Just-in-Time (JIT) and Lean Systems

Chapter 7

Management 326

Operationsand

OperationsStrategy

Designing

anOperation

sSystem

Managingan

OperationsSystem

Improvingan

OperationsSystem

(Just-in-Time)

Presentation Outline

The philosophy of JIT 7 Elements of JIT Philosophy Examples of waste 3 key principles of JIT

JIT in services Blockbuster's lean systems project Principles of lean processes (JIT) in services

Presentation Outline (2)

JIT in manufacturing Inventory reduction

Cost of inventory Kanban pull system Small lot sizes and quick setups Uniform plant loading Flexible resources (people & equipment) Efficient plant layouts

Presentation Outline (3)

Other topics in JIT and lean systems Respect for people: the role of employees The role of managers Benefits of JIT and lean systems

Just-in-Time & Lean Systems

Just-in-time: an operations system for producing the right goods and services in the right place, at the right time, in a quality manner

Lean systems: A broad view of JIT that shows how the entire organization contributes to JIT production (of goods and services), customer service, and customer satisfaction

Value-adding activities1. Necessary steps in completing a product or service 2. Customer service activities that increase the value of

the service to customers

The Philosophy of JIT7 Elements of JIT Philosophy

All waste must be eliminated- non value items Waste is any amount of a resource that is not

required to produce and deliver a quality good or service when it is needed

Broad view that entire organization must focus on serving customers Serving customers requires cooperation

throughout the organization: serve external & internal customers

The Philosophy of JIT (2) 7 Elements of JIT Philosophy (2)

JIT is built on simplicity - the simpler the better Focuses on improving every operation- Kaizen Install simple, visible control systems Provide flexibility to produce different

models/features

The same philosophy also applies in Lean Systems

Examples of Waste

Producing items before they are needed

Waiting time: high WIP.idle machines, or idle people

Needless movement of materials or people

Unneeded process steps

Inventory Searching for

materials, tools, etc. Defects People who are not

challenged by their jobs and are not allowed to give input into decisions

3 Key Principles of JITand Lean Systems

Just-in-time processes Total quality management Respect for people

Blockbuster's Project StoreLean Systems Project

Business objectives Give customers a better experience &

increase sales Allow employees to spend more time with

customers Reduce costs

Eliminate unnecessary work activities Reduce employee stress

Blockbuster's Process Re-Design

The goal was to simplify and standardize processes across U.S. stores

Key process re-design principles Eliminate tasks that did not add value Separate customer-related tasks from those

that did not involve customers (example: shelving videos)

Reallocate the time saved to customer service

Blockbuster Steps in Process Re-Design

1. Collected data on Processes used – these were not standard Customer experiences Customer satisfaction How employees spent time (only 40% with

customers) Employee frustrations

BlockbusterSteps in Process Re-Design (2)

2. Worked with employees to identify improvement ideas (brainstorming)

3. Tested the ideas in "learning" stores Involved employees in designing new

processes Gave employees "ownership" of the process Refined the ideas Eliminated waste and unnecessary steps Did cost/benefit analysis Developed flowcharts for the new processes

BlockbusterSteps in Process Re-Design (3)

4. Trained employees in "pilot" stores to use the new processes Return videos to the shelves at fewer times

during the day Simpler, shorter process for re-shelving

videos5. National rollout: Implemented new

processes in all U. S. stores Human factors were the biggest obstacle to

implementation – some employees did not enjoy spending time with customers

Elements of Lean Systemsin Services

Improved quality – consistency Uniform facility loading when possible Multifunctional workers More efficient processes and shorter

cycle time Shorter setup times Parallel processing

Clean, well-organized workplace See pages 244-245 for details

Elements of JIT Manufacturing

Inventory reduction exposes problems

Kanbans & pull production systems Small lots & quick setups Uniform plant loading Flexible resources Efficient facility layouts (cellular

layout)

Cost Impact of InventoryFigure 7-1, page 225

High inventory high inventory holding costs

High inventory hides problems, and the company pays for the cost of the problems

In manufacturing, high inventory requires large lot sizes Long manufacturing lead times Harder to meet changing customer demand Delays in introducing new or improved products

Reducing InventoryKanban Pull System (Figure 7-3, p.

229)

Production kanban: authorization to make a container of parts No production can be done without a

production kanban and an empty container Withdrawal kanban: authorization to get a

container of parts for use in the next process step

Work in process (WIP) inventory WIP < (number of kanbans)(lot size) Lot size = number of parts of a certain type

produced at one time

Reducing InventorySmall Lot Sizes and Quick Setups

Benefits of small lot sizes Shorter manufacturing lead time Faster

response to changes in customer demand Lower inventory and inventory holding costs

Small lot sizes require more setups Setups must be done more quickly and at

lower costs. This is necessary To ensure adequate capacity To control setup costs To avoid production delays

Inventory ReductionUniform Plant Loading

A “level” schedule is developed so that the same mix of products is made every day in small quantities

Leveling the schedule reduces inventory along the whole supply chain

See Table 7.1, page 233, for a schedule example.

JIT in ManufacturingFlexible Resources

Moveable, general purpose equipment: Portable equipment with plug in power/air E.g.: drills, lathes, printer-fax-copiers, etc. Capable of being setup to do many different

things with minimal setup time Multifunctional workers:

Workers assume considerable responsibility Cross-trained to perform several different

duties Trained to also be problem solvers

JIT in ManufacturingEffective Facility Layouts

Workstations that are close to each other reduce transport & movement

Streamlined flow of material Often use:

Cellular Manufacturing (instead of process focus) – reduces WIP, transportation time and costs. Simplifies scheduling.

U-shaped lines: (allows material handler to quickly drop off materials & pick up finished work)

See Figure 7.6, page 235.

JIT and TQM

Build quality into all processes Focus on continuous improvement - Kaizen Quality at the source - immediate inspection Jidoka (authority to stop line) Poka-yoke (fail-safe all processes) Preventive maintenance – scheduled to

minimize the impact on production Work environment- everything in its place, a

place for everything

Respect for People: The Role of Employees

Genuine and meaningful respect for associates Willingness to develop cross-functional skills Actively engage in problem-solving (quality circles) Everyone is empowered Everyone is responsible for quality: understand

both internal and external customer needs

Respect for People: The Role of Employees

Associates gather performance data Team approaches used for problem-solving Many decisions are made from the bottom up Everyone (in a manufacturing plant) is responsible

for preventive maintenance

The Role of Management

Responsible for culture of mutual trust Serve as coaches & facilitators Support culture with appropriate incentive

system including non-monetary Responsible for developing workers Provide multi-functional training Facilitate teamwork

Benefits of JIT and Lean Systems

Smaller inventories Shorter lead times Improved quality Reduced space requirements Lower operations costs Increased productivity Greater flexibility