Heizer om10 ch16-jit and lean operations

10/16/2010

JIT and Lean Outline
16 Operations Global Company Profile:
Toyota Motor Corporation
Just-in-Time, the Toyota
Production System, and Lean
y ,
PowerPoint presentation to accompany
Heizer and Render
Operations
Operations Management, 10e
Principles of Operations Management, 8e Eliminate Waste
PowerPoint slides by Jeff Heyl Remove Variability
Improve Throughput

© 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 1 © 2011 Pearson Education, Inc. publishing as Prentice Hall 16 - 2

Outline – Continued Outline – Continued
Just-in-Time JIT Inventory
JIT Partnerships Reduce Variability
Concerns of Suppliers Reduce Inventory
JIT Layout Reduce Lot Sizes
Distance Reduction Reduce Setup Costs
Increased Flexibility JIT Scheduling
Impact on Employees Level Schedules
Reduced Space and Inventory Kanban


Outline – Continued Learning Objectives
JIT Quality When you complete this chapter you
Toyota Production System should be able to:
Continuous Improvement 1. Define just-in-time, TPS, and lean
Respect for People operations
Standard Work Practices 2. Define the seven wastes and the
5 Ss
Lean Operations
3. Explain JIT partnerships
Building a Lean Organization
4. Determine optimal setup time
Lean Operations in Services

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Learning Objectives Toyota Motor Corporation
When you complete this chapter you
should be able to: Largest vehicle manufacturer in the
world with annual sales of over 9
million vehicles
5. Define kanban Success due to two techniques JIT
techniques,
6. Compute the required number of and TPS
kanbans Continual problem solving is central
7. Explain the principles of the Toyota to JIT
Production System Eliminating excess inventory makes
problems immediately evident


Toyota Motor Corporation TPS Elements
Central to TPS is employee learning
and a continuing effort to produce
products under ideal conditions
Respect for people is fundamental
Small building but high levels of
production
Subassemblies are transferred to the
assembly line on a JIT basis
High quality and low assembly time
per vehicle

JIT/Lean Operations Just-In-
Just-In-Time, TPS, and
Lean Operations
Good production systems require JIT is a philosophy of continuous and
that managers address three issues forced problem solving via a focus on
that are pervasive and fundamental throughput and reduced inventory
to operations management: TPS emphasizes continuous
eliminate waste, remove variability, improvement, respect for people, and
and improve throughput standard work practices
Lean production supplies the
customer with their exact wants when
the customer wants it without waste


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Just-In-
Just-In-Time, TPS, and Eliminate Waste
Lean Operations
Waste is anything that does not
JIT emphasizes forced problem add value from the customer point
solving of view
TPS emphasizes employee Storage, inspection, delay, waiting
learning and empowerment in an in queues, and defective products
assembly-line environment do not add value and are 100%
Lean operations emphasize waste
understanding the customer


Ohno’s Seven Wastes Eliminate Waste
Overproduction
Other resources such as energy,
Queues water, and air are often wasted
Transportation Efficient, sustainable production
Inventory minimizes inputs, reduces waste
Motion Traditional “housekeeping” has
been expanded to the 5 Ss
Overprocessing
Defective products

The 5 Ss The 5 Ss
Sort/segregate – when in doubt, Sort/segregate – when in doubt,
throw it out throw it out
Simplify/straighten – methods Simplify/straighten – methods
analysis tools analysis additional Ss
Two tools
Shine/sweep – clean daily Shine/sweepbuild in good practices
Safety – – clean daily
Standardize – remove variations Standardize – remove variations
from processes Support/maintenance – reduce
from processes
variability and unplanned
Sustain/self-
Sustain/self-discipline – review Sustain/self-
Sustain/self-discipline – review
downtime
work and recognize progress work and recognize progress


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Remove Variability Sources of Variability
JIT systems require managers to 1. Incomplete or inaccurate drawings
reduce variability caused by both or specifications
internal and external factors
2. Poor production processes
Variability is
V i bilit i any d i ti f
deviation from th
the resulting in incorrect quantities,
optimum process late, or non-conforming units
Inventory hides variability 3. Unknown customer demands
Less variability results in less
waste

Sources of Variability Improve Throughput
1. Incomplete or inaccurate drawings The time it takes to move an
or specifications order from receipt to delivery
2. Poor production processes The time between the arrival of
resulting in incorrect quantities, raw materials and the shipping
late, or non-conforming units of the finished order is called
manufacturing cycle time
3. Unknown customer demands
A pull system increases
throughput


