16 JIT and Lean Operations Power Point presentation

16 JIT and Lean Operations Power. Point presentation to accompany Heizer and Render Operations Management, 10 e Principles of Operations Management, 8 e Power. Point slides by Jeff Heyl © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 1

JIT/Lean Operations Good production systems require that managers address three issues that are pervasive and fundamental to operations management: eliminate waste, remove variability, and improve throughput © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 2

1. Eliminate Waste u Waste is anything that does not add value from the customer point of view u Storage, inspection, delay, waiting in queues, and defective products do not add value and are 100% waste © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 3

Ohno’s Seven Wastes u Overproduction u Queues u Transportation u Inventory u Motion u Overprocessing u Defective products © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 4

Eliminate Waste u Other resources such as energy, water, and air are often wasted u Efficient, sustainable production minimizes inputs, reduces waste u Traditional “housekeeping” has been expanded to the 5 Ss © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 5

The 5 Ss u Sort/segregate – when in doubt, throw it out u Simplify/straighten – methods analysis tools u Shine/sweep – clean daily u Standardize – remove variations from processes u Sustain/self-discipline – review work and recognize progress © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 6

The 5 Ss u Sort/segregate – when in doubt, throw it out u Simplify/straighten – methods analysis tools u Two additional Ss u Shine/sweep – clean daily practices u Safety – build in good u Standardize – remove variations u Support/maintenance – reduce from processes variability and unplanned u Sustain/self-discipline – review work downtime and recognize progress © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 7

2. Remove Variability u JIT systems require managers to reduce variability caused by both internal and external factors u Variability is any deviation from the optimum process u Inventory hides variability u Less variability results in less waste © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 8

Sources of Variability 1. Incomplete or inaccurate drawings or specifications 2. Poor production processes resulting in incorrect quantities, late, or non-conforming units 3. Unknown customer demands © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 9

Sources of Variability 1. Incomplete or inaccurate drawings or specifications 2. Poor production processes resulting in incorrect quantities, late, or non-conformingnvunits entory i d n a T s I l o o t th J o e B v i ect f f 3. Unknown customer demands e e r a n o i of t c s e u s d u e r a c g n i y f i t n e in id y t i l i b a i r a v © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 10

3. Improve Throughput u The time it takes to move an order from receipt to delivery u The time between the arrival of raw materials and the shipping of the finished order is called manufacturing cycle time u A pull system increases throughput © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 11

Improve Throughput u By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement u Manufacturing cycle time is reduced u Push systems dump orders on the downstream stations regardless of the need © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 12

Just-In-Time (JIT) u Powerful strategy for improving operations u Materials arrive where they are needed when they are needed u Identifying problems and driving out waste reduces costs and variability and improves throughput u Requires a meaningful buyer-supplier relationship © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 13

JIT and Competitive Advantage © 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 16. 1 16 - 14

JIT and Competitive Advantage © 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 16. 1 16 - 15

JIT Partnerships u JIT partnerships exist when a supplier and purchaser work together to remove waste and drive down costs u Four goals of JIT partnerships are: u Removal of unnecessary activities u Removal of in-plant inventory u Removal of in-transit inventory u Improved quality and reliability © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 16

JIT Partnerships Figure 16. 2 © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 17

JIT Layout Reduce waste due to movement JIT Layout Tactics Build work cells for families of products Include a large number operations in a small area Minimize distance Design little space for inventory Improve employee communication Use poka-yoke (fail safe) devices Build flexible or movable equipment Cross-train workers to add flexibility Table 16. 1 © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 18

Distance Reduction u Large lots and long production lines with single-purpose machinery are being replaced by smaller flexible cells u Often U-shaped for shorter paths and improved communication u Often using group technology concepts © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 19

Increased Flexibility u Cells designed to be rearranged as volume or designs change u Applicable in office environments as well as production settings u Facilitates both product and process improvement © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 20

Impact on Employees u Employees may be cross trained for flexibility and efficiency u Improved communications facilitate the passing on of important information about the process u With little or no inventory buffer, getting it right the first time is critical © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 21

Reduced Space and Inventory u With reduced space, inventory must be in very small lots u Units are always moving because there is no storage © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 22

JIT Inventory is at the minimum level necessary to keep operations running JIT Inventory Tactics Use a pull system to move inventory Reduce lot sizes Develop just-in-time delivery systems with suppliers Deliver directly to point of use Perform to schedule Reduce setup time Use group technology Table 16. 2 © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 23

Reduce Variability Inventory level Process downtime Scrap Setup time Quality problems Late deliveries Figure 16. 3 © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 24

