business systems – operations management session 9c.pdf · 3 business systems - operations...

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Business Systems - Operations ManagementSession 9 Lean Operations & JIT

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Business Systems Business Systems ––Operations ManagementOperations Management

Facilitator:Facilitator:Dr. Jonathan FarrellDr. Jonathan Farrell

Session 9 - Lean Operations & JIT

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This EveningThis Evening’’s Programs Program

• Lean Operations– Definitions– The Philosophy of Lean Operations & JIT– Contribution to Operations Management– JIT in Services– MRP, or JIT?

• Case Study – Bowin Designs (Folder of Readings)• Exercises – Operations Scheduling, Kanban (refer to the

Folder of Readings)

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JIT DefinedJIT Defined

• JIT can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods)

• JIT also involves the elimination of waste in production effort

• JIT also involves the timing of production resources (i.e., parts arrive at the next workstation “just in time”)

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JIT DemandJIT Demand--Pull LogicPull Logic

Customers

Sub

Sub

Fab

Fab

Fab

Fab

Vendor

Vendor

Vendor

Vendor

Final Assembly

Here the customer starts the process, pulling an inventory item from Final Assembly…

Here the customer starts the process, pulling an inventory item from Final Assembly…

Then sub-assembly work is pulled forward by that demand…

Then sub-assembly work is pulled forward by that demand…

The process continues throughout the entire production process and supply chain

The process continues throughout the entire production process and supply chain

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traditional approach

JIT approach

JIT and capacity utilisationJIT and capacity utilisation

focus on high capacity utilisation

more stoppages because of problems

high inventory means less chance of problems being

exposed and solved

extra productiongoes into inventory

because of continuing stoppages at stages

more production at each stage

focus on producing only when needed

fewer stoppages

low inventory so problems are

exposed and solved

no surplus production goes

into inventory

lower capacity utilisation, but

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SynonymsSynonyms

continuous flow manufacturehigh value-added manufacturestockless productionlow-inventory productionfast-throughput manufacturinglean manufacturingenforced problem solvingshort cycle time manufacturing

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Operations resourcesCustomer

requirements

DemandSupply Delivery of products

and services only when needed

The operation

The market

Lean planning and control seeks to eliminate waste in the supplyof an operation’s products and services and deliver them only

when needed

Lean planning and controlLean planning and control

Required time, quantity and quality of products

and services

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JIT Planning & ControlJIT Planning & Control

JIT as a philosophy

• Eliminate waste • Involve everyone • Continuous improvement

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• Design for manufacture• Small simple machines• Layout and flow• TPM• Set-up reduction

• Visibility• JIT supply

JIT as a set of techniques for managing operations

JIT as a philosophy


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JIT as a method of planning and control

• Pull scheduling• Kanban control• Level scheduling•Synchronisation

• Design for manufacture• Small simple machines• Layout and flow• TPM• Set-up reduction

• Visibility• JIT supply

JIT as a set of techniques for managing operations

JIT as a philosophy


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JIT JIT -- Respect for PeopleRespect for People

• Level payrolls• Cooperative employee unions• Subcontractor networks• Bottom-round management style• Quality circles (Small Group Involvement Activities

or SGIA’s)

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Toyota Production SystemToyota Production System’’s Four Ruless Four Rules

• All work shall be highly specified as to content, sequence, timing, and outcome

• Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses

• The pathway for every product and service must be simple and direct

• Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization

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JIT Implementation Requirements: JIT Implementation Requirements: Design Flow ProcessDesign Flow Process

• Link operations• Balance workstation capacities • Redesign layout for flow • Emphasize preventive maintenance • Reduce lot sizes • Reduce setup/changeover time

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JIT Implementation Requirements: JIT Implementation Requirements: Total Quality ControlTotal Quality Control

• Worker responsibility • Measure SQC (System Quality Control)• Enforce compliance • Fail-safe methods (Poka Yoke)• Automatic inspection

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JIT Implementation Requirements: JIT Implementation Requirements: Stabilise ScheduleStabilise Schedule

• Level schedule • Underutilise capacity• Establish freeze windows

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JIT Implementation Requirements: JIT Implementation Requirements: KanbanKanban--PullPull

• Demand pull • Backflush • Reduce lot sizes

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JIT Implementation Requirements: JIT Implementation Requirements: Work with VendorsWork with Vendors

• Reduce lead times • Frequent deliveries • Project usage requirements • Quality expectations

