LEAN

OPERATiONS
Presented By:
Group 7

Based on the textbook by Heizer and Render

Most of the figures from the book:
Pearson Education, Inc. publishing as Prentice
Hall © 2011
 What is JIT?
• A corporate system designed to produce
output within the minimum lead time and
at the lowest total cost by continuously
identifying and eliminating all forms of
corporate waste and variance.
 Looking Back
• JIT originated in Japan, post WWII
• Driven by a need survive after the
devastation caused by the war
• JIT gained worldwide prominence in the
1970s
• Toyota Motor Co. developed JIT
 Toyota Motor Corp.
• Largest vehicle manufacturer
• Techniques of JIT, TPS and Lean
Operation
• Introduced by Taiichi Ohno
 Implementation of JIT and TPS at
Toyota plant
6

1 2 4
Main assembly complex Supplier
3 11
buildings
surround
main
10
assembly
complex
9

8 14

13

12
 Just-In-Time, TPS, and
Lean Operations
• JIT - continuous and forced problem solving
via a focus on throughput and reduced
inventory
• TPS -continuous improvement, respect for
people, and standard work practices
• Lean production - supplies the customer
with exact wants when the customer wants
it without waste
 Just In Time
Good production systems require that
managers address three issues that are
pervasive and fundamental to operations
management: eliminate waste, remove
variability, and improve throughput
Three Elements of JIT
 Eliminate Waste

• Waste is anything that does not add

value from the customer point of view
• Storage, inspection, delay, waiting in
queues, and defective products do
not add value and are 100% waste
The most dangerous
kind of waste is the
waste we do not
recognize
Ohno’s Seven Wastes
• Overproduction
• Queues
• Transportation
• Inventory
• Motion
• Over processing
• Defective products
 Common Causes of Waste

• Layout (distance) • Inconsistent

performance measures
• Long setup time
• Incapable processes• Ineffective production
planning
• Poor maintenance
• Lack of workplace
• Poor work methods organization
• Lack of training
• Poor supply
quality/reliability
 Eliminate Waste

• Efficient, sustainable production

minimizes inputs, reduces waste
• Traditional “housekeeping” has been
expanded to the 5 Ss
 The 5 Ss
• Sort/segregate – when in doubt, throw it
out
• Simplify/straighten – methods analysis
tools
• Shine/sweep – clean daily
• Standardize – remove variations from
processes
• Sustain/self-discipline – review work and
recognize progress
 Two additional Ss
• Safety- build in good practices

• Support Maintenance- reduce variability

and unplanned downtime

© 2011 Pearson Education,

Inc. publishing as Prentice
Hall
 Reducing Waste: Push Vs Pull

Raw Final
Material Customer
Assembly
Supplier

PUSH

Raw Final
Material Customer
Assembly
Supplier

PULL

Information Flow
Material Flow
 Remove Variability
• JIT systems require managers to
reduce variability caused by both
internal and external factors
• Variability is any deviation from the
optimum process
• Inventory hides variability
• Less variability results in less waste
Inventory is Evil
 Sources of Variability

1. Incomplete or inaccurate drawings or

specifications
2. Poor production processes resulting in
incorrect quantities, late, or non-
conforming units
3. Unknown customer demands
 Improve Throughput
• The time it takes to move an order
from receipt to delivery
• The time between the arrival of raw
materials and the shipping of the
finished order is called
manufacturing cycle time
• A pull system increases throughput
 Improve Throughput
• By pulling material in small lots,
inventory cushions are removed,
exposing problems and emphasizing
continual improvement
• Manufacturing cycle time is reduced
• Push systems dump orders on the
downstream stations regardless of the
need
JIT and Competitive Advantage
 JIT and Competitive Advantage

