2008 Prentice Hall, Inc. 16 – 1 Operations Management Chapter 16 – Chapter 16 – JIT and Lean Operations JIT and Lean Operations PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer/Render Heizer/Render Principles of Operations Management, 7e Principles of Operations Management, 7e Operations Management, 9e Operations Management, 9e
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Operations ManagementOperations ManagementChapter 16 – Chapter 16 – JIT and Lean JIT and Lean OperationsOperations
PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer/Render Heizer/Render Principles of Operations Management, 7ePrinciples of Operations Management, 7eOperations Management, 9e Operations Management, 9e
Global Company Profile: Global Company Profile: Toyota Motor CorporationToyota Motor Corporation
Just-in-Time, the Toyota Just-in-Time, the Toyota Production System, and Lean Production System, and Lean OperationsOperations Eliminate WasteEliminate Waste
Largest vehicle manufacturer in the Largest vehicle manufacturer in the world with annual sales of over 9 world with annual sales of over 9 million vehiclesmillion vehicles
Success due to two techniques, JIT Success due to two techniques, JIT and TPSand TPS
Continual problem solving is central Continual problem solving is central to JITto JIT
Eliminating excess inventory makes Eliminating excess inventory makes problems immediately evidentproblems immediately evident
Central to TPS is a continuing effort Central to TPS is a continuing effort to produce products under ideal to produce products under ideal conditionsconditions
Respect for people is fundamentalRespect for people is fundamental
Small building but high levels of Small building but high levels of productionproduction
Subassemblies are transferred to the Subassemblies are transferred to the assembly line on a JIT basisassembly line on a JIT basis
High quality and low assembly time High quality and low assembly time per vehicleper vehicle
Just-In-Time, TPS, and Just-In-Time, TPS, and Lean OperationsLean Operations
JIT is a philosophy of continuous and JIT is a philosophy of continuous and forced problem solving via a focus on forced problem solving via a focus on throughput and reduced inventorythroughput and reduced inventory
TPS emphasizes continuous TPS emphasizes continuous improvement, respect for people, and improvement, respect for people, and standard work practicesstandard work practices
Lean production supplies the Lean production supplies the customer with their exact wants when customer with their exact wants when the customer wants it without wastethe customer wants it without waste
Just-In-Time, TPS, and Just-In-Time, TPS, and Lean OperationsLean Operations
JIT emphasizes forced problem JIT emphasizes forced problem solvingsolving
TPS emphasizes employee TPS emphasizes employee learning and empowerment in an learning and empowerment in an assembly-line environmentassembly-line environment
Lean operations emphasize Lean operations emphasize understanding the customerunderstanding the customer
Waste is anything that does not Waste is anything that does not add value from the customer point add value from the customer point of viewof view
Storage, inspection, delay, waiting Storage, inspection, delay, waiting in queues, and defective products in queues, and defective products do not add value and are 100% do not add value and are 100% wastewaste
Other resources such as energy, Other resources such as energy, water, and air are often wastedwater, and air are often wasted
Efficient, ethical, and socially Efficient, ethical, and socially responsible production minimizes responsible production minimizes inputs, reduces wasteinputs, reduces waste
Traditional “housekeeping” has Traditional “housekeeping” has been expanded to the 5 Ssbeen expanded to the 5 Ss
JIT systems require managers to JIT systems require managers to reduce variability caused by both reduce variability caused by both internal and external factorsinternal and external factors
Variability is any deviation from the Variability is any deviation from the optimum processoptimum process
1.1. Incomplete or inaccurate drawings Incomplete or inaccurate drawings or specificationsor specifications
2.2. Poor production processes Poor production processes resulting in incorrect quantities, resulting in incorrect quantities, late, or non-conforming unitslate, or non-conforming units
1.1. Incomplete or inaccurate drawings Incomplete or inaccurate drawings or specificationsor specifications
2.2. Poor production processes Poor production processes resulting in incorrect quantities, resulting in incorrect quantities, late, or non-conforming unitslate, or non-conforming units
3.3. Unknown customer demandsUnknown customer demandsBoth JIT and inventory
The time it takes to move an The time it takes to move an order from receipt to deliveryorder from receipt to delivery
The time between the arrival of The time between the arrival of raw materials and the shipping of raw materials and the shipping of the finished order is called the finished order is called manufacturing cycle timemanufacturing cycle time
A pull system increases A pull system increases throughputthroughput
By pulling material in small lots, By pulling material in small lots, inventory cushions are removed, inventory cushions are removed, exposing problems and emphasizing exposing problems and emphasizing continual improvementcontinual improvement
Manufacturing cycle time is reducedManufacturing cycle time is reduced
Push systems dump orders on the Push systems dump orders on the downstream stations regardless of downstream stations regardless of the needthe need
• Powerful strategy for improving operationsPowerful strategy for improving operations
• Materials arrive where they Materials arrive where they are needed when they are are needed when they are neededneeded
• Identifying problems and Identifying problems and driving out waste reduces driving out waste reduces costs and variability and costs and variability and improves throughputimproves throughput
• Requires a meaningful Requires a meaningful buyer-supplier relationshipbuyer-supplier relationship
JIT partnerships exist when a JIT partnerships exist when a supplier and purchaser work supplier and purchaser work together to remove waste and drive together to remove waste and drive down costsdown costs
Four goals of JIT partnerships are:Four goals of JIT partnerships are: Removal of unnecessary activitiesRemoval of unnecessary activities
Removal of in-plant inventoryRemoval of in-plant inventory
Removal of in-transit inventoryRemoval of in-transit inventory
Improved quality and reliabilityImproved quality and reliability
DiversificationDiversification – ties to only one customer – ties to only one customer increases riskincreases risk
SchedulingScheduling – don’t believe customers can – don’t believe customers can create a smooth schedulecreate a smooth schedule