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JIT Implementation Requirements: JIT Implementation Requirements: Reduce Inventory MoreReduce Inventory More

• Look for other areas• Stores • Transit• Carousels• Conveyors

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JIT Implementation Requirements: JIT Implementation Requirements: Improve Product DesignImprove Product Design

• Standard product configuration • Standardise and reduce number of parts• Process design with product design • Quality expectations

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JIT Implementation Requirements: JIT Implementation Requirements: Concurrently Solve ProblemsConcurrently Solve Problems

• Root cause

• Solve permanently

• Team approach

• Line and specialist responsibility

• Continual education

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JIT Implementation Requirements: JIT Implementation Requirements: Measure PerformanceMeasure Performance

• Emphasise improvement • Track trends

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types of waste:types of waste:

overproductionwaiting timetransportprocessinventorymotiondefective goods

operation

movement

inspection

delay

storage

Activities:

Waste (muda) Which of these symbols signify non-value adding activities?

influencing the throughput efficiency

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Focus:Focus:• Most businesses are unnecessarily complex

and difficult to manage. However, in JIT operations:

focus on:

low costhigh quality conformancestandardisation and/or modularisation

consistent policies for:selected market segmentsvolumesproduct rangetechnology choice

emphasis:strategydesign for operations

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Total productive maintenance (TPM)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:

training operatorslong-term planned maintenancecondition monitoring

emphasis:operator involvementcare for equipmentensuring total reliability

operate correctlydetect problemslubricate, clean, adjustcollect data

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Poka YokePoka Yoke

• Developed by Shigeo Shingo (co-developer of JIT at Toyota)

• Emphasis on preventing defects in the process, not inspection of end products.

• Simple, economical devices to make process mistake-proof.

• Attacks random causes of error.

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Poka YokePoka Yoke

Types of Poka Yoke systems:

1. Control Poka Yokes

Takes error out of operator’s hands

Particularly useful in mass-production

e.g. machine trips if part not inserted properly

2. Warning Poka Yokes

Alerts the operator to an error

e.g. wrench dipped in dye to ensure all nuts tightened

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3.5 inch diskette cannot be inserted unless it is oriented correctly. This is as far as a disk can be inserted upside-down. This feature, along with the fact that the diskette is not square, prohibit incorrect orientation. It is a control method.

Warning lights and chimes alert the driver of potential problems. These devices employ a control method and a warning method.

Poka Yoke (failPoka Yoke (fail--safing)safing)

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File cabinets can fall over if too many drawers are pulled out. For some file cabinets, opening one drawer locks all the rest, reducing the chance of the file cabinet tipping. It is a control method.

The window in the envelope is not only a labour saving device. It prevents the contents of an envelope intended for one person being inserted in an envelope addressed to another. It is a control method.

Poka Yoke (failPoka Yoke (fail--safing)safing)

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Poka Yoke in Service OperationsPoka Yoke in Service Operations

1. Fail-safing the Server

Task Poka Yokes e.g. automatic coin return

Treatment Poka Yokes e.g. “How are you today”

Tangible Poka Yokes e.g. smart uniforms, spell-check

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Poka Yoke in Service Operations Poka Yoke in Service Operations

2. Fail-safing the Customer

Preparation Poka Yokes e.g. students told before registration what courses they can take

Encounter Poka Yokes e.g. lines to encourage orderly queues

Resolution Poka Yokes e.g. appraisal forms to defuse any negatives

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JIT JIT -- LayoutLayout

• Conventional functional layouts create pipeline inventory, delays, movement costs and other forms of waste. In the JIT approach:

operations are arranged to achieve a logical flow (e.g. cell, line)

equipment is close together to reduce cost of movement

often “U” shaped to increase visibility and teamwork

emphasis:

simplicityflowvisibilitymorale

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Small MachinesSmall Machines• conventional western approach is to purchase large machines to get

“economies of scale”• these often have long, complex set-ups, and make big batches

quickly creating “waste”

JIT small machines approach:

•easy to move (layout)•quick set-up•flexible scheduling options•cheaper tooling•planned maintenance easier•fewer set-ups are needed

emphasis: flexibilityeconomies of scope

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The basic working practices of JITThe basic working practices of JIT

basic working practices

discipline and standards

flexibility of working practices equality of

conditions

creativityquality of

working lifedevelopment of

personnel

autonomy to intervene

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SchedulingScheduling

• In conventional planning, demand and production quantities / timing are often different, resulting in idle inventory and “lumpy” demand

couples usage and production

allows local planning / control

simplifies communication (e.g. Kanban)

emphasis: make only as needed•simplicity

JIT “PULL” SCHEDULING:

