JIT Production

Henry C. Co Technology and Operations Management, California Polytechnic and State University

Major MPC Approaches

Up to the late 1960s, the EOQ/ROP approach was the method of choice in productioninventory management (PIM). During the 1970s, the American Production and Inventory Control Society (APICS) campaigned to promote MRP. For the 1980s, APICS promotes JIT production as the proper method of PIM. Another contemporary technique for managing production and inventory is the Optimized Production Technology (OPT) system.
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EOQ/ROP

Developed at Westinghouse by F. W. Harris in 1915. Event-triggered, uses Calculus to find the optimal order quantity Q=

2DS H

Major deficiencies.

Ignores product structure relationships. Does not permit effective rescheduling in response to dynamic changes in demand or production activities. Reactive [backward looking] rather than proactive [forward looking].

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MRP Resolves EOQ/ROP Deficiencies

Matched sets.

structured bill of material provides "matched sets" of components parts from which to build the end items called for by the master schedule. Inventory and production management is guided by firm orders and forecasts of future demand. orders for parts are matched with the demand these parts are expected to satisfy.

Proactive.

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Nervousness of MRP

Steady stream of changes confronted by manufacturing companies.

Forecasts are wrong! bill of materials are revised! parts are scraped! vendors are late! etc.

A significant change in the final assembly creates changed requirements in feeder operations that are usually amplified because of lot size rules, set-ups, queues, and waiting time. A 10% change at assembly could easily result in a 100 % change at the front end.
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The Toyota Production System

A manufacturing strategy having a dominant theme of constantly reduced inventory and a system of equipment, procedures and attitudes which eliminate waste and promote respect for people. Just-in-time manufacturing is a production philosophy which calls for the production of precisely the necessary units, in the necessary quantities, at the necessary times. The kanban system is an MPC system that supports JIT manufacturing.

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Kanban System

Developed in the 1970s by Toyota.

Information system that supports JIT production. Kanban is a card, usually put in a rectangular vinyl envelope, that authorizes the production or withdrawal of materials. Consequently, we can think of the kanban system as a manufacturing planning and control system.

Three categories:

pickup information, transfer information, production information.

The kanban controls the production of more than $4.8 billion a year!

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FUNCTIONS Provides pick-up or transport information. Provides production information.

RULES FOR USE Subsequent process picks up the number of items indicated by the kanban at the preceding stage. Preceding process produces items in the quantity and sequence indicated by the kanban.

Prevents overproduction No items are made or and excessive transport. transported without a kanban. Serves as a work order attached to goods. Prevents defective product by identifying the process making the product. Reveals existing problems and maintains inventory control. Always attach a kanban to the goods. Defective products are not attached with a kanban.

Reducing the number of kanban heighten their sensitivity.

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Key Elements of Toyota Production

Just-in-time production.

People involvement: Teamwork, Discipline (job design, methods), Supplier involvement. Total quality control. Kanban-controlled flow.

Rapid setup to achieve JIT production. Group technology: mixed-model assembly. Streamlined plant layout. Capacity reserve to support peak production.

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Total quality.

Work simplification. Preventive maintenance. JIT production control: kanban-controlled. Focused factories. Supplier network. JIT accounting. Team approach.
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Quality is everyone's job, each has an immediate customer. Many quality-related efforts are moved to the workers. TQC must become a company culture to be fully effective.

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Toyota Focuses on Eliminating Waste

Queues = waste. Reduce queues a way to discover problems and reduce cost.

Waste of overproduction and unnecessary inventory. Waste of time waiting. Waste in transportation. Waste of processing (making defective products). Waste of movement.

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JIT Production

Uniform production rate. Purchasing and producing small lots.

Quick, inexpensive setups. Multiskilled workers and flexible facilities. High quality level. Effective preventive maintenance. Fix it, even if it ain't broke. Wake up the sleeping dog!

Continuous improvement.

A pull method of coordinating work centers (e.g., kanban).

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Production Smoothing at Toyota

The JIT system works in Toyota because of the unique way Toyota structure its master production schedule.

Aggregate production schedule.

Master production schedule in MRP seeks economies and efficiencies through economical lot sizes. at Toyota, the master production schedule is prepared with the goal of scheduling every product every day. Mixed-model assembly: processing a variety of models of the same family on the same assembly line. One-year horizon. Updated monthly; marketing and finance input.

