Just in-time systems

Just-in-Time SystemsJust-in-Time SystemsAn integrated management system developed by An integrated management system developed by

Taiichi Ohno, VP of Toyota Motor CompanyTaiichi Ohno, VP of Toyota Motor Company It takes Toyota 20 years to perfect the systemIt takes Toyota 20 years to perfect the systemEarly StudiesEarly Studies

1977 Hertz Repair Study1977 Hertz Repair Study Quasar Plant Productivity StudyQuasar Plant Productivity Study

Two Fundamental ConceptsTwo Fundamental Concepts Elimination of WasteElimination of Waste Respect for PeopleRespect for People

1977 Hertz Repair Study1977 Hertz Repair Study

ModelModel Repair per 100 vehicleRepair per 100 vehicle(first 12,000 miles)(first 12,000 miles)

FordFord 326326

ChevChev 425425

PintoPinto 306306

ToyotaToyota 5555

Quasar Benchmarking StudyQuasar Benchmarking Study

UnderUnderMotorolaMotorola

Under Under MatsushitaMatsushita

Direct Labor EmployeesDirect Labor Employees 1,0001,000 1,0001,000

Indirect EmployeesIndirect Employees 600600 300300

TotalTotal 1,6001,600 1,3001,300

Daily ProductionDaily Production 1,0001,000 2,0002,000

Assembly RepairAssembly Repair 130%130% 6%6%

Annual Warranty Cost ($M)Annual Warranty Cost ($M) $16$16 $2$2

JIT’s Management PhilosophyJIT’s Management Philosophy

Elimination of WasteElimination of WasteFocused Factory NetworkFocused Factory NetworkGroup TechnologyGroup TechnologyJidoka– Quality at the SourceJidoka– Quality at the SourceJust-in-Time Production (little JIT)Just-in-Time Production (little JIT)Kanban SystemKanban SystemUniform Plant LoadingUniform Plant LoadingMinimize setup timesMinimize setup times

Focused Factory NetworksFocused Factory Networks Small Specialized plantsSmall Specialized plants

# Employees# Employees # Plants# Plants 1000+ <7501000+ <750 30-1000 60,00030-1000 60,000 30- 180,00030- 180,000 Difficult to manage a large installationDifficult to manage a large installationCreate wasteCreate wasteStifle communication flowsStifle communication flowsBuy special machine tools to do critical jobBuy special machine tools to do critical job

Create Business GroupCreate Business GroupToyota, Mitsubishi, Hitachi, ….Toyota, Mitsubishi, Hitachi, ….

Group TechnologyGroup Technology Key conceptsKey concepts

Group products into product familiesGroup products into product families Assign a set of dissimilar machine to each familyAssign a set of dissimilar machine to each family Arrange machines in a narrow UArrange machines in a narrow U Use multifunctional workersUse multifunctional workers

Why Product families?Why Product families? job shop – move a job from department to departmentjob shop – move a job from department to department Cincinnati Miracron’s StudyCincinnati Miracron’s Study

Move time + setup + queue time: 90-95% of the total Move time + setup + queue time: 90-95% of the total processing timeprocessing time

Run Time: 5-10%Run Time: 5-10%

Group Technology (con’d)Group Technology (con’d)

L L L

L L L

M M M

M M M

G G G

G G G

D D D

D D D

Job Shop Layout

Input Output

Group Technology (con’d)Group Technology (con’d)Convert Job Shop Layout to Group Convert Job Shop Layout to Group

Technology Layout (Cellular Manufacturing)Technology Layout (Cellular Manufacturing) Classification and Coding SchemeClassification and Coding Scheme

Assign a code number to each part (products)Assign a code number to each part (products)Assign products with similar codes to a family Assign products with similar codes to a family

Production Flow AnalysisProduction Flow AnalysisForm product families based on manufacturing Form product families based on manufacturing

similaritiessimilarities

Group Technology (con’d)Group Technology (con’d) A set of machines dedicated to processing one or more A set of machines dedicated to processing one or more

familyfamily Arrange machines in a narrow UArrange machines in a narrow U Workers rotate among several machinesWorkers rotate among several machines

