JustinTime and Lean Production Systems Professor Ahmadi Slide

Just-in-Time and Lean Production Systems Professor Ahmadi Slide 1

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 Slide 2

Types of Waste n n n n Overproduction Waiting Transportation Inefficient processing Inventory Unnecessary motion Product defects Slide 3

What is Just-in-Time? n n n 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. What Does Just-in-Time Do? Attacks waste • Anything not adding value to the product u n From the customer’s perspective Exposes problems and bottlenecks caused by variability • Deviation from optimum n Achieves streamlined production • By reducing inventory Slide 4

Push versus Pull n Push system: material is pushed into downstream workstations regardless of whether resources are available n Pull system: material is pulled to a workstation just as it is needed Slide 5

JIT Contribution to Competitive Advantage n Suppliers • • • n reduced number of vendors supportive supplier relationships quality deliveries on time Layout • • • work-cell layouts with testing at each step of the process movable, changeable, flexible machinery high level of workplace organization and neatness reduced space for inventory delivery direct to work areas Slide 6

JIT Contribution to Competitive Advantage Continued n Inventory • small lot sizes • low setup times • specialized bins for holding set number of parts n Scheduling • • zero deviation from schedules level schedules suppliers informed of schedules Kanban techniques Slide 7

JIT Contribution to Competitive Advantage - Continued n Preventive Maintenance • scheduled • daily routine • operator involvement n Quality Production • • • statistical process control quality by suppliers quality within firm Slide 8

JIT Contribution to Competitive Advantage - Continued n n Employee Empowerment • empowered and cross-trained employees • few job classifications to ensure flexibility of employees • training support Commitment • support of management, employees, and suppliers Slide 9

Results n n n Queue and delay reduction, speedier throughput, freed assets Quality improvement, reduces waste and wins orders Cost reduction which reduces selling price Variability reductions in the workplace reduces waste Rework reduction, reduces waste and wins orders Faster response to the customer at lower cost and higher quality, which leads to: A competitive advantage! Slide 10

Just-in-Time Success Factors Employee Empowerment Quality Preventive Maintenance Suppliers Layout JIT Inventory Scheduling Slide 11

Suppliers Goals of JIT Partnership with Suppliers n JIT partnerships eliminate • Unnecessary activities • In - plant inventory • In - transit inventory • Poor suppliers Slide 12

Goals of JIT partnerships Ø Ø Elimination of unnecessary activities Elimination of in-plant inventory Elimination of in-transit inventory Elimination of poor suppliers Slide 13

Concerns of Suppliers n n n Diversification Poor customer scheduling Frequent engineering changes Quality assurance Small lot sizes Physical proximity Slide 14

Layout n n 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 Slide 15

Inventory n n Traditional: inventory exists in case problems arise JIT objective: eliminate inventory JIT requires • Small lot sizes • Low setup time • Containers for fixed number of parts JIT inventory: Minimum inventory to keep system running Slide 16

Lot Size Example (See page 635 of your textbook) D= d = p = Q= H= S = Annual demand = 400, 000 units Daily demand = 400, 000/250 = 1, 600 per day Daily production rate = 4, 000 units EOQ desired = 400 Holding cost = $20 per unit Setup cost (to be determined) Q= 2 DS H(1 - d/p) (Q 2)(H)(1 - d/p) S= = 2 D Q 2 2 DS = H(1 - d/p) (3, 200, 000)(0. 6) 800, 000 = $2. 40 Slide 17

JIT Inventory Tactics n n n n Use a pull system to move inventory Reduce lot size Reduce setup time Develop Just-in-Time delivery systems with suppliers Deliver directly to point of use Perform-to-schedule Reduce setup time Slide 18

JIT Scheduling Tactics n n n n Communicate the schedule to suppliers Make level schedules Perform to schedule Eliminate waste Produce in small lots Use kanbans Make each operation produce a perfect part Slide 19

Kanban n n 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 Slide 20

Kanban: Additional Points n n When producer and user are not in visual contact, a card may be used; otherwise, a light, flag, or empty spot on the floor may work. Because a pull station may require several re-supply components, several Kanban pull techniques can be used at the same station. Usually, each card controls a specific quantity of parts, although multiple card systems can be used if the producing cell produces several components or the lot size is different from the move size. In an MRP system, the schedule can be thought of as a “build” authorization and the Kanban as a type of “pull” system that initiates the actual production. Slide 21

Kanban: Additional Points - Continued n n The Kanban cards provide direct control (limit) on the amount of work-in-process between cells. If there is an intermediate storage area, a two-card system may be used; one card circulates between user and storage area, and the other circulates between the storage area and the producing area. Slide 22

The Number of Cards or Containers Ø Need to know the lead time needed to produce a container of parts Ø Need to know the amount of safety stock needed Number of kanbans = Demand during Safety lead time + stock Size of container Slide 23

Number of Kanbans Example (See page 640 of your textbook) Daily demand Production lead time (wait time + material handling time + processing time) Safety stock Container size = 500 cakes = 2 days = 1/2 day = 250 cakes Demand during lead time = 2 days x 500 cakes = 1, 000 Number of kanbans = 1, 000 + 250 =5 Slide 24

Quality n n n JIT reduces inventory JIT limits number defects with small lots JIT requires TQM • Statistical process control • Worker involvement u u Inspect own work Quality circles • Immediate feedback Slide 25

JIT Quality Tactics n n Use statistical process control Empower employees Build failsafe methods (checklists, etc. ) Provide immediate feedback Slide 26

Employee Empowerment n n Get employees involved in product & process improvements • Employees know job best! JIT requires • Empowerment • Cross-training • Training support • Few job classifications Slide 27

Lean Production supplies customers with exactly what the customer wants, when the customer wants, without waste, through continuous improvement. Slide 28

Attributes of Lean Producers n n n n use JIT to eliminate virtually all inventory build systems to help employees produce a perfect part every time reduce space requirements develop close relationships with suppliers educate suppliers eliminate all but value-added activities make jobs more challenging reduce the number of job classes and build worker flexibility Slide 29