Production and Operations Management: Manufacturing and Services

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CHASE AQUILANO JACOBS
Operations Management
For Competitive Advantage
Chapter 10
Just-In-Time and Lean Systems
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Chapter 10Just-in-Time and Lean Systems

• JIT Defined
• The Japanese Approach to Productivity
• JIT Implementation Requirements
• JIT in Services

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Just-In-Time (JIT)Defined

• JIT can be defined as an integrated set of
  activities designed to achieve high-volume
  production using minimal inventories (raw
  materials, work in process, and finished goods).
• JIT also involves the elimination of waste in
  production effort.
• JIT also involves the timing of production
  resources (e.g., parts arrive at the next
  workstation just in time).

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Characteristics of JIT

• JIT is popularly known as stockless production
• Produce just enough to meet demand
• Inventory is wasteful
• Labor and materials
• Equipment and time
• Storage and insurance
• Capital, etc.
• Quality must be at the source

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JIT Demand-Pull Logic
Exhibit 10.1
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The Japanese Approach to Productivity

• Imported technologies
• Efforts concentrated on shop floor
• Quality improvement focus
• Elimination of waste
• Respect for people

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Waste in Operations

• (1) Waste from overproduction
• (2) Waste of waiting time
• (3) Transportation waste
• (4) Inventory waste
• (5) Processing waste
• (6) Waste of motion
• (7) Waste from product defects

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Minimize WasteFocused Factory Networks

• Small specialized plants
• Thinner is better
• Better control
• Bolsters specialization and excellence
• More economical to manage
• Large vertically integrated operations are
• Bureaucratic
• Difficult to manage

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Minimizing Waste Focused Factory Networks
Coordination
System Integration
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Minimizing WasteGroup Technology

• Identification of
• Machine cells
• Part families
• Based on similarities in
• Design
• Manufacture
• Saves time and effort

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Minimizing Waste Group Technology (Part 1)

• Using Departmental Specialization for plant
  layout can cause a lot of unnecessary material
  movement.

Saw
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Saw
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Heat Treat
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Minimizing Waste Group Technology (Part 2)

• Revising by using Group Technology Cells can
  reduce movement and improve product flow.

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2
1
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Minimizing WasteUse of Other Technologies

• Robotics
• Supply chain management
• Value stream mapping
• Flexible manufacturing systems
• Computer integrated manufacturing systems
• Expert systems
• Neural networks

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Minimizing Waste Quality at the Source

• Self-inspection
• Limited use of QC departments
• Automated inspection
• Line-stopping empowerment
• Quality before quantity

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Minimizing Waste JIT Production
Produce... ...what is needed... ...when its
needed... ...NOTHING MORE!
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Minimizing Waste Uniform Plant Loading
This does not mean building a single product. But
maintaining a stable mix of products, and firm
monthly schedules.
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Minimizing Waste Uniform Plant Loading
Suppose we operate a production plant that
produces a single product. The schedule of
production for this product could be accomplished
using either of the two plant loading schedules
below.
Not uniform Jan. Units Feb. Units Mar.
Units Total 1,200 3,500 4,300 9,000
or
Uniform Jan. Units Feb. Units Mar.
Units Total 3,000 3,000 3,000 9,000
How does the uniform loading help save labor
costs?
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Minimizing Waste Just-In-Time Production
Exhibit 10.3
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Minimizing Waste Inventory Hides Problems
Exhibit 10.4
Example By identifying defective items from a
vendor early in the production process the
downstream work is saved.
Example By identifying defective work by
employees upstream, the downstream work is saved.
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Minimizing WasteKanban Production Control System

• Uses signaling system to regulate JIT flows
• Kanban--sign or instruction card
• Kanban system is a pull system
• Authority to produce comes from downstream
• It is a form of information system
• Production kanban--can be single card if move
  distance is short
• Move (withdrawal, conveyance) kanban

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Minimizing Waste Kanban Production Control
Systems
Exhibit 10.6
Withdrawal kanban
Storage Part A
Storage Part A
Machine Center
Assembly Line
Material Flow Card (signal) Flow
Production kanban
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Determining the Number of Kanbans Needed

• Setting up a kanban system requires determining
  the number of kanbans (or containers) needed.
• Each container represents the minimum production
  lot size.
• An accurate estimate of the lead time required to
  produce a container is key to determining how
  many kanbans are required.

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The Number of Kanban Card Sets
k Number of kanban card sets (a set is a
card) d Average number of units demanded over
some time period L lead time to replenish an
order (same units of time as demand) S Safety
stock expressed as a percentage of demand during
lead time C Container size
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Example of Kanban Card Determination Problem Data

• A switch assembly is assembled in batches of 4
  units from an upstream assembly area and
  delivered in a special container to a
  downstream control-panel assembly operation.
• The control-panel assembly area requires 5 switch
  assemblies per hour.
• The switch assembly area can produce a container
  of switch assemblies in 2 hours.
• Safety stock has been set at 10 of needed
  inventory.