© 2011 Pearson Education, Inc. publishing as

Prentice Hall
 JIT Partnerships
• JIT partnerships exist when a supplier
and purchaser work together to
remove waste and drive down costs
• Four goals of JIT partnerships are:
• Removal of unnecessary activities
• Removal of in-plant inventory
• Removal of in-transit inventory
• Improved quality and reliability
JIT Partnerships
 JIT Layout
•Reduces another kind of waste -“Movement”
•Places material directly where needed
•Eg. Toyota
JIT Layout Tactics
• Build work cells for families of products
• Include a large number operations in a small area
• Minimize distance
• Design little space for inventory
• Improve employee communication
• Use poka-yoke (fail safe) devices
• Build flexible or movable equipment
• Cross-train workers to add flexibility
 Concerns of Suppliers
• Diversification – ties to only one customer
increases risk
• Scheduling – don’t believe customers can
create a smooth schedule
• Changes – short lead times mean engineering
or specification changes can create problems
• Quality – limited by capital budgets,
processes, or technology
• Lot sizes – small lot sizes may transfer costs
to suppliers
 JIT Inventory
•Why does extra inventory exist?
•“Just In Case”
•cover problems
•Just-in-time Inventory
•Minimum inventory to keep a perfect system
running
 JIT Inventory
•JIT Inventory Tactics
•Four tactics
• Reduce •Reduce
Setup Variability
Costs
4 1
3 2
• Reduce • Reduce
Lot Size Inventory
 •Inventory hides variability &
problems
•Analogy with the lake full of
rocks
Water:
Inventory Flow
Inventory level

Process
Scrap downtime
Rocks:
Problems Setup Quality
time problems
Late deliveries
 •Uncovering of the “rocks”
•Reveals problems,
variability
•Management clears the
lake
Inventory
level

Process
Scrap downtime
Setup Quality
time problems Problems
revealed
Late deliveries
 No problems No inventory

Inventory
level

No scrap Quality
problems
Setup removed
time
reduced Process
Late downtime
deliveries removed
 •Key to JIT:
“Good product in small lot
sizes”
•Reduces Inventory Costs
Q1 When average order size = 200
average inventory is 100
200 –
Inventory

Q2 When average order size = 100

average inventory is 50
100 –

Time
Lowering the order size Increases the Order size Decreases Inventory
•Ideal Situation
•Lot Sizes of ONE pulled from ONE process to the
next
•But, unrealistic
•Small lot sizes possible but Single lot size not
feasible
•Two necessary changes:
•Improve Material Handling
•Reduce Setup time
Lot Size Example: Crate Furniture Inc.
D = Annual demand = 400,000 units
d = Daily demand = 400,000/250 = 1,600 per day
p = Daily production rate = 4,000 units
Q = EOQ desired = 400
H = Holding cost = $20 per unit
S = Setup cost (to be determined)

2DS 2DS
Q= Q2 =
H(1 - d/p) H(1 - d/p)

(Q2)(H)(1 - d/p) (3,200,000)(0.6)

S= 2D = 800,000 = $2.40

Setup time = $2.40/($30/hour) = 0.08 hr = 4.8 minutes

• High setup costs encourage large lot sizes

Ultimate Solution: Reducing setup costs

Reduces lot size & Reduces Optimum

average inventory order size
 Holding cost
Sum of ordering
and holding costs
Cost

T1
Setup cost curves (S1, S2)
T2
S1
S2

Lot size
 • Setup Costs highly
correlated with Setup time

• Setup time can be reduced through

preparation prior to shutdown and
changeover
• Reduced Setup times=A major JIT
Component
 Reduce Setup Times
Initial Setup Time 90 min —

Separate setup into preparation and actual setup,

doing as much as possible while the machine/process
Step 1 is operating
(save 30 minutes)
60 min —
Move material closer and
Step 2 improve material handling (save
20 minutes)
45 min —
Standardize and
Step 3 improve tooling (save
15 minutes)
25 min —
Use one-touch system to eliminate
Step 4 15 min —
adjustments (save 10 minutes)
13 min —
Training operators and standardizing work
Step 5 procedures (save 2 minutes)
—
Figure 16.6 Step 6 Repeat cycle until subminute
setup is achieved
© 2011 Pearson Education, Inc. publishing as Prentice Hall
 JIT Scheduling Organization

