Operations

Management

Just-in-Time and Lean

Production Systems

1
JUST WHAT IS JUST-IN-TIME AND
LEAN PRODUCTION?
Some Definitions shortly
HOW DOES IT IMPACT SUPPLIERS?
Goals of JIT Partnerships
Concerns of Suppliers
WHAT DO YOU GET WHEN YOU DO
A JIT LAYOUT?
Distance Reduction
Increased Flexibility
Impact on Employees
Reduced Space and Inventory
2
WHAT DOES JIT DO TO YOUR
INVENTORY?
Reduce Variability
Reduce Inventory
Reduce Lot Sizes
Reduce Setup Costs
WHAT DOES JIT DO TO SCHEDULING?
Level Schedules
Kanban
HOW DOES JIT IMPROVE QUALITY?
HOW DOES JIT INCREASE EMPLOYEE
EMPOWERMENT?
JUST WHAT IS LEAN PRODUCTION?
HOW DOES JIT WORK FOR SERVICE
BUSINESSES?
3
 Learning Objectives
WHAT YOU NEED TO KNOW AND
REMEMBER
Identify or Define:
Types of waste JIT seeks to eliminate
How Variability is dealt with in JIT
Kanban Cards
Describe or Explain:
What is Just-in-Time (JIT) philosophy
What is a Pull systems
What is a Push systems
What are the goals of a JIT partnerships
What is Lean Production
4
 What Toyota Understands that
Ford, GM, Chrysler Dont
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 1995 Corel Corp.

5
 What is Just-in-Time?

A management philosophy of continuous

and forced problem solving
Supplies and components are pulled
through system to arrive where they are
needed exactly when they are needed.

6
 Lean Production
Lean Production is a management
philosophy that supplies customers with
exactly what the customer wants, when
the customer wants it, without any waste,
using a continuous improvement process.

7
 What Exactly Does
Just-in-Time Do?
Attacks waste
Eliminates anything that does not add value to
the product for the customer
Exposes problems and bottlenecks caused
by process and product variability
Works on eliminating any deviation from the
optimum from the customers perspective
Achieves a streamlined production process
Works constantly on trying to reducing inventory

8
 Types of Waste JIT
Seeks to Eliminate
Overproduction
Delays in the production
process
Transportation
Inefficient processing
Inventory
Unnecessary motion
Product defects
1995
Corel
Corp.

9
 Heres How Much JIT Reduced
Waste
at Hewlett-Packard
Waste Reduction (%)
Setup Time 20%
Scrap 30%
Finished Goods
Inventory 30%
Space 40%
Lead Time 50%
Raw Material
Inventory 50%
Work-in-Process
Inventory 82%
0% 20% 40% 60% 80% 100%

10
 Why Variability Occurs
Employees, machines, and suppliers
produce units that do not conform to
standards, are late, or are not the proper
quantity
Engineering drawings or specifications are
inaccurate
Production personnel try to produce
products before drawings or specifications
are complete
Customer demands are unknown or ignored

11
 Push versus Pull
Push system: material is pushed into
downstream workstations regardless of
whether resources are available
Generally, push systems are the result
of a chase management strategy and/or
poor demand forecasting
Pull system: material is pulled to a
workstation just as it is needed

12
How JIT Gives Companies A
Competitive Advantage
Leads to a Better Supply Chain and Suppliers
reduced number of vendors
supportive supplier relationships
quality deliveries on time
Forces the Business to Develop Optimum Layouts
work-cell layouts with testing at each step of the
process
group technology
movable, changeable, flexible machinery
high level of workplace organization and neatness
reduced space for inventory
delivery direct to work areas

13
How JIT Gives Companies A
Competitive Advantage (cont)
Reduces Inventory Costs
small lot sizes
low setup times
specialized bins for holding set number of parts
Improves Scheduling
zero deviation from schedules
level schedules
suppliers informed of schedules
Kanban techniques

14
How JIT Gives Companies A
Competitive Advantage (cont)
Insures Proper Preventive Maintenance
scheduled
daily routine
operator involvement
Stress Quality in all Phases of
Production
statistical process control
quality by suppliers
quality within firm

15
How JIT Gives Companies A
Competitive Advantage (cont)
Uses Employee Empowerment to Maximize
Efficiency and Profits
empowered and cross-trained employees
few job classifications to ensure flexibility of
employees
training support
Elicits a Commitment from Everyone in the
Organization
support of management, employees, and
suppliers

16
 What JIT Gives You
Queue and delay reduction, speedier throughput,
freed assets, and winning orders
Quality improvements, reduces waste and wins
orders
Cost reduction increases margin or reduces
selling price and wins orders
Variability reductions in the workplace reduces
waste and wins orders
Rework reduction, reduces waste and wins orders

17
 Being able to respond faster in meeting the
customers needs at lower cost and with higher
quality results in

A BIG competitive advantage!

