Bozarth - ch16 (EDocFind - Com) - 1

JIT/Lean Production
Chapter Objectives
Be able to:
Describe what JIT/Lean is and differentiate between the Lean philosophy and kanban systems. Discuss the Lean perspective on waste and describe the eight major forms of waste, or muda, in an organization. Discuss the Lean perspective on inventory and describe how a kanban system helps control inventory levels and synchronize the flow of goods and materials across a supply chain. Describe how the concepts of the Lean supply chain and Lean Six Sigma represent natural extensions of the Lean philosophy. Explain how a two-card kanban system works. Calculate the number of kanban cards needed in a simple production environment. Show how MRP and kanban can be linked together and illustrate the process using a numerical example.
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 2
Some Statistics from 1986 ...

A comparison of:
1) assembly hours 2) defects per 100 cars 3) average inventory levels
Framingham (GM) 40.7 hours 130 defects 2 weeks Toyota Takaoka 16 hours 45 defects 2 hours
Chapter 16, Slide 3
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Post World War II

Growing and rebuilding world economy Demand > Supply US Manufacturing:
Higher volumes Capital substitution Breakthrough improvements The production problem has been solved
View from Japan

Very little capital War-ravaged workforce Little space Poor or no raw materials Lower demand levels Little access to latest technologies
U.S. methods would not work

Chapter 16, Slide 5
Japanese Approach to Operations

Maximize use of people
Simplify first, add technology second Gradual, but continuous improvement
Minimize waste (including poor quality) Led to the development of the approach known as Just-in-Time
Just-in-Time
Repetitive production system in which processing and movement of materials and goods occur just as they are needed
Pre-JIT: Traditional Mass Production

Big lot sizes Lots of inventory PUSH material to next stage Big purchase shipments
???
Lower per unit cost Big pushes of finished goods to warehouses or customers
Post-JIT: Lean Production

Tighter coordination along the supply chain Goods are pulled along only make and ship what is needed
Smaller shipments Smaller lots Faster setups Less inventory, storage space PULL material to next stage
Minimal or no inventory holding cost
Goods are pulled out of plant by customer demand

Chapter 16, Slide 9
JIT Goals
(throughout the supply chain) Eliminate disruptions Make the system flexible Reduce setup times and lead times Minimize inventory Eliminate waste
Chapter 16, Slide 10
Waste
Definition: 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
Forms of Waste:
(muda in Japanese)
Overproduction Waiting Unnecessary movement Wrong process Unnecessary inventory Excess motion Defects Underutilization of employees
Inventory as a Waste
Requires more storage space Requires tracking and counting Increases movement activity Hides yield, scrap, and rework problems Increases risk of loss from theft, damage, obsolescence
Lean Perspective
Process of reducing inventory leads to reduction of the other wastes and exposes problems in order of severity (water and rocks analogy)
Lean Six Sigma & Supply Chain in Lean Environment

Six Sigma methodology combines well with Lean goals, helps address the rocks as they become exposed when reducing inventory. Supply chain choices affect many of the wastes. Supplier variances such as lead time and quality create need for safety stock a direction opposite reduction of inventory goals
Examples of Eliminating Wastes

Big Bobs Automotive Axles:
Wheels bought from outside supplier Axles made and assembled in house
BEFORE: Shipping in Wheels

Wheels
Bobs
Warehouse
Truck Cost: $500 (from Peoria) Maximum load of wheels: 10,000 Weekly demand of wheels: 500
AFTER: Shipping in Wheels

Wheels
Bobs
Truck Cost: $50 (from Burlington) Maximum load of wheels: 500 Weekly demand of wheels: 500
What wastes have been reduced?

BEFORE: Making Axles

(Different lengths)
Axle Maker Setup: 8 hours Setup cost: $800
Manufacturing
Minimum Batch 1,000 Axles Push to Final Assembly
Tool Bin
Final Assembly
BEFORE: Making Axles (Oops!)

Axle Maker Setup: 8 hours Setup cost: $800 Manufacturing Minimum Batch 1,000 Axles Push to Final Assembly
Tool Bin
Final Assembly
What is the outcome of detecting defective axles at the end?
Defect: Axles are not true!

After: Making Axles I

(Different lengths)
Axle Maker Setup: 15 min. Setup cost: $25 No minimum batch size Manufacturing Tools next to Maker Pull to Final Assembly
Final Assembly
After: Making Axles II

(More improvements)
Axle Maker Setup: 15 min. Setup cost: $0 Verify Trueness Manufacturing Tools next to Maker Poka-Yoke Device
What wastes have been reduced?
Final Assembly
Building Blocks of JIT

Product design
Standard parts Modular design Quality
Sta ff Pr o ces Pr o duc t s C MP G OR
Des
ign
Des
ign
Process design Personnel and organizational elements Manufacturing planning and control
Process Design
Focused Factories Group Technology Simplified layouts with little storage space Jidoka and Poka-Yoke Minimum setups
Multi-Task Work Cells

500 chairs per hour Seats
Assembly
Packing
Backposts
Planning takes place for one area: What does the BOM look like? What about lead times?
Slats
Legs
Personnel and Organizational Elements

Workers as assets
Cross-trained workers
Greater responsibility at lower levels

Leaders as facilitators, not order givers
Classic Organizational View

Top Management Long-term planning Product line decisions Expansion issues Technical Staff Work methods, QC Process improvements, MIS
Middle management Planning, purchasing hiring, and capital decisions Monitor costs Planning Info
Supervisors Control activities in specific areas Monitor quality, delivery, etc.
Control Info
Direct Labor Perform predetermined tasks

