MgtOp 340—Operations ManagementProfessor Munson

Topic 9

Just-in-Time and Lean Systems

“Inventory is the root of all evil.” Anonymous Japanese Manager

“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 of Toyota

“The supplier of our cleaner called Express is edging more toward JIT to reduce inventory. As a result the company they buy Express from has increased the shipping charge on Express due to smaller order sizes. The price per gallon has increased from $10 to $20. Since we have space, I have suggested that our department work with our supplier to see what quantities they would need us to order to keep the price down. Kind of fun stuff, but it suggests that JIT breaks down somewhere if there is not strong communication up and down the line.”

Tony Rogers, former MgtOp 340 student, 2004

Just-in-Time (JIT): Produce what is needed only when it is needed.

“Broader” definition: JIT is a philosophy of continuous and forced problem solving that drives out waste.

“Push” vs. “Pull” ProductionPush

Pull

How can the two be reconciled?

Types of WasteTypes of Waste OverproductionOverproduction WaitingWaiting TransportationTransportation Inefficient processingInefficient processing InventoryInventory Unnecessary motionUnnecessary motion Product defectsProduct defects

J u s t - I n - T i m e ( J I T ) E x a m p l e

J u s t - I n - T i m e ( J I T ) E x a m p l e

S c r a p

W o r k i n p r o c e s s i n v e n t o r y l e v e l( h i d e s p r o b l e m s )

U n r e l i a b l e V e n d o r s

C a p a c i t y I m b a l a n c e s

KanbanKanban Japanese word for cardJapanese word for card

Pronounced ‘kahn-bahn’ (not ‘can-ban’)Pronounced ‘kahn-bahn’ (not ‘can-ban’) Authorizes production fromAuthorizes production from downstream downstream

operationsoperations ‘Pulls’ material through plant‘Pulls’ material through plant

May be a card, flag, verbal signal etc. May be a card, flag, verbal signal etc. Used often with fixed-size containersUsed often with fixed-size containers

Add or remove containers to changeAdd or remove containers to change production rateproduction rate

Setup Time Reduction

Reduce setup times to zero!

Benefits

smaller lot sizes/less inventory

increased flexibility to offer product variety

increased utilization

increased capacity

Requirements

flexible tooling

family production scheduling

automation

divide setups into external and internal(Do whatever you can in advance of stopping the line.)(Make as many things externally as possible.)

Setup Time Reduction Examples

Omark Industries Die changes on its 250-ton press averaged 4 hours Old way—275-kilo die inserts moved by crane, forklift, and 2

workers Created “one-size fits all” insertion process Added movable trolleys for storage Added air hoses for lifting Added fast-attach and quick-release clamps New time = 50 secondsBlack and Decker Each department is charged for setups Created sense of urgency to reduce changeovers Mold changeovers reduced by 50% through training &

videotapingKawasaki Motors Old setup took 3 hours Reduced to 12 minutesToyota Toyota could change over to a new door type in 10 minutes,

compared to 16 hours at General Motors Global Body Line holds vehicle frames in place during

welding, using just one master brace instead of dozens of separate ones—a savings of 75% of refitting cost & key to their ability to make multiple models on 1 line (Bus Wk 11-17-03)

Primary Source: Northey, Patrick and Nigel Southway, Cycle Time Management, Productivity Press, Portland, 1993, p. 42.

Suppliers Incoming material & finished goods involve waste Buyer & supplier form JIT partnerships JIT partnerships eliminate

Unnecessary activities In-plant inventory In-transit inventory Poor suppliers

Characteristics of JIT Partnerships Few, nearby suppliers Long-term contract agreements Frequent deliveries in small lots Buyer helps suppliers meet quality Suppliers use process control charts Buyer schedules inbound freight Buyer shares customer preferences & forecasts

Supplier Worries Lack of flexibility

Long-term contact with one customer Poor customer scheduling Frequent engineering changes Strict quality assurance Small lot sizes Close physical proximity

Conventional vs. JIT Attitudes

Conventional Just-in-Time Large lots are efficient Ideal lot size is one

(more is better). (less is better).

Fast production is efficient. Balanced production is efficient(faster production is waste).

Inventory provides safety. Safety stock is a waste.

Inventory smooths Inventory is undesirable.production.

Inventory is an asset. Inventory is a liability.

Suppliers are adversaries. Suppliers are partners.

Multiple supply sources Fewer sources of supply lead tolead to safety. control.

Breakdown maintenance Preventive maintenance isis enough. essential.

Setup time is given. Setup time should be zero.

Work force is specialized. Work force is multifunctional.

Disadvantages of JIT

higher risk of supply shortage

no “just-in-case” inventory

lose the operational advantages that having extra inventory can bring

traffic problems

increased transportation costs

reliance on suppliers (loss of control)

idle workers

depends upon level schedules

a stoppage anywhere stops the whole line

Results of Some JIT Applications in the U.S.

Black &Apple Decker GeneralComputers (Consumer Deere & Electric Harley Hewlett

Category (Macintosh) power tools) Company (Housewares) Davidson PackardProduct Micro- Electrical Heavy Electrical Motorcycles Computers and Category computers products machinery, appliances test systems

farm equip., lawn care equipment

Productivity Inspection Assembly Subassembly: Direct labor: 39% overall From 87 to 39 Improvement labor from operators: 19% to 35% 15% productivity standard

25 to 9 24 to 6 Welding: Indirect labor: increase hoursAssembly Support 15% to 38% 25% labor from operators: Mfct. cost: 22 to 4 7 to 5 10% to 20%

Material hndlg: 40%

Setup Time Estimate of Punch press: Presses: 38% Significant, Many 30% to 45% Improvement 30% (lines 1 hour to to 80% hours to operations reduction in

mostly 1 min Drills: 24-33% minutes combined, manual setup dedicated, Drastic in many Shears: 45% overall setup started JIT) areas Grinders: 44% reduction:

Average: 45% 75%

Inventory Estimate of Turns: 16 to 30 Raw steel: In-process: Turns up from PC assembly: Reduction 90% in WIP 40% 40% 5 to 20 8500 to

and raw Purchased 60% reduction 5750 sq. ft. material parts: 7% in WIP & raw compared to Crane shafts: material other factories 30 to 3 days

Quality Scrap and Reduced Implemented Scrap and 46% decrease HP corporate Improvement rework: 10% complaints in processes rework: 33% in scrap and helped JIT

Incoming packaging: 90% control rework Proud to be material: 100% customer charting in 35% decrease among 1st 20% service level 40% of in warranty to implement

operations JIT/TQC

Space No need for Significant Significant 52,000 sq. ft. 35% reduction PC assembly: Savings warehouse in warehouse 8500 to

Material 15% reduction 5750 sq. ft. delivered to in point of use manufacturing

Lead All Products made Significant Weeks to days All suppliers PC assembly: Times components in weekly lots: Mixed within 200 15 to 1.5 days

less than 2 50% to 95% production miles days Daily vendor Weekly or dailyDaily schedule delivery delivery

Lean OperationsGoals: Eliminate waste, remove variability,

improve throughput

7Ss1. Sort/segregate2. Simplify/straighten3. Shine/sweep4. Standardize5. Sustain/self discipline6. Safety7. Support/maintenance

Lean Tactics Work cells Minimize distance Minimize material handling Design little space for inventory Poka-yoke devices Checklists Flexible or movable equipment Cross-train workers Level schedules Frozen schedules Preventive maintenance (machines cannot fail) Total quality control Empowered employees Gemba walks (waste walks) Kaizen