Group Technology (con’d)Group Technology (con’d)

AdvantagesAdvantages Reduce cycle timeReduce cycle time

Move time Move time Queue timeQueue timeSet up timeSet up time

Adjust the output rate by increasing or Adjust the output rate by increasing or decreasing the number of workers in a celldecreasing the number of workers in a cell

Facilitate job trainingFacilitate job training Promote job satisfactionPromote job satisfaction

Jidoka: Quality at the SourceJidoka: Quality at the SourceStop everything when something goes Stop everything when something goes

wrongwrongInstead of using QC staff, each worker Instead of using QC staff, each worker

becomes his or her own inspectorbecomes his or her own inspectorAvoid batch processing: give each person Avoid batch processing: give each person

only on part to work on at a timeonly on part to work on at a timeAutonomation: automatic control of defectAutonomation: automatic control of defect

Foolproof systemsFoolproof systems Visual control (call light, Andon, and stop watch)Visual control (call light, Andon, and stop watch)

Just-in-Time ProductionJust-in-Time ProductionWhat is JIT? – provideWhat is JIT? – provide

Necessary products (services)Necessary products (services) Necessary quantitiesNecessary quantities Necessary timeNecessary time

Work well in a repetitive processing Work well in a repetitive processing environmentenvironment

The ideal lot size is one (Inventory is evil!)The ideal lot size is one (Inventory is evil!) Typical internal lot sizes are 1/10 of a day’s productionTypical internal lot sizes are 1/10 of a day’s production Makes no allowances for contingenciesMakes no allowances for contingencies

JIT Vs. Just-in-case PhilosophyJIT Vs. Just-in-case Philosophy

Little JIT (Con’d)Little JIT (Con’d)

Unreliabledelivery

Machine Breakdowns

Absenteeism Poor Quality

Inventory covers up problems

Kanban ControlKanban Control Kanban = CardKanban = Card

Production Kanban: Authorizes the manufacturing of a container of materialProduction Kanban: Authorizes the manufacturing of a container of material Withdrawal Kanban: Authorizes the withdrawal and the move of one containerWithdrawal Kanban: Authorizes the withdrawal and the move of one container

Kanban FlowKanban FlowKanban Rule: No Kanban card, no Kanban Rule: No Kanban card, no

production or movement of materialproduction or movement of materialCan accommodate 10%-20% of changes in Can accommodate 10%-20% of changes in

planned productionplanned productionCan easily extend to suppliers (supplier Can easily extend to suppliers (supplier

Kanban)Kanban)

Uniform Plant LoadingUniform Plant LoadingKanban system cannot function smoothly if Kanban system cannot function smoothly if

parts withdrawal is irregularparts withdrawal is irregularHow to ensure smooth productionHow to ensure smooth production

Mixed model assembly line: an assembly produces small Mixed model assembly line: an assembly produces small quantities of several products at the same time.quantities of several products at the same time.

Avoid the reaction wave in response to schedule variationAvoid the reaction wave in response to schedule variationFreeze monthly production rateFreeze monthly production rateProduce the same mix of products every dayProduce the same mix of products every dayDetermine the sequence for “introducing” products to Determine the sequence for “introducing” products to

the same assembly line (Goal Chasing Algorithm)the same assembly line (Goal Chasing Algorithm)

Uniform Plant Loading (con’d)Uniform Plant Loading (con’d)

One production cycle consists of 4 units of A’s, 3 units of B’s, 2 One production cycle consists of 4 units of A’s, 3 units of B’s, 2 C’s, and I DC’s, and I D

The sequence for producing this cycle is determined by the Goal The sequence for producing this cycle is determined by the Goal Chasing Algorithm to ensure a constant parts consumptionChasing Algorithm to ensure a constant parts consumption