Detailed Methods, Schedules
JIT Organization View

Top Management Long-term planning Product line decisions Expansion issues Technical Staff Training and Technical Support
Middle management Planning, with less purchasing, hiring, and capital decisions Monitor costs and assist labor
Direct Labor (self-supervising) Task performance and schedule attainment Control specific areas of activity Monitor quality, delivery, etc. Participate in hiring and continuous improvement Control Info
Technical Ideas
Planning Info
Planning and Control Systems

Small JIT Stable and level schedules
Mixed Model Scheduling
Pull versus Push

Kanban Systems
Kanban
Uses simple visual signals to control production pull processing Examples:
empty slot in hamburger chute empty space on floor kanban card
Kanban Example
Workcenter A Workcenter B
Workcenter B uses parts produced by Workcenter A

How can we control the flow of materials so that B always has parts and A doesnt overproduce?
Kanban card: Signal to produce

Kanban Card
When a container is opened by Workcenter B, its kanban card is removed and sent back to Workcenter A. This is a signal to Workcenter A to produce another box of parts.
Empty Box: Signal to pull

Empty box sent back. Signal to pull another full box into Workcenter B. Question: How many kanban cards here? Why?
How Many Kanbans?
DT(1 x) y C
y D T C X = = = = = number of kanban cards demand per unit of time lead time container capacity safety factor
Example
Hourly demand = 300 units Lead time = 3 hours Each container holds 300 units Assuming no variation in lead-time or demand (x = 0): y = (300 3) / 300 = 3 kanban cards
Example: 8:00 AM
Process A: 300 per hour
11:00 AM to Noon
10:00 to 11:00 AM
9:00 to 10:00 AM
8:00 to 9:00 AM
Process B: 300 per hour

One Hour Later at 9:00 AM

Process A: 300 per hour
Noon to 1:00 PM
11:00 AM to Noon
10:00 to 11:00 AM
9:00 to 10:00 AM
Process B: 300 per hour

Extended Out Further . . .
Note:
For a kanban system to work, we NEED CONSISTENT demand across the work centers Example - think McDonalds How do we ensure this?
Mixed Model Sequencing

Product A B C Monthly Demand 800 800 200 Daily Requirement 40 40 10
Largest integer that divides evenly into daily requirement is 10: A: 40 / 10 = 4 B: 40 / 10 = 4 C: 10 / 10 = 1 Mixed model sequence: A-B-A-B-A-B-A-B-C
Mini-Quiz: Mixed Model Scheduling and Establishing Kanbans

Product D E F Monthly Demand 1200 400 600 Daily Requirement 60 20 30
What would sequence be if NO minimum job size?
Sequence with Minimum of 5:

60 / 4 = 15 Ds 20 / 4 = 5 Es 30 / 4 = 7.5 Fs
5D - 7F - 5D - 5D - 5E - 5D - 8F - 5D - 5D - 5E Sequence of 55 (27.52)
Kanbans Required: Product D

Hourly Requirements = 60/8 = 7.5 Lead time = 2 hours Container size = 2 units Safety factor = 10%
Kanban Cards Required:

(7.5 units / hour ) (2 hour lead time ) 1.1 Cards (2 units per container ) 8.25 cards , or 9 cards
Implications? Impact of container size?

Implementing JIT
Eliminate Surprises
Simplify
Increase Flexibility
What about automation?
Drive Out Waste

Putting the Squeeze on Resources . . .
Squeeze! NO
PAIN?
YES
Simplify Eliminate Uncertainty Increase Flexibility
Case Study in JIT/Lean Production
A Bumpy Road for Toyota

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JIT/Lean Production

Some Statistics from 1986 ...

Post World War II

View from Japan

U.S. methods would not work

Japanese Approach to Operations

Pre-JIT: Traditional Mass Production

Post-JIT: Lean Production

Minimal or no inventory holding cost

Goods are pulled out of plant by customer demand

Chapter 16, Slide 10

Chapter 16, Slide 14

Lean Six Sigma & Supply Chain in Lean Environment

Examples of Eliminating Wastes

Chapter 16, Slide 16

BEFORE: Shipping in Wheels

Chapter 16, Slide 17

AFTER: Shipping in Wheels

What wastes have been reduced?

BEFORE: Making Axles

Minimum Batch 1,000 Axles Push to Final Assembly

Chapter 16, Slide 19

BEFORE: Making Axles (Oops!)

What is the outcome of detecting defective axles at the end?

Defect: Axles are not true!

After: Making Axles I

Chapter 16, Slide 21

After: Making Axles II

What wastes have been reduced?

Chapter 16, Slide 22

Building Blocks of JIT

Chapter 16, Slide 23

Chapter 16, Slide 24

Multi-Task Work Cells

Personnel and Organizational Elements

Greater responsibility at lower levels

Chapter 16, Slide 26

Classic Organizational View

Supervisors Control activities in specific areas Monitor quality, delivery, etc.

Direct Labor Perform predetermined tasks

Chapter 16, Slide 27

JIT Organization View

Chapter 16, Slide 28

Planning and Control Systems

Pull versus Push

Chapter 16, Slide 30

Workcenter B uses parts produced by Workcenter A

Kanban card: Signal to produce

Empty Box: Signal to pull

How Many Kanbans?

Process B: 300 per hour

One Hour Later at 9:00 AM

Process B: 300 per hour

Extended Out Further . . .

Chapter 16, Slide 38

Chapter 16, Slide 39

Mixed Model Sequencing

Mini-Quiz: Mixed Model Scheduling and Establishing Kanbans

What would sequence be if NO minimum job size?

Chapter 16, Slide 41

Sequence with Minimum of 5:

Kanbans Required: Product D

Chapter 16, Slide 43