Reduce Variability Inventory level Process downtime Scrap Setup time Quality problems Late deliveries Figure 16. 3 © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 25

Reduce Variability Inventory level No scrap Setup time reduced Quality problems removed Late deliveries © 2011 Pearson Education, Inc. publishing as Prentice Hall Process downtime removed Figure 16. 3 16 - 26

Reduce Inventory u Reducing inventory uncovers the “rocks” u Problems are exposed u Ultimately there will be virtually no inventory and no problems u Shingo says “Inventory is evil” © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 27

Reduce Lot Sizes Q 1 When average order size = 200 average inventory is 100 Inventory 200 – Q 2 When average order size = 100 average inventory is 50 100 – Time Figure 16. 4 © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 28

Reduce Lot Sizes u Ideal situation is to have lot sizes of one pulled from one process to the next u Often not feasible u Can use EOQ analysis to calculate desired setup time u Two key changes necessary u Improve material handling u Reduce setup time © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 29

Reduce Setup Costs u High setup costs encourage large lot sizes u Reducing setup costs reduces lot size and reduces average inventory u Setup time can be reduced through preparation prior to shutdown and changeover © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 30

Lower Setup Costs Holding cost Cost Sum of ordering and holding costs T 1 Setup cost curves (S 1, S 2) T 2 S 1 Lot size Figure 16. 5 © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 31

Reduce Setup Times Initial Setup Time Step 1 90 min — Separate setup into preparation and actual setup, doing as much as possible while the machine/process is operating (save 30 minutes) Move material closer and improve material handling (save 20 minutes) Step 2 Standardize and improve tooling (save 15 minutes) Step 3 Step 4 Step 5 Figure 16. 6 Step 6 © 2011 Pearson Education, Inc. publishing as Prentice Hall Use one-touch system to eliminate adjustments (save 10 minutes) Training operators and standardizing work procedures (save 2 minutes) Repeat cycle until subminute setup is achieved 60 min — 45 min — 25 min — 13 min — — 16 - 32

JIT Scheduling u Schedules must be communicated inside and outside the organization u Level schedules u Process frequent small batches u Freezing the schedule helps stability u Kanban u Signals used in a pull system © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 33

JIT Scheduling Better scheduling improves performance JIT Scheduling Tactics Table 16. 3 Communicate schedules to suppliers Make level schedules Freeze part of the schedule Perform to schedule Seek one-piece-make and one-piece move Eliminate waste Produce in small lots Use kanbans Make each operation produce a perfect part © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 34

Level Schedules u Process frequent small batches rather than a few large batches u Make and move small lots so the level schedule is economical u “Jelly bean” scheduling u Freezing the schedule closest to the due dates can improve performance © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 35

Scheduling Small Lots JIT Level Material-Use Approach A A B B B C B C C C Large-Lot Approach A A A B B Time © 2011 Pearson Education, Inc. publishing as Prentice Hall B B Figure 16. 7 16 - 36

Kanban u Kanban is the Japanese word for card u The card is an authorization for the next container of material to be produced u A sequence of kanbans pulls material through the process u Many different sorts of signals are used, but the system is still called a kanban © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 37

Kanban 1. User removes a standard sized container 2. Signal is seen by the producing department as authorization to replenish Signal marker on boxes Figure 16. 8 Part numbers mark location © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 38

Kanban Material/Parts Supplier Final assembly Finished goods Customer order Work cell Kanban Figure 16. 9 © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 39

JIT Quality u Strong relationship u JIT cuts the cost of obtaining good quality because JIT exposes poor quality u Because lead times are shorter, quality problems are exposed sooner u Better quality means fewer buffers and allows simpler JIT systems to be used © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 40

JIT Quality Tactics Use statistical process control Empower employees Build fail-safe methods (pokayoke, checklists, etc. ) Expose poor quality with small lot JIT Provide immediate feedback Table 16. 4 © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 41

Lean Operations u Different from JIT in that it is externally focused on the customer u Starts with understanding what the customer wants u Optimize the entire process from the customer’s perspective © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 42

Building a Lean Organization u Transitioning to a lean system can be difficult u Lean systems tend to have the following attributes u Use JIT techniques u Build systems that help employees produce perfect parts u Reduce space requirements © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 43

Building a Lean Organization u Develop partnerships with suppliers u Educate suppliers u Eliminate all but value-added activities u Develop employees u Make jobs challenging u Build worker flexibility © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 44

Lean Operations in Services u The JIT techniques used in manufacturing are used in services u Suppliers u Layouts u Inventory u Scheduling © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 45