Improve Throughput Just-In-
Just-In-Time (JIT)
Powerful strategy for improving
By pulling material in small lots, operations
inventory cushions are removed, Materials arrive where they
exposing problems and emphasizing are needed when they are
continual improvement needed
Identifying problems and
Manufacturing cycle time is reduced driving out waste reduces
Push systems dump orders on the costs and variability and
downstream stations regardless of improves throughput
the need Requires a meaningful
buyer-supplier relationship

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JIT and Competitive JIT and Competitive
Advantage Advantage

Figure 16.1 Figure 16.1

JIT Partnerships JIT Partnerships
JIT partnerships exist when a
supplier and purchaser work
together to remove waste and drive
down costs
Four goals of JIT partnerships are:
Removal of unnecessary activities
Removal of in-plant inventory
Removal of in-transit inventory
Improved quality and reliability
Figure 16.2

Concerns of Suppliers JIT Layout
Diversification – ties to only one customer
increases risk Reduce waste due to movement
Scheduling – don’t believe customers can JIT Layout Tactics
create a smooth schedule Build work cells for families of products
Include a large number operations in a small area
Lead time – short lead times mean
Minimize distance
engineering or specification changes can
Design little space for inventory
create problems
Improve employee communication
Quality – limited by capital budgets, Use poka-yoke devices
processes, or technology Build flexible or movable equipment
Lot sizes – small lot sizes may transfer Cross-train workers to add flexibility
costs to suppliers Table 16.1

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Distance Reduction Increased Flexibility
Large lots and long production Cells designed to be rearranged
lines with single-purpose as volume or designs change
machinery are being replaced by
smaller flexible cells Applicable in office environments
as well as production settings
Often U-shaped for shorter paths
and improved communication Facilitates both product and
process improvement
Often using group technology
concepts


Impact on Employees Reduced Space and
Inventory
Employees may be cross trained
for flexibility and efficiency
Improved communications With reduced space, inventory
facilitate the passing on of must be in very small lots
y
important information about the Units are always moving because
process there is no storage
With little or no inventory buffer,
getting it right the first time is
critical

JIT Inventory Reduce Variability
Inventory is at the minimum level
necessary to keep operations running Inventory level

JIT Inventory Tactics
Use a pull system to move inventory
p y y
Reduce lot sizes
Develop just-in-time delivery systems with suppliers Process
Deliver directly to point of use Scrap downtime

Perform to schedule Setup Quality
Reduce setup time time problems
Use group technology Late deliveries
Table 16.2 Figure 16.3

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Reduce Variability Reduce Variability

Inventory Inventory
level level

Process
Scrap downtime No scrap Quality
problems
Setup Quality Setup removed
time problems time
reduced Process
Late downtime
Late deliveries removed
deliveries
Figure 16.3 Figure 16.3

Reduce Inventory Reduce Lot Sizes
Reducing inventory uncovers the
Q1 When average order size = 200
“rocks” 200 –
average inventory is 100
entory

Problems are exposed
Q2 When average order size = 100
Inve

average i
inventory is 50
t i
Ultimately there will 100 –
be virtually no
inventory and no
problems
Time
Shingo says “Inventory is evil”
Figure 16.4

Reduce Lot Sizes Lot Size Example
Ideal situation is to have lot sizes D= Annual demand = 400,000 units
of one pulled from one process to d= Daily demand = 400,000/250 = 1,600 per day
the next p= Daily production rate = 4,000 units
Q= EOQ desired = 400
Often not feasible H= Holding cost = $20 per unit
S= Setup
S t cost (to be determined)
t (t b d t i d)
Can use EOQ analysis to calculate
desired setup time 2DS 2DS
Q= Q2 =
H(1 - d/p) H(1 - d/p)
Two key changes necessary
(Q2)(H)(1 - d/p) (3,200,000)(0.6)
Improve material handling S= 2D = 800,000 = $2.40
Reduce setup time Setup time = $2.40/($30/hour) = 0.08 hr = 4.8 minutes

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Reduce Setup Costs Lower Setup Costs

High setup costs encourage large Sum of ordering
Holding cost

lot sizes and holding costs

Reducing setup costs reduces lot
g p

st
Cos
size and reduces average
T1
inventory Setup cost curves (S1, S2)
T2
Setup time can be reduced S1
through preparation prior to S2

shutdown and changeover Lot size
Figure 16.5


Reduce Setup Times JIT Scheduling
Initial Setup Time 90 min — Schedules must be communicated
Separate setup into preparation and actual
setup, doing as much as possible while the
inside and outside the organization
Step 1 machine/process is operating
(save 30 minutes) Level schedules
60 min —
Move material closer and
M t i l l d
improve material handling
Process frequent small batches
Step 2
(save 20 minutes)
45 min —
Freezing the schedule helps stability
Standardize and
Step 3 improve tooling
(save 15 minutes) Kanban
25 min —
Step 4
Use one-touch system to eliminate Signals used in a pull system
adjustments (save 10 minutes)
15 min —
Training operators and standardizing 13 min —
Step 5 work procedures (save 2 minutes)
Figure 16.6 Step 6 Repeat cycle until subminute —
setup is achieved