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Visible, enforced improvementVisible, enforced improvement

• “Traditional” production systems often accept waste and use the insurance of all types of inventory.

gradual reduction of inventory

identify exposed problems

emphasis: small step continuous improvement expose waste and eliminate it

In JIT systems:

repeat the cycle

eliminate these problems

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JIT purchasingJIT purchasing

In conventional businesses, vendors are often viewed as adversaries, not to be trusted. Buyers prefer several competing vendors to drive down purchase prices

JIT businesses recognise that:purchase price is not the only cost

suppliers can be valuable partners by:

•helping to design products•eliminating uncertainties of quality and delivery•eliminating overheads (e.g. paperwork)

local suppliers reduce purchasing costs

emphasis: positive relationshipsmutual benefitssupplier development

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JIT JIT –– The Kanban systemThe Kanban system

• Kanban = “card” or “signal”• Receipt of a kanban (card) signals a movement,

production or supply of a unit of production• A kanban can also be a space on the ground or a

container – the presence of an open space or empty container signals the movement, etc.

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Minimising Waste: Kanban Production Control SystemsMinimising Waste: Kanban Production Control Systems

Storage Part A

Storage Part AMachine

Center Assembly Line

Material Flow

Card (signal) Flow

Withdrawal kanban

Once the Production kanban is received, the Machine Center produces a unit to replace the one taken by the Assembly Line people in the first place

This puts the system back were it was before the item was pulled

The process begins by the Assembly Line people pulling Part A from Storage

Production kanban

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Determining the Number of Kanbans NeededDetermining the Number of Kanbans Needed

• Setting up a kanban system requires determining the number of kanban cards (or containers) needed

• Each container represents the minimum production lot size

• An accurate estimate of the lead time required to produce a container is key to determining how many kanbans are required

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The Number of Kanban Card SetsThe Number of Kanban Card Sets

k = k = Number of kanban card sets (a set is a card)Number of kanban card sets (a set is a card)DD = Average number of units demanded over some time period= Average number of units demanded over some time periodLL = lead time to replenish an order (same units of time as = lead time to replenish an order (same units of time as demand)demand)SS = Safety stock expressed as a percentage of demand during = Safety stock expressed as a percentage of demand during leadtimeleadtimeCC = Container size= Container size

CSDL

k

)(1

containertheofSizestockSafety timeleadduringdemandExpected

+=

+=

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Example of Kanban Card Determination: Example of Kanban Card Determination: Problem DataProblem Data

• A switch assembly is assembled in batches of 4 units from an “upstream” assembly area and delivered in a special container to a “downstream” control-panel assembly operation

• The control-panel assembly area requires 5 switch assemblies per hour

• The switch assembly area can produce a container of switch assemblies in 2 hours

• Safety stock has been set at 10% of needed inventory

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Example of Kanban Card Determination: Example of Kanban Card Determination: CalculationsCalculations

AlwaysAlways round up!round up!

3or ,75.24

5(2)(1.1))(1

containertheofSizestockSafety timeleadduringdemandExpected

==+

=

+=

CSDL

k

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Applying JIT to ServicesApplying JIT to Services

• Place linked processes near one another• Standardise processes & procedures• Eliminate loop-backs (items sent back for re-work,

reprocessing)• Balance the Load• Segregate complexity (i.e. KISS)• Publicise Performance results

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Services vs ManufactureServices vs Manufacture

• Production & Consumption occur simultaneously• The Customer / Consumer is involved in both• Services cannot be inventoried – they are perishable• Services are intangible• Service Quality can vary considerably• There are two measures of quality – Outcome and Delivery

In Services:

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JIT in ServicesJIT in Services

Total Visibility:• Of equipment, people, resources & processes• The customer will see all of this for a service and measure quality

accordingly• The concept of expectations versus perceptions

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Synchronisation & Balance:• Matching Outputs with customer demands &

expectations• How long will a customer wait for service?• To what degree do you involve the customer in the

service delivery?