ChangesChanges – short lead times mean – short lead times mean engineering or specification changes can engineering or specification changes can create problemscreate problems
QualityQuality – limited by capital budgets, – limited by capital budgets, processes, or technologyprocesses, or technology
Lot sizesLot sizes – small lot sizes may transfer – small lot sizes may transfer costs to supplierscosts to suppliers
Reduce waste due to movementReduce waste due to movement
JIT Layout TacticsJIT Layout Tactics
Build work cells for families of productsBuild work cells for families of productsInclude a large number operations in a small areaInclude a large number operations in a small areaMinimize distanceMinimize distanceDesign little space for inventoryDesign little space for inventoryImprove employee communicationImprove employee communicationUse poka-yoke devicesUse poka-yoke devicesBuild flexible or movable equipmentBuild flexible or movable equipmentCross-train workers to add flexibilityCross-train workers to add flexibility
Large lots and long production Large lots and long production lines with single-purpose lines with single-purpose machinery are being replaced by machinery are being replaced by smaller flexible cellssmaller flexible cells
Often U-shaped for shorter paths Often U-shaped for shorter paths and improved communicationand improved communication
Often using group technology Often using group technology concepts concepts
Employees are cross trained Employees are cross trained for flexibility and efficiencyfor flexibility and efficiency
Improved communications Improved communications facilitate the passing on of facilitate the passing on of important information about important information about the processthe process
With little or no inventory With little or no inventory buffer, getting it right the first buffer, getting it right the first time is criticaltime is critical
Inventory is at the minimum level Inventory is at the minimum level necessary to keep operations runningnecessary to keep operations running
JIT Inventory TacticsJIT Inventory Tactics
Use a pull system to move inventoryUse a pull system to move inventoryReduce lot sizesReduce lot sizesDevelop just-in-time delivery systems with suppliersDevelop just-in-time delivery systems with suppliersDeliver directly to point of useDeliver directly to point of usePerform to schedulePerform to scheduleReduce setup timeReduce setup timeUse group technologyUse group technology
High setup costs encourage large High setup costs encourage large lot sizeslot sizes
Reducing setup costs reduces lot Reducing setup costs reduces lot size and reduces average size and reduces average inventoryinventory
Setup time can be reduced through Setup time can be reduced through preparation prior to shutdown and preparation prior to shutdown and changeoverchangeover
Communicate schedules to suppliersCommunicate schedules to suppliersMake level schedulesMake level schedulesFreeze part of the scheduleFreeze part of the schedulePerform to schedulePerform to scheduleSeek one-piece-make and one-piece moveSeek one-piece-make and one-piece moveEliminate wasteEliminate wasteProduce in small lotsProduce in small lotsUse kanbansUse kanbansMake each operation produce a perfect partMake each operation produce a perfect part
Kanban is the Japanese word for cardKanban is the Japanese word for card
The card is an authorization for the next The card is an authorization for the next container of material to be producedcontainer of material to be produced
A sequence of kanbans A sequence of kanbans pulls material through pulls material through the processthe process
Many different sorts of Many different sorts of signals are used, but signals are used, but the system is still called the system is still called a kanbana kanban
When the producer and user are not in When the producer and user are not in visual contact, a card can be usedvisual contact, a card can be used
When the producer and user are in visual When the producer and user are in visual contact, a light or flag or empty spot on contact, a light or flag or empty spot on the floor may be adequatethe floor may be adequate
Since several Since several components may components may be required, be required, several different several different kanban techniques kanban techniques may be employedmay be employed
Usually each card controls a specific Usually each card controls a specific quantity or partsquantity or parts
Multiple card systems may be used if Multiple card systems may be used if there are several components or there are several components or different lot sizesdifferent lot sizes
In an MRP system, the schedule can In an MRP system, the schedule can be thought of as a build authorization be thought of as a build authorization and the kanban a type of pull system and the kanban a type of pull system that initiates actual productionthat initiates actual production
Kanban cards provide a direct control Kanban cards provide a direct control and limit on the amount of work-in-and limit on the amount of work-in-process between cellsprocess between cells
If there is an immediate storage area, a If there is an immediate storage area, a two-card system can be used with one two-card system can be used with one card circulating between the user and card circulating between the user and storage area and the other between the storage area and the other between the storage area and the producerstorage area and the producer
Number of Kanbans ExampleNumber of Kanbans Example
Daily demandDaily demand == 500500 cakes cakes
Production lead timeProduction lead time == 22 days days(Wait time + (Wait time + Material handling time + Material handling time + Processing time)Processing time)
Strong relationshipStrong relationship JIT cuts the cost of obtaining good JIT cuts the cost of obtaining good
quality because JIT exposes poor quality because JIT exposes poor qualityquality
Because lead times are shorter, Because lead times are shorter, quality problems are exposed soonerquality problems are exposed sooner
Better quality means fewer buffers Better quality means fewer buffers and allows simpler JIT systems to be and allows simpler JIT systems to be usedused
Standard work practiceStandard work practice Work shall be completely specified as to Work shall be completely specified as to
content, sequence, timing, and outcomecontent, sequence, timing, and outcome
Internal and external customer-supplier Internal and external customer-supplier connection are directconnection are direct
Product and service flows must be simple Product and service flows must be simple and directand direct
Any improvement must be made in Any improvement must be made in accordance with the scientific method at the accordance with the scientific method at the lowest possible level of the organizationlowest possible level of the organization