Just-In-Time and Lean Systems - ADDVALUE - Nilesh Arora

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JIT Lean Manufacturing
by
Best Performing Consulting Organization
Adding Value In Totality !!
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Session Topics

• What is JIT?
• Benefits of JIT
• Value Added Management
• Push vs. Pull
• Buffered vs. Lean Manufacturing
• Performance Measures

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What is Just-in-Time?

• Management philosophy of continuous and forced
  problem solving
• Supplies and components are pulled through
  system to arrive where they are needed when they
  are needed.

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What Does Just-in-Time Do?

• Attacks waste
• Anything not adding value to the product
• Customers perspective
• Exposes problems and bottlenecks
• Caused by variability
• Deviation from optimum
• Achieves streamlined production
• By reducing inventory

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What is Waste

• Waste is anything other than the minimum amount
  of equipment, materials, parts, space, and
  workers time, which are absolutely essential to
  add value to the product.
• Shoichiro Toyoda President, Toyota

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Just-In-Time Manufacturing

• JIT seeks to reduce waste. Waste is viewed as a
  symptom of some unsolved problem. Types of waste
  include
• Overproduction
• Waiting Time
• Movement
• Inventory
• Product Defects
• Process Waste

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Just-In-Time Manufacturing

• JIT is used for many activities including
• Inventory Reduction
• Quality Improvement
• Lead Time Reduction
• Continuous Improvement (Kaizen)
• Preventive Maintenance

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Major Objective of JIT

• Identify the causes of system variance (waste)
  and eliminate or control these causes. By
  attacking the causes of variance, JIT can reduce
  the dependency of the manufacturing process on
  wasteful buffers like excessive inventory, long
  lead times, and idle capacity.

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Variability Occurs Because

• Employees, machines, and suppliers produce units
  that do not conform to standards, are late, or
  are not the proper quantity
• Engineering drawings or specifications are
  inaccurate
• Production personnel try to produce before
  drawings or specifications are complete
• Customer demands are unknown

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Benefits of JIT

• Shorter Lead Times (Faster Response)
• Lower Defect Rates
• Reduced Inventories
• Enhanced Flexibility

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Advantages Of Faster Response Times

• Increased Productivity
• Increased Quality
• Reduced Risk
• Increased Profitability
• Increased Market Share
• Increased Product Variety

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Value Added Management

• A Strategy for Time-Based Competition
• Focus on
• Reducing Lead Times
• Process Flow Analysis
• Eliminating or Reduce Non-Value Adding Activities
• WIP Storage
• Material Movement
• Inspection
• Rework
• Unscheduled Maintenance
• Changeovers

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Value Added Management

• Value-Added Activity Time
• The time required to perform those activities
  essential to the production of a product, or the
  delivery of a service.

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Value Added Management

• Non Value-Adding Activities
• Any activity that does not add value to the
  product being built, or the service being
  offered. Non value-adding activities are waste.

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Value Added Management

• Examples of Non-Value Added Activities
• Administrative Processes Paperwork
• Process Delays
• Material Movement
• Material Storage
• Inspection
• Rework
• Unscheduled Maintenance
• Machine Changeovers

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Value Added Management

• Cycle Time Improvements
• Improvements to cycle times are achieved by
  reducing or eliminating non value-adding
  activities

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Value Added Management

• Identifying Non Value-Adding Activities
• The key to identifying non value-adding
  activities is process flow analysis.