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Example of Kanban Card Determination Calculations
Always round up!
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Minimizing Waste Minimized Setup Times

• What are the consequences of long setup times?
• Long manufacturing lead times
• Increased cost
• Reduced capacity
• A requirement for small-lot-size, mixed-model
  production?
• Practice more setups to reduce time/setup
• Fixed production quantity--improves setup
• SMED

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Respect for People

• Strive to maintain level payrolls
• Workers as assets
• Cooperative employee unions
• Subcontractor networks
• Bottom-round management style
• Quality circles (Small group involvement
  activities)

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JIT Requirements Design Flow Process
See Exhibit 10.8

• Link operations
• Balance workstation capacities
• Relayout for flow
• Emphasize preventive maintenance
• Reduce lot sizes
• Reduce setup/changeover time

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JIT Requirements Total Quality Control

• Design for quality and quality at the source
• Worker responsibility/quality culture
• Measure SQC and use achievable goals
• Enforce compliance
• Fail-safe methods
• Automatic inspection

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JIT Requirements Stabilize Schedule

• Level schedule
• Pull materials into final assembly in uniform
  pattern
• Underutilize capacity
• Realized by removing excess inventory
• Inventory less likely with quality and equipment
  maintenance
• Establish freeze windows
• Fixed schedule with no further changes possible

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JIT Requirements Kanban-Pull

• Demand pull
• Backflush
• Used to explode end items BOM to determine how
  many of each product went into it
• Reduce lot sizes

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JIT Requirements Work with Vendors

• Limited number of suppliers for better control
• Reduce lead times
• Frequent deliveries
• Project usage requirements
• Quality expectations

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JIT RequirementsPlanning and Control

• Plan for quality
• Uniform production rate
• Smooth flow of materials
• Emphasize rate not capacity
• Refocused productivity
• Less expensive machines
• Push towards lot size of one
• Less expensive machines

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JIT Requirements Reduce Inventory More

• Look for other areas
• Stores
• Transit
• Carousels
• Conveyors

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JIT Requirements Improve Product Design

• Standard product configuration
• Standardize and reduce number of parts
• Process design with product design
• Quality expectations

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JIT in Services (Examples)

• Organize Problem-Solving Groups
• Upgrade Housekeeping
• Upgrade Quality
• Clarify Process Flows
• Revise Equipment and Process Technologies

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JIT in Services (Examples)

• Level the Facility Load
• Eliminate Unnecessary Activities
• Reorganize Physical Configuration
• Introduce Demand-Pull Scheduling
• Develop Supplier Networks

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New Paradigms The Kanban Production System
Direction of Pull
2
Assembly n
Cutting 1
Customer
RHF Cell
Supplier
A
B
Z
Order Signal
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Kanban Production System

• Objectives
• Lead time reduction
• Lot size reduction
• Waste elimination
• One of Several Tools of Lean Mfg. (WCM)
• Ineffective without others
• Prerequisites must be met

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New Paradigms

• Follow rules of the kanban control system
• Withdraw only the quantity needed
• Produce only to quantity given by kanban
• Kanban is withdrawal/production authority
• Move only good parts
• Smooth and level production
• Decrease number of cards to reduce inventory

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Lean Manufacturing (WCM)

• What, Why, How, When
• Baseline measurements
• Benchmarking
• JIT Education/Training for all
• Milestone charts
• Communication
• Numerical goal setting

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Performance Measurement

• Quality levels
• Customer satisfaction
• Equipment effectiveness
• Supplier performance
• Throughput time
• Inventory levels
• Setup/lead time reduction
• Layout efficiency

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Overriding Principles

• Simplification
• Eliminate all nonessentials
• Product design
• Processes layout
• Work methods
• Visibility--Andons
• Timely data gathering/analysis/reporting
• Real time control of
• Quality
• Inventory
• Productivity

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Visual Control (5s)

• Sort--Seiri (organization find whats not
  needed)
• Set in order--Seiton (place for everything)
• Shine--Seiso (cleanliness)
• Standardize--Seiketsu (develop/maintain stds.)
• Sustain--Shitsuke (self-discipline)

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The Clean Workplace
Post all pertinent Information
Schedule
Store Tools Close to the Point of use
Returns
Procedures Posted
Problems
Part A
Part B
Outgoing
Holding areas Identified
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Overriding Principles

• Variance reduction
• Identify sources and reduce/eliminate
• Check the standards and enforce them
• Quality, delivery, setup, level production
• Shoot for perfection always
• Measurement
• Benchmarking
• Where are we right now?
• Where do we want to be?
• How to get there.
• Post results of improvements

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Benchmarking

• Where are we now?
• Quality
• Inventory
• Orderliness
• Where do we want to be?
• Quality
• Inventory
• Orderliness
• How do we get there--whats the plan?

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