• Better Scheduling
1 • Supports JIT

2 • Improves ability to meet customer orders

3 • Drives down inventory

4 • Allows smaller lot sizes

5 • Reduces work-in-process
JIT Scheduling: Example Ford Motor Company
Ford communicates its Schedule describes:
Style and color of
schedules to bumper the bumper for
Polycon Industries each vehicle

PW Personnel load the It transmits the

bumpers onto conveyors information to
leading to the loading Polycon Warehouse
dock personnel

Bumpers are then trucked

to ford plant
 JIT Scheduling: Two major tools

Level
Schedules
Kanban
1. Level Schedules: Jelly Bean Scheduling
• Technique processes frequent small batches
• Many “always changing” small lots
JIT Level Material-Use Approach
A A B B B C A A B B B C

Large-Lot Approach
A A A A A A B B B B B B B B B C C C

Time
 Freezing
• Not allowing changes
• Improves the performance
• The portion closest to the due dates
• Allows
– Production system to function
– Schedule to be met
 2. Kanban: Only when ready
• “Kanban”-Japanese word for “card”
• Technique that uses “pull” system
• Match or nearly match the processing time
• Card=an authorization for the next container of
material to be produced Signaling
• Empty containers devices to
• Lights control the
flow of
• Flag or rag
material
• Colored golf balls
 Kanban

1. User removes a
standard sized
container
2. Signal is seen by the
producing
department as
authorization to
replenish
Signal marker on
boxes

Part numbers
mark location
Figure 16.8
© 2011 Pearson Education, Inc. publishing as Prentice Hall
 Kanban

Kanban Finished Customer

goods order
Work
cell
Ship

Raw Kanban Final Kanban

Material assembly
Supplier Kanban Kanban
Sub-
Purchased
assembly
Parts Kanban
Supplier
 Number of Kanban Cards or Containers
• 1st – Set the size of each container
– Need to know the lead time needed to produce a
container of parts
– Need to know the amount of Safety Stock needed
• 2nd – Calculate no of Kanbans
 Example: No of Kanban: Hobbs Bakery

• Daily Demand =500 cakes

• Production Lead Time =2 days
• Safety Stock =0.5 days
• Container size =250 cakes
• Now, Demand during lead time =2 days x 500
cakes = 1,000
 Quality
•Strong Relationship between JIT &
Quality

JIT cuts the cost of

obtaining good
quality

Better quality
means fewer JIT improves
buffers=Easier-to quality
use JIT system
 JIT Quality Tactics
Use statistical process control
Empower employees
Build fail-safe methods (poka-yoke,
checklists, etc.)
Expose poor quality with small lot
JIT
Provide immediate feedback
Table 16.4
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
 Toyota Production System
• Continuous improvement
• Build an organizational culture and value system
that stresses improvement of all processes
• Part of everyone’s job
• Respect for people
• People are treated as
knowledge workers
• Engage mental and
physical capabilities
• Empower employees
 Toyota Production System
• Standard work practice
• Work shall be completely specified as to
content, sequence, timing, and outcome
• Internal and external customer-supplier
connection are direct
• Product and service flows must be simple and
direct
• Any improvement must be made in
accordance with the scientific method at the
lowest possible level of the organization
 Lean Operations

• Different from JIT in that it is externally

focused on the customer
• Starts with understanding what the
customer wants
• Optimize the entire process from the
customer’s perspective
 Building a Lean Organization

• Transitioning to a lean system can be

difficult
• Lean systems tend to have the
following attributes
• Use JIT techniques
• Build systems that help employees
produce perfect parts
• Reduce space requirements
 Building a Lean Organization

• Develop partnerships with suppliers

• Educate suppliers
• Eliminate all but value-added
activities
• Develop employees
• Make jobs challenging
• Build worker flexibility
 JIT in Services

The JIT techniques used in

manufacturing are used in services
• Suppliers
• Layouts
• Inventory
• Scheduling
 THANK YOU
ANY QUESTIONS?

Group 7