18
 Just-in-Time
Requires
Committed
Employee Suppliers Optimized
Empowerment Layouts

Minimal and
Stressing JIT Accurate Inventory
Quality Information

Doing
Efficient
Preventive
Scheduling
Maintenance

19
 The Role of Suppliers
Incoming material and finished goods generally
involve waste
To eliminate the waste buyer and supplier form
JIT partnerships
The goal of the JIT partnerships is to eliminate
Unnecessary activities
In-plant inventory
In-transit inventory
Poor suppliers

20
 Characteristics of JIT
Partnerships

Suppliers
Few in number
Nearby the business
Are given repeat business
Company provides analysis and financial support to enable
desirable suppliers to become or stay price competitive
Company limits competitive bidding to mostly limited to new
purchases
Buyers resists the temptation to engage in vertical
integration and subsequent wipeout of their suppliers
business
Suppliers are encouraged to extend JIT to their suppliers
(2nd and 3rd tier suppliers)

21
 Some Characteristics of JIT
Partnerships
Supplier and Buyer get a steady output rate
Frequent deliveries in small-lot quantities increase
flexibility
Long-term contract agreements help reduce costs
Minimal or no paperwork (use EDI or internet)
Delivery quantities fixed for whole contract term
Little or no permissible overage or underage
Suppliers package in exact quantities
Suppliers reduce their production lot sizes

22
 Some Characteristics of JIT
Partnerships (cont.)

Buyer helps suppliers meet quality

requirements
Close relationship between buyers and
suppliers quality assurance people aids
profits for both buyer and supplier
Suppliers can use poka-yokes and
process control charts instead of lot-
sampling techniques
23
 Some Characteristics of JIT
Partnerships (cont.)
Scheduling of inbound freight more
routine and less costly
More control by using company-
owned transportation or contract
shipping and warehousing
Being able to use Advanced
Shipping Notice (ASN)

24
 Review of the Goals of a JIT
partnerships
Elimination of unnecessary activities
Elimination of in-plant inventory
Elimination of in-transit inventory
Elimination of poor suppliers

25
 Things Suppliers Worry About
When Entering a JIT Relationship
with a Buyer
Giving up Diversification
Dealing with poor buyer scheduling
Responding to frequent engineering
changes
Responding to quality assurance
requirements of buyer
Small lot sizes generally = small profits
Physical proximity may lead to more
oversight and requests for special
deliveries
26
 JIT Streamlines Production
Traditional Flow Production Process
(stream of water)

Suppliers
Customers
Inventory (stagnant
Flow with JIT ponds) Material
(becomes like
water in
Suppliers
stream)

Customers
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 How JIT Uses Layout
JIT objective: Reduce movement of people
and material
Movement is waste!
JIT requires
Work cells for product families
Moveable or changeable machines
Short distances
Little space for inventory
Delivery directly to work areas

28
 Work Cell versus
Process Layout (Chapter 9)
Process Layout Work Cell
1
Lathe Saw 2
Lathe Saw Saw Press
2
5 4 Heat Lathe Lathe
Treat
Grinder
3 1
Press Grinder Heat
6 Treat
Press Grinder

29
 Some JIT Layout Tactics
Build work cells for families of products
Minimize distance
Design little space for inventory
Improve employee communication
Use poka-yoke devices
Build flexible or movable equipment
Cross train workers to add flexibility

30
 How JIT Uses Inventory
Traditional: inventory exists in case problems
arise
JIT objective: eliminate inventory by eliminating
problems before they happen
JIT requires
Small lot sizes
Short setup time
Containers for fixed number of parts
JIT inventory Goal: Only have the Minimum
inventory needed to keep system running

31
Some JIT Inventory Tactics
Use a pull system to move inventory
Reduce lot size
Reduce setup time
Develop Just-in-Time delivery systems
with suppliers
Deliver directly to point of use no storage
Perform-to-schedule
Reduce setup time
Use group technology

32
Inventory Hides Problems Just as
Water in a Lake Hides Rocks

Inventory level

Inventory level

Process Process
Scrap Scrap
downtime downtime
Setup Setup Quality
Quality time
time problems problems

Late Late
deliveries deliveries