JIT Scheduling Level Schedules
Better scheduling improves performance
JIT Scheduling Tactics Table 16.3
Process frequent small batches
Communicate schedules to suppliers
rather than a few large batches
Make level schedules Make and move small lots so the
Freeze part of the schedule
F t f th h d l level schedule is economical
l l h d l i i l
Perform to schedule
Seek one-piece-make and one-piece move “Jelly bean” scheduling
Eliminate waste Freezing the schedule closest to the
Produce in small lots
due dates can improve performance
Use kanbans
Make each operation produce a perfect part

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Scheduling Small Lots Kanban
Kanban is the Japanese word for card
JIT Level Material-Use Approach
The card is an authorization for the next
A A B B B C A A B B B C
container of material to be produced
A sequence of kanbans
q
pulls material through
Large-Lot Approach the process
A A A A A A B B B B B B B B B C C C Many different sorts of
signals are used, but
the system is still called
a kanban
Time
Figure 16.7

Kanban Kanban
1. User removes a
standard sized
container Material/Parts
Supplier
Final
assembly
Finished
goods
Customer
order

2. Signal is seen by Work
cell
the producing
department as Kanban
authorization to Kanban Kanban
replenish
Signal marker
on boxes

Part numbers
Figure 16.9
mark location
Figure 16.8

More Kanban More Kanban
When the producer and user are not in Usually each card controls a specific
visual contact, a card can be used quantity or parts
When the producer and user are in Multiple card systems may be used if
visual contact a light or flag or empty
contact, there are several components or
spot on the floor may be adequate different lot sizes
Since several components may In an MRP system, the schedule can
be required, several different be thought of as a build authorization
kanban techniques may be employed and the kanban a type of pull system
that initiates actual production


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More Kanban The Number of Kanban Cards
or Containers
Kanban cards provide a direct control Need to know the lead time needed to
and limit on the amount of work-in- produce a container of parts
process between cells
Need to know the amount of safety
If there is an immediate storage area, a
area stock needed
two-card system can be used with one
card circulating between the user and
storage area and the other between the Demand during Safety
Number of kanbans lead time + stock
storage area and the producer (containers) =
Size of container


Number of Kanbans Example Advantages of Kanban
Daily demand = 500 cakes
Production lead time = 2 days Allow only limited amount of faulty or
(Wait time + delayed material
Material handling time +
Processing time)
g ) Problems are immediately evident
Safety stock = 1/2 day Puts downward pressure on bad
Container size = 250 cakes aspects of inventory
Demand during lead time = 2 days x 500 cakes = 1,000
Standardized containers reduce
weight, disposal costs, wasted space,
1,000 + 250 and labor
Number of kanbans = 250 =5


JIT Quality JIT Quality Tactics
Strong relationship Use statistical process control
JIT cuts the cost of obtaining good Empower employees
quality because JIT exposes poor
quality Build fail safe methods (poka-
fail-safe (poka
Because lead times are shorter, yoke, checklists, etc.)
quality problems are exposed sooner Expose poor quality with small
Better quality means fewer buffers lot JIT
and allows simpler JIT systems to be
used Provide immediate feedback
Table 16.4

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Toyota Production System Toyota Production System
Continuous improvement
Standard work practice
Build an organizational culture and value
system that stresses improvement of all Work shall be completely specified as to
processes, kaizen content, sequence, timing, and outcome
Part of everyone’s j
y job Internal and external customer-supplier
connection are direct
i di
Respect for people
Product and service flows must be simple
People are treated as and direct
knowledge workers Any improvement must be made in
Engage mental and accordance with the scientific method at the
physical capabilities lowest possible level of the organization
Empower employees

Lean Operations Building a Lean Organization
Transitioning to a lean system can
Different from JIT in that it is be difficult
externally focused on the customer
Lean systems tend to have the
Starts with understanding what the following attributes
customer wants
Use JIT techniques
Optimize the entire process from Build systems that help employees
the customer’s perspective produce perfect parts
Reduce space requirements


Building a Lean Organization Lean Operations in Services
Develop partnerships with suppliers The JIT techniques used in
Educate suppliers manufacturing are used in services
Eliminate all but value-added Suppliers
activities
acti ities
Layouts
Develop employees
Inventory
Make jobs challenging
Scheduling
Build worker flexibility


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10/16/2010

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