MPS has a three-month horizon.

First month shows daily schedule for the final assembly of each model. Next two months lso in daily time-buckets, but in terms of model family. Daily schedules are determined by dividing the number of units required for the month by the number of working days in the month. Same production for each item each day.

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Illustration

Forecasts for next two weeks:

50% of the sales will be Product A, 25% will be Product B, and 25% will be Product C: Make Product A for 5 straight days, Change over to Product B for two and a half days Produce Product C for the balance of the week make Product A, followed by Product B, followed by Product A, followed by Product C, and the cycle repeats. The goal is to schedule every product every day, and in a sequence which intermixes all products.
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Typical U.S. plant:

Under the JIT system:

JIT MPS: Future Resembles Past

Week 1 A A AA Week 2 B B BB Week 1 A B AC Week 2 A B AC AA AA BB BB Others AA AA AA AA BB CC CC CC AA AA CC CC AB AC AB AC
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Toyota (JIT) AB AB AB AC AC AC AB AB AB AC AC AC

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A Two Card Kanban System

Consider a multi-stage system.

At workstations B (the customer):

The output of workstation A is the input to workstation B. Each filled container at the outgoing stocking point of A has a production (P) kanban; At the incoming stocking point in B, each has a withdrawal (W) kanban. As each container is opened, B detaches the Wkanban and deposits it in a withdrawal post (either a box or a board). At fixed intervals (e.g., 2 hours), a material handler (called "mizusumashi" at Toyota) picks up the W-kanban at the withdrawal post; takes the W-kanban and the corresponding number of empty containers to the outgoing stock point at workstation A.
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Order-Picking at the outgoing stocking point of Workstation A:

The material handler:

Picks up the corresponding number of filled containers. Detaches the P-kanban from each filled containers at the outgoing stock point. Deposits the detached P-kanban in a receiving post. Attaches a W-kanban to each of these filled containers. Transports the filled containers to Workstation B.

Production at Workstation A:

Each kanban card deposited in the P-kanban post authorizes workstation A to produce one container. Attaches the production kanban to each filled containers, store at the outgoing stock point.

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Two Card Kanban

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Pull & Push Systems

Push system (conventional production system).

To maintain a high level of utilization (i.e., to keep the workstations working), materials are pushed from each stage to the succeeding stage(s). When something goes wrong in some intermediate stage, inventory builds up in the up-stream stages. Production at each stage is triggered by its successor stage(s), and this process is carried all the way to the raw material acquisition stage. Production is controlled (i.e., pulled) by demand, as information of demand flows backwards from the final stage (the final assembly) to the initial stage (the raw material acquisition). at each work center, all requests for production are made through the kanban cards.

Pull system (kanban-controlled)

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Number of kanban Needed

Number of kanban cards =

AD (WT + PT ) (1 + PV ) CQ

AD = average daily demand for the month. WT = waiting time. PT = processing time for one container. CQ = container quantity -- limited to maximum of 10% of day's demand. PV = policy variable (determined by management) up to 10% of day's demand. WT + PT = time interval between order picking.

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Kanban and EOQ/ROP

Observations by Walter Goddard of Oliver Wight Educational Associates, Inc. Both are reactive systems designed to replenish inventory -- the quantity used is the quantity ordered -- not in anticipation of future orders (MRP). Kanban system: linked replenishment.

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Linked Replenishment

The conventional EOQ/ROP system ignored the product structure/bill-of-materials relationships among the component parts. the demand of each component item is assumed to be independent of each other. Hence, items are replenished independently. With the kanban system, production of an item is "pulled" by the demand for the item at the succeeding stage.

Last stage = the final assembly, which is planned in the master production schedule. If something is not used in the final assembly, no replenishment action will take place. Replenishment is therefore linked with the master production schedule, just like in MRP.

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Quick Setups at Toyota

To make:

10,000 coronas a month, consisting of 5,000 sedans, 2500 hardtops, and 2500 wagons. 20 days/month means producing 250 sedans/day, 125 hardtops/day, and 125 wagons/day. In 1940's die-change time was 2-3 hours. In the late 1960's, it was cut to 3 minutes. A 50 fold decrease!
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Die-change time