CTU Manufacturing 2011

Operations Management A Lean Approach

White Paper This paper explains the advantages and disadvantages of JIT and lean manufacturing systems, what they have to do with non-value or wasted activities and the challenges of implementing JIT.
Kevin Baker MGM340-1103A-03

Contents
Introduction ----------------------------------------------------------------------------------------------------3 Forecast Driven vs. Demand-Based ------------------------------------------------------------------------3 A Closer Look at JIT and Lean Manufacturing-----------------------------------------------------------4 JIT Implementation Challenges-----------------------------------------------------------------------------5 Summary-------------------------------------------------------------------------------------------------------6 References------------------------------------------------------------------------------------------------------6

Introduction
In todays global economy, in order to survive, our company has to modify its operational techniques to remain competitive. Many successful manufacturing companies have gone to a lean system in order to reduce cost, increase quality, omit waste, maximize productivity and continue to see profit gains. By putting into action the principles of lean manufacturing we will be able to carry through challenging financial times, continue to grow and set ourselves up for the future. Lean manufacturing patterns a system that was developed by the Toyota Motor Car Company that was called Toyota Production System (TSP). This system is a means of process improvement and waste elimination. The foundation for TSP, identified as Heijunka, is the building blocks for lean manufacturing meaning production leveling. From this foundation, lean has gained its own foundation of Just-in-Time (JIT) production and Automation with a human touch (Lean-Manufacturing-Junction.com, 2009).

Forecast Driven vs. Demand-Based

Before analyzing which system is best for our company, it is essential to know the meaning of each system and the pros and cons of each. A forecast driven system can be very risky for a manufacturing company. Forecasting is based on anticipated sales, expenses and profits. The benefits of a forecast driven system is available inventory is always on hand and customer service is high because of fast availability of a product. The main drawback is that forecasting can be wasteful. If a company anticipates selling X amount of a product and falls short, the excess inventory is wasted at a loss. A demand-based system or just-in-time system is a manufacturing concept that is based on the intended omission of waste and constant productivity improvement. Richard J. Schonberger explained that just in time has the objective of the right part in the right place at the right time. The benefits of JIT is only the resources and labor needed to fulfill a commitment is necessary and companies only do what needs to be done to meet consumer needs. The disadvantages are that final products need longer times to distribute which can lead to diminished service if the customer wants the product quickly.

A Closer Look at JIT and Lean Manufacturing

The manufacturing business has become a global, highly competitive, competition. In todays economy, it has become extremely difficult to remain competitive because of global expansion and the ease of outsourcing. Lean manufacturing is a system that can lower costs, do away with waste, maintain quality and continue to see a rise in profits. Going lean is a daily process, striving for constant improvement. This comes from the Japanese word Kaizen. BusinessDictionary.com defines Kaizen as a method of achieving higher standards in quality and reducing waste through continuous improvements from the top of the corporate ladder to the lowest level. The work process in lean manufacturing is level, meaning that every day; every process is consistently the same. This comes from the Japanese term Heijunka which means the leveling of production (lean-manufacturing-junction.com, 2009). Just-in-time (JIT) is tool used in lean manufacturing. JIT is a concept, not a particular technique. There are several variations on the definition of JIT but they all mean the same thing. JIT is producing a product, with minimum waste, exactly when and how the customer wants it. It takes a closer look at problems in the process and corrects anything that deprives the values of the product. It considers any idea that will make the process easier to understand and easier to manage. Quality assurance is a big part of JIT making each employee responsible for their own work. A solid preventative maintenance system is also important. This will ensure all the equipment needed in the process will be in top working order. As mentioned earlier, doing away with unnecessary was is important in a JIT philosophy. This includes no overproduction, wasting time, no product defects, no waste of inventory and no waste in transportation expenses. Using all of these methods will improve the work ethics among the employees and allow the company to use Total Quality Management techniques to make the process a group effort to succeed. Every individual will have the ability to share their ideas and knowledge for a common goal (Institute for Manufacturing, n.d.).

JIT Implementation Challenges

Just in time is not a hard system to maintain but there is a lot of planning and preparation required for it to be successful and a long term commitment by all employees involved in the process. Our organization will need to set up an implementation team to ensure we are prepared. This may pose a challenge because the current lack of JIT knowledge within the company. Training of this team will be very important. Communication of our plans for implementing JIT to the employees will be another challenge. It will be very important for our workforce to give maximum participation. There may be indifferent opinions on our decision to change the way we do business so we must start communications early and demonstrate the advantages for them, not just the company. It is mandatory that we make the extra effort to confirm our current on hand inventory. This will be a very critical step in the implementation and will definitely be a challenge if the inventory is not completed correctly. The correct inventory will make sure we communicate to the supply chain correctly. If done incorrectly, it will put the product line in jeopardy causing major losses for our company. Developing a process plan and training staff will be another challenge we must overcome. The implementation team will ensure that all employees are aware of how our plan is to work and conduct training during the implementation stage. Refresher training will also be common practice on a continuous basis. Training will be a facilitate type training to encourage all hands participation. The JIT will be responsible for documenting all suggestions on process improvement. The JIT team will monitor the effectiveness of our program and determine if any weak conditions exists to train toward those weaknesses to further improve the process. This will be a never ending evolution because we should always look for better ways to do business (Valuestreamguru.com, n.d.).

Summary
The affiliation with our customers is a long term relationship. Lean manufacturing will provide them with significant benefits to provide a more flexible and consistent product. The transition can be a challenging endeavor; however, the gains in the long run of measurable benefits to our companys production, cost savings and productivity are well worth the challenge. The concept that we should always remember is that the customer only wants to pay for the value added processes of our product. By going lean and using the JIT philosophy we will eliminate the nonvalue portion of our production process that will allow the customer to get what they want, when they want it, all at improved efficiency and profit margin for us. Lean is win-win for everyone involved.

References
Institute for Manufacturing, n.d., University of Cambridge. Retrieved using CTU Online Library July 16, 2011 from http://www.ifm.eng.cam.ac.uk/dstools/process/jit.html Lean-Manufacturing-Junction.com, 2009.What is Lean Manufacturing? Retrieve July 15, 2011 using Google search engine from http://www.lean-manufacturingjunction.com/index.html Richard J. Schonberger, UNC Ashland, n.d. JUST-IN-TIME (JIT) Production.Retrieved from lectured notes on July 16, 2011 using Yahoo search engine from http://personal.ashland.edu/~rjacobs/m503jit.html Valuestreamguru.com, n.d.Implementing Just in Time (JIT) in lean manufacturing.Retrieved using Yahoo search engine July 17, 2011 from http://www.valuestreamguru.com/?p=45