number of kanbans should be reduced. • The time period should be made shorter © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15

15. 35 The End © Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4 E: Chapter 15