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Respect for People:• Service delivery staff play a crucial role because Customers

are directly involved in the delivery• Staff must respect Customer requirements• Management must respect service delivery staff, and

provide all the necessary tools for them to do their job (training, feedback, supervisory assistance, support tools & technology, etc.)

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Flexibility & Responsibility• Both in the service delivery processes and staff• Service delivery staff must have the authority to make

decisions on the spot (the Customer is watching!)

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Holistic Approach• Look at the end-to-end process• Examine the movement of the customer through the entire

service delivery – is it just in time?• Fits with synchronisation & balance

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Elimination of Waste• Look at waste in terms of All resources including time• Examine the Processes – does each add value?• Examine the Resources – do they add value?• Do the tools & technology help or hinder?• How well do the staff deliver the service(s)?

• Do you bring the customer to the delivery point or the services to the customer? – Look at the layout

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Continuous Improvement• Services provide the biggest area of opportunity for

improvement• Can new processes, tools & technology improve the service

delivery, or possibly provide new services? • Listen to the people in the front line – They will know more

than anyone else what can be improved.

• When you have finished all the other aspects of using JIT in Services – start again

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JIT in Services (Examples)JIT in Services (Examples)

• Organise Problem-Solving Groups• Upgrade Housekeeping• Upgrade Quality• Clarify Process Flows• Revise Equipment and Process Technologies

Chase et al, (2004) Chase et al, (2004) ““Operations Management for Competitive AdvantageOperations Management for Competitive Advantage””, , McGraw Hill, pp441McGraw Hill, pp441--443443

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JIT in Services (Examples)JIT in Services (Examples)

• Level the Facility Load• Eliminate Unnecessary Activities• Reorganise Physical Configuration• Introduce Demand-Pull Scheduling• Develop Supplier Networks

Chase et al, (2004) Chase et al, (2004) ““Operations Management for Competitive AdvantageOperations Management for Competitive Advantage””, , McGraw Hill, pp441McGraw Hill, pp441--443443

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JIT vs MRPJIT vs MRP

JIT is a JIT is a PULLPULL technology, and is most appropriate technology, and is most appropriate for controlling individual cells at the operating for controlling individual cells at the operating level.level.

MRP is a MRP is a PUSHPUSH technology, and is most technology, and is most appropriate for controlling the overall process, appropriate for controlling the overall process, ensuring the medium term availability of ensuring the medium term availability of materials.materials.

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JIT and MRP JIT and MRP -- splitting the BOMsplitting the BOM

master production schedule

bill of materials for common parts

bill of materials for options parts

rate-based weekly requirements

time-phased volume-based weekly requirements

supplier’s schedules

Kanban cards

schedules schedules

batch schedules

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How JIT and MRP can coexistHow JIT and MRP can coexist

High

LowVolumeLow High

Job-based techniques

VarietyHigh Low

Governed by integrated technology

MRP JIT + MRP

JIT

Leve

l of c

ontr

ol

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Transformation towards Transformation towards the JIT approach the JIT approach -- summarysummary

• basic strategy - how do we compete?• basic disciplines - attitudes, housekeeping, quality

standards• process control - capability and SPC; supplier quality• eliminate waste - DFM; JIT techniques, supplier

involvement• eliminate errors at source - error proofing (Poka-Yoke);

automatic monitoring.

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Case Study Case Study –– Bowin DesignsBowin Designs

• What are the main issues?

• What does the future hold?

• What recommendations can you give?

• What are the most likely outcomes?

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Where is Bowin Today?Where is Bowin Today?

• Company renamed to Bowin Mfg Pty Ltd

• “. . .an Australian designer and manufacturer of dedicated Lo-NoxTM gas heaters and burners for domestic, institutional and light commercial markets world wide” *

• Australian Design awards for their heaters

• In Australia, over 300 independent gas specialists & major merchandising chain stores sell their products

• Successfully exporting to USA, South Africa & NZ

• “. . . embraces the J.I.T. (Just-In-Time) manufacturing disciplines and MATO (Make-assemble-to-order) policies. This 'supply' system creates significant advantages for Bowin's dealer network, offering flexible minimum stock level holdings on a 7 days 'top-up' turn around, thus increasing profits and eliminating 'high risk' bulk warehousing. “*

* Company web site: www.bowin.com.au

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ExercisesExercises

• Operations Scheduling– Scheduling staff for a hotel reception

• Kanbans– How many kanban card sets are required?

business systems – operations management session 9c.pdf · 3 business systems - operations...

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