BA339

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BA339 Chapter 16 - JIT

• Just-In-Time (JIT)
• Philosophy
• Suppliers
• JIT Layout
• Inventory
• Scheduling
• Quality
• Employee Empowerment
• Lean Production
• JIT in Services

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BA339 Chapter 16 - JIT

• JIT Philosophy
• Continuous and forced problem solving
• Supplies/materials are pulled thru a systems
  to arrive where they are needed, when they are
  needed (vs. push system dumps orders on
  downstream workstation regardless of timeliness
  or resource availability)
• Problem is identified when good units to not
  arrive just as needed
• Drives out waste unwanted variability
• No unwanted/excess inventory or time, costs
  associated with unneeded inventory are eliminated
• Support strategies of rapid response and low cost

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BA339 Chapter 16 - JIT

• JIT Philosophy
• Waste reduction
• Anything that does not add value is considered
  waste
• Products stored, inspected, delayed, waiting in
  queues, and defective is considered waste gt also,
  any activity that does not add value from the
  customers perspective is waste as well
• Variability reduction
• Less variability less waste
• Employees, machines, or suppliers producing units
  that do not conform to std, are late, or wrong
  qty.
• Inaccurate engineering drawings/specs.
• Production personnel producing before engineering
  drawings or specs. are complete
• Unknown customer demands

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BA339 Chapter 16 - JIT

• JIT Suppliers
• Partnerships see Table S12.2 (page 519 in text)
• Exist when supplier and purchaser work together
  to reduce waste and drive down costs
• Suppliers viewed as extension of the organization
• Goals of JIT partnerships
• Elimination of unnecessary activities (e.g.,
  incoming inspection)
• Elimination of in-plant inventory materials
  delivered when and where needed small lots
  directly to the department/operation where they
  are needed
• Elimination of in-transit inventory encourages
  suppliers to locate near mfg. facilities and ship
  in small lots
• Consignment inventory supplier owns until it is
  used
• Elimination of poor suppliers fewer suppliers,
  higher quality/reliability, improved trust, zero
  defects

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BA339 Chapter 16 - JIT

• JIT Suppliers
• Supplier concerns
• Desire for diversification avoid long-term
  contract with one customer
• Poor customer scheduling lack of confidence in
  purchasers ability to smooth/coordinate schedule
• Engineering changes frequency inadequate
  lead-times for tooling changes
• Quality assurance zero defects considered
  unrealistic
• Small lot sizes processes may be designed for
  large lot sizes gt customer uses this to transfer
  holding costs to supplier
• Proximity depending on customers location,
  frequent delivery of small lot sizes may be
  economically prohibitive

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BA339 Chapter 16 - JIT

• JIT Layout
• Reduces movement of material ( people) that does
  not add value gt flexibility
• Distance reduction
• Major contribution for work cells/centers and
  focused factories
• Work cells (u-shaped) contain several
  multi-function machines gt often use group
  technology codes to group matl into families
  with cells built around them
• Produce only materials needed by customer

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BA339 Chapter 16 - JIT

• JIT Layout
• Increased flexibility
• Easy re-arrangement of work cells to adapt to
  changes in volume, product improvements or new
  designs
• Example - modular office equipment, computer
  connections telecommunications
• Aids changes resulting from process and product
  improvements

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BA339 Chapter 16 - JIT

• JIT Layout
• Impact on employees
• Cross-training provides flexibility and
  efficiency to each work cell
• Facilitates communication among employees to
  discuss/fix problems
• Sequential layouts provide for instantaneous
  feedback identification of defect in next
  subsequent production stage (fixes easier and
  less costly)
• Before JIT, defects were replaced from inventory
  gt no such luxury in JIT must get it right the
  first time

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BA339 Chapter 16 - JIT

• JIT Layout
• Reduced space inventory
• Reduced travel distance gt reduced space means
  less space for inventory gt small lot movement,
  improved processing time, reduced salaries, O/H
  costs with square footage
• Inventory just-in-case(JIT inventory minimum
  inventory needed to keep a perfect system
  running)
• Reduced variability in production system means
  less inventory needed
• Variability caused by late deliveries, machine
  breakdowns, poor personnel performance

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BA339 Chapter 16 - JIT

• Inventory
• Reduce inventory removal results in
  identification of problems which are
  systematically fixed until all are gone
• Reduce lot sizes
• Smaller lot sizes means less inventory and lower
  costs
• Greater number of orders (transaction costs) are
  offset by inventory reduction savings gt also
  forces firm to cost-effectively process orders

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BA339 Chapter 16 - JIT

• Inventory
• Reduce setup costs
• Inventory and holding costs decrease and
  inventory-reorder qty. and maximum inventory
  level drops gt large orders often purchased to
  reduce setup costs gt reducing setup costs enables
  lot size reductions and inventory reductions
• See figure S12.2(b) on page 524 in text
• Small lot sizes hide fewer problems
• Tends to drive improvement in ordering process
  and times
• See figure S12.3, Steps to Reduce Setup Times, p.
  525

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BA339 Chapter 16 - JIT

• Scheduling
• Ford example bumper manufacturer provides
  schedule information (vehicle, date, time, color)
  to supplier directly gt supplier delivers only
  correct bumpers, in correct order, on time
• Level schedules
• Process frequent small batches vs. few large
• Small batches mfg. movement is more economical
• Freezing portion of production schedule closest
  to due dates allows production system to function
  and meet schedule
• Kanban card
• Authorization that next container of material is
  to be produced
• Signal to pull item through the system gt ex.
  take-out orders at fast-food restaurant
• Requires tight schedules, small qtys. Produced
  several times/day, little lead-time variability
  limit amt. faulty material

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BA339 Chapter 16 - JIT

• Quality
• JIT cuts cost of obtaining good quality (poor
  quality hidden in inventory) by exposing bad
  quality
• Tracking of errors is fresh and limits potential
  sources gt early warning system w/ immediate
  feedback
• Fewer buffers needed in production/inventory/suppl
  ier system
• JIT relies on SPC, empowers employees, builds
  fail-safe methods, provides immediate feedback

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BA339 Chapter 16 - JIT

• Employee Empowerment
• Some JIT techniques require policy strategy
  decisions, but many rely on employee involvement
  (less staff gt less labor costs gt quicker problem
  identification resolution
• Assumes that employee knows the job better than
  the employee
• Focuses on cross-training, job enrichment, fewer
  job classifications gt improves quality
  commitment

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BA339 Chapter 16 - JIT

• Lean Production
• Drive out activities that do not add value
• Minimize waste thru continuous learning,
  creativity teamwork
• Requires full commitment of all employees and
  suppliers
• Lean producer attributes
• JIT to eliminate inventory
• Build systems to build perfect parts every time
• Reduce space requirements
• Educate build close relationships w/suppliers
• Strive to eliminate non-value-added activities
• Develop the workforce make jobs more
  challenging
• Reduce the number of job classes

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BA339 Chapter 16 - JIT

• JIT in Services
• JIT suppliers very common restaurants
• Layouts very efficient gt McDonalds kitchen and
  airline baggage handling
• Inventory stockbroker inventory nearly zero
  McDonalds finished goods inventory is 10 mins.
  hospitals run low safety stocks using networks
  and backup systems
• Scheduling customer demand of tickets in
  airline industry gt e-tickets, staff arrives JIT
  at counter