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Value Added Management
Value-Added Time Analysis Worksheet
Process Activity
Total Time
Value Added Time
Non Value Added Time
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Value Added Management
Total Mfg. Lead Time
95
5
Non Value-Adding
Value Adding
Traditional Response
2
98
Non Value-Adding
Value Adding
50
50
Value-Adding Response
Non Value Adding
Value Adding
Lead Time Reduced Non Value-Adding Time Reduced
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Value Added Ratio

• V.A.R. Value Added Time
• Total Cycle Time
• Improved By
• Eliminating or Reducing Non Value-Adding Time
• WIP Storage/FGI Storage
• Material Movement
• Rework
• Unscheduled Maintenance
• Changeover Time
• ANYTHING THAT DOES NOT ADD VALUE FOR
  THE CUSTOMER

Increase V.A.R. by Reducing Cycle Time Forces
Continuous Process Flow Analysis Drives Quality
Improvement
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Value Added Management Results

• Oregon Cutting Systems Output Per Hour Up 55
• Lead Time from 21 to 1 day
• Abbott Laboratories Production Cost Down 40
• Lead Time Reduced gt 80
• Lockheed Defect Rate Reduced 80 Rework
  Down 91
• Lead Time Down by 95
• Texas Instruments Lead Time Down 15.8 to 3.7
  days

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JIT Inventory

• Why do companies hold inventories?
• What are some advantages to holding inventories?
• What are some problems with holding inventories?

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Inventory

• Traditional inventory exists in case problems
  arise
• JIT objective Reduce inventory
• JIT requires
• Small lot sizes
• Low setup time
• Containers for fixed number of parts
• JIT inventory Minimum inventory to keep system
  running

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Inventory Hides Problems
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Lowering Inventory Reduces Waste
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Lowering Inventory Reduces Waste
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Lowering Inventory Reduces Waste
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JIT Inventory Tactics

• Use a pull system to move inventory
• Reduce lot size
• Reduce setup time
• Develop Just-in-Time delivery systems with
  suppliers
• Deliver directly to point of use
• Perform-to-schedule
• Use group technology

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To Lower InventoryReduce Lot Sizes
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Reducing Lot Sizes Increases the Number of Lots
Customer orders 10
Lot size 5
Lot 1
Lot 2
Lot size 2
Lot 1
Lot 2
Lot 3
Lot 4
Lot 5
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Which Increases Inventory Costs
Cost
Total Cost
Holding Cost
Setup Cost
Lot Size
Optimal Lot Size
SmallerLot Size
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Unless Setup Costs are Reduced
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Minimizing Waste Reducing Setup Times

• What are the consequences of long setup times?
• What are the advantages of short setup times?

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Steps to Reduce Setup Time
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Push versus Pull

• Push system material is pushed into downstream
  workstations regardless of whether resources are
  available
• Pull system material is pulled to a workstation
  just as it is needed

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Push Scheduling

• Moves an order to the next operation or work
  center in its route immediately on completion of
  the current activity whether or not that work
  center can begin processing it.

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Traditional Push System
F I N I S H E D G O O D S Inv.
M A T E R I A L Inv.
Process
Process
Process
Work-In-Process Staging Area
Work-In-Process Staging Area
Material Is Moved Down Stream After Processing at
Each Stage Work-In-Process Inventories
Develop Traditional Efficiency Measures Encourage
Overproduction
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Push Scheduling Benefits

• Implementation is relatively simple
• Eliminates the need to coordinate between work
  centers
• Keeps a work center busy as long as work remains
  in its queue

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Push Scheduling Problems

• High WIP Levels
• Higher Quality Problems
• Hides Processing Problems
• Requires dispatching rules to sequence orders

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Pull Scheduling

• Orders are processed and transferred in response
  to signals from downstream work centers

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Alternative Pull System
Signal Supplier
C U S T O M E R D E M A N D
Signal
M A T E R I A L Inv.
Process
Process
Process
Signal
Signal
Signal
FGI
Pull Systems Move Material In Response To A
Signal From a Downstream Process Minimal WIP
Buildup/Reduced Space Requirements Reduced
Material Inventory/ More Frequent Supplier
Deliveries Minimal Finished Goods
Inventory Emphasis on Throughput Not Efficiencies
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Pull Scheduling Benefits

• Simplifies schedulingeach center builds only
  what is required when needed
• Orders are driven by real demand thus minimizing
  inventory accumulation
• Makes problems immediately apparent
• Prevents additional load from piling up extra
  work at the bottleneck in the event of some
  problem

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Pull Scheduling Problems

• Challenging to implement
• Success requires coordination among related work
  centers
• Requires good planning
• Must limit interventions requesting changes in
  product mix, quantity, or due dates.