ModelsModels Monthly Monthly DemandDemand

Daily Daily demanddemand

Cycle TimeCycle Time Production Production CycleCycle

AA 8,0008,000 400400 44

BB 6,0006,000 300300 33

CC 4,0004,000 200200 22

DD 2,0002,000 100100 11

TotalTotal 20,00020,000 1,0001,000 1010

(480 min * 2 shifts) /

1000= 0.96

min/unit

Goal Chasing AlgorithmGoal Chasing Algorithm Objective: maintain a constant parts consumption rate (create a Objective: maintain a constant parts consumption rate (create a

constant demand)constant demand) Principle: minimize the difference between the ideal parts Principle: minimize the difference between the ideal parts

consumption and actual parts consumptionconsumption and actual parts consumption

Production sequence

Units

Actual parts consumption

Ideal parts consumption

Minimize Setup TimesMinimize Setup Times Attanept to achieve a single-digit setup (less than one Attanept to achieve a single-digit setup (less than one

minute)minute) Relationship between setup time and inventory level Relationship between setup time and inventory level Example: Hood and Fender press comparison (800-ton Example: Hood and Fender press comparison (800-ton

press)press)

ToyotaToyota USAUSA SwedenSweden GermanyGermany

Setup timeSetup time 10 minutes10 minutes 6 hours6 hours 4 hours4 hours 4 hours4 hours

Setups/daySetups/day 33 11 -- ½½

Lot size Lot size (inventory)(inventory)

1 day1 day 10 days10 days 1 month1 month --

Minimize Setup Times (con’d)Minimize Setup Times (con’d)Separate internal setup from external setupSeparate internal setup from external setup

Internal setup: has to be performed while the Internal setup: has to be performed while the machine is stoppedmachine is stopped

External setup: can be performed while the External setup: can be performed while the machine is runningmachine is running

Convert internal setup to external setupConvert internal setup to external setupEliminate the adjustment processEliminate the adjustment processAbolish the setup stepAbolish the setup step

Produce more than one parts at the same time (one Produce more than one parts at the same time (one die, two parts)die, two parts)

JIT’s Management Philosophy JIT’s Management Philosophy (con’d)(con’d)

Respect for PeopleRespect for PeopleLife time employeeLife time employeeCompany-wide unionsCompany-wide unionsAttitude toward workersAttitude toward workersAutomation/RoboticsAutomation/RoboticsBottom-Round ManagementBottom-Round ManagementSubcontractorSubcontractorQuality CircleQuality Circle

Life time EmploymentLife time Employment1/3 of workforce (permanent workers)1/3 of workforce (permanent workers)No layoff or firing of the regular workersNo layoff or firing of the regular workersMandatory retirement at age 55Mandatory retirement at age 55Lump sum compensationLump sum compensationAdvantagesAdvantages

Job stability and lifetime trainingJob stability and lifetime training Opening for young peopleOpening for young people Team spirit and loyaltyTeam spirit and loyalty Forced savingsForced savings

Company UnionsCompany UnionsIncluded everybody in the company Included everybody in the company

(did not matter what skills were)(did not matter what skills were)The relationship between the union The relationship between the union

and management is cooperativeand management is cooperativeCompensation (based on bonus, up to Compensation (based on bonus, up to

50% of salaries) reinforces the harmony 50% of salaries) reinforces the harmony relationshiprelationship

Attitude Toward WorkersAttitude Toward WorkersDo not look at people like human machinesDo not look at people like human machinesIf a machine can do a job, then a person If a machine can do a job, then a person

should not do it (human dignity)should not do it (human dignity)Give opportunity for workers to do more Give opportunity for workers to do more

(what workers are doing is only tapping their (what workers are doing is only tapping their capability)capability)

The Japanese spend more for employee The Japanese spend more for employee training and education than any other training and education than any other industrial nation.industrial nation.

Automation/ RoboticsAutomation/ RoboticsAutomation and robotics are not considered Automation and robotics are not considered

staff-cutting moves; eliminates dull jobsstaff-cutting moves; eliminates dull jobsJapan has invested as much as 1/ of its GNP Japan has invested as much as 1/ of its GNP

in capital investmentin capital investmentInvested first in low-cost enhancementInvested first in low-cost enhancementJapan had about 5 times of the number of Japan had about 5 times of the number of

programmable robots (some very simple) as programmable robots (some very simple) as the United Statesthe United States

Employees often initiate automation projectsEmployees often initiate automation projects

Bottom-Round ManagementBottom-Round Management More than 100 million people crowded More than 100 million people crowded

on an island about the size of California, on an island about the size of California, 80% of which is mountainous80% of which is mountainous

The importance of the group The importance of the group superseded that of individualsuperseded that of individual

Decisions are made at the lowest Decisions are made at the lowest possible level and involved all potentially possible level and involved all potentially interested partiesinterested parties

A very slow decision making process A very slow decision making process (quick implementation)(quick implementation) Problems +

solutions

Recommen-dations

Recommen-dations

Com

pany

hie

rarc

hy

Subcontractor NetworksSubcontractor NetworksThe bulk of the subcontractors have fewer The bulk of the subcontractors have fewer

than 30 employeesthan 30 employeesMore than 90% of all Japanese companies More than 90% of all Japanese companies

are part of am enormous subcontractor are part of am enormous subcontractor networknetwork

Sole-source arrangementSole-source arrangement Mutual trustMutual trust No inspection, no paperwork, no delayNo inspection, no paperwork, no delay Help vendors improve their manufacturing systemHelp vendors improve their manufacturing system Provide financial helpProvide financial help

Quality CirclesQuality CirclesThe OC circles at Toyota mirror its formal The OC circles at Toyota mirror its formal

organizational structureorganizational structureA QC circle is made of a foreman and his A QC circle is made of a foreman and his

subordinatessubordinatesAll employees must participate in some circlesAll employees must participate in some circlesDiscuss problems encountered and devise solutions Discuss problems encountered and devise solutions

to their management to their management Education & training Education & training

Problems solving and presentation skillsProblems solving and presentation skills Advisor and trainer coursesAdvisor and trainer courses Inspection tours to U.S. and EuropeInspection tours to U.S. and Europe

Quality Circles (con’d)Quality Circles (con’d)Reward SystemsReward Systems

Topic Recommendation awards the individual topic Topic Recommendation awards the individual topic registered by a circleregistered by a circle

Effort Prize (momentary rewards): when a topic is Effort Prize (momentary rewards): when a topic is completedcompleted

Advisor Prize: 1/3 of the Topics RecommendationsAdvisor Prize: 1/3 of the Topics Recommendations Coordinator Prize: 1/3 of the Advisor PrizeCoordinator Prize: 1/3 of the Advisor Prize Gold and Silver Prize (at the plant level)Gold and Silver Prize (at the plant level) QC circle-Toyota PrizeQC circle-Toyota Prize All-Japan QC Circles ContestAll-Japan QC Circles Contest

Quality Circles (con’d)Quality Circles (con’d)Nissan spent $30,000+ to train each Nissan spent $30,000+ to train each

assembly worker (Smyrna, Tennessee) assembly worker (Smyrna, Tennessee) before they started on the jobbefore they started on the job

EffectsEffects Toyota: 5 million suggestions a year (500/employee)Toyota: 5 million suggestions a year (500/employee) Cannon: 900,000 suggestions, 78 suggestions per Cannon: 900,000 suggestions, 78 suggestions per

employeesemployees Matsushita: 6.5 million suggestions a yearMatsushita: 6.5 million suggestions a year

Principles of Continuous Principles of Continuous ImprovementImprovement

Create a mind-set for improvementCreate a mind-set for improvementTry and try againTry and try againThink; Don’t buy improvementThink; Don’t buy improvementWork in teamsWork in teamsRecognize improvement knows no limitsRecognize improvement knows no limits