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Layout

• JIT objective Reduce movement of people and
  material
• Movement is waste!
• JIT requires
• Work cells for product families
• Moveable or changeable machines
• Short distances
• Little space for inventory
• Delivery directly to work areas

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Work Cell versus Process Layout
Process Layout
Work Cell
1
Lathe
Saw
2
Saw
Press
Lathe
Saw
2
Lathe
Lathe
4
5
Heat
Treat
Grinder
3
1
Grinder
Press
Heat
Treat
6
Grinder
Press
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Layout Tactics

• Distance reduction
• Build work cells for families of products
• Increased flexibility
• Flexible or movable equipment
• Impact on employees
• Cross-training immediate feedback
• Poka-yoke self-testing functions
• Reduced space and inventory
• Design little space for inventory

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Just-In-Time Manufacturing
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Just-in-Time

• People Management
• Housekeeping
• Control Through Visibility
• Total Quality
• Problem Solving
• Employee Involvement

• Technology Management
• Structured Flows
• Set-Up Reduction
• Small Lot Sizes

JIT

• Systems Management
• Balanced Lines
• TPM
• Supplier Partnerships
• Pull System

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Buffered Manufacturing

• Buffered Manufacturing Has Limited Goals
• Acceptable Number Of Defects
• Acceptable Inventory Levels
• Limited Product Variety
• Acceptable Levels Of Waste

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Lean Manufacturing

• Lean Manufacturing Seeks Perfection
• Strives To Reduce Costs
• Strives For Zero Defects
• Strives To Reduce Inventory
• Strives For Greater Product Variety
• Strives To Reduce Cycle Times
• Seeks To Eliminate Waste
• Seeks Continuous Process Improvement

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Lean Manufacturing

• Key Features Of Lean Manufacturing
• Transfers Tasks To Workers Adding Value
• Quickly Uncovers Solves Problems

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Employee Empowerment

• Getting employees involved in product process
  improvements
• Know job best
• JIT requires
• Empowerment
• Cross-training
• Training support
• Few job classifications

1995 Corel Corp.
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Lean Manufacturing

• Basic Tenets of Lean Manufacturing
• Produce Only What Is Demanded
• Produce At The Market Rate Of Demand
• Produce With Perfect Quality
• Produce With No Waste
• Develop Employees Productive Potential

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Traditional Performance Measures

• Traditional Measures Focus On Outputs. This
  Leads To
• Long Production Runs
• Large Inventories
• Large Buffers
• Long Lead Times
• Poorer Quality
• Lack Of Responsiveness

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Time-Based Performance Measures

• Time-Based Measures Track Process Improvements
• Value-Added Ratio
• Setup Times Number
• Throughput Times
• Quality
• Delivery Speed Reliability

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New Management Measures
Customer Focused
On-Time Delivery Defects Customer Satisfaction
Drivers of Competitive Mfg.
Measures are Stable Capable Improving
Production Focused
Throughput WIP FGI Lead Time
Process Focused
Value Added Ratio Changeover Times
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New Business Paradigm
New Performance Measures Time-Based - Quality
Based - Customer Focused

Value-Added Management Process Flow Analysis -
Focus on Time
Competing Through Manufacturing Just-In-Time -
Pull Manufacturing Philosophies
Total Quality Leadership - Culture- Customers-
Suppliers - Process Improvement People- Business
Planning - Communication - Recognition
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Homework Assignment

• Estimate the value added ratio for some process
  in your organization.
• Identify 3 sources of waste in your operation?
  Is it possible to eliminate the waste?
• What performance measures do you use? Do the
  measures help or hinder your continuous
  improvement efforts? Can you suggest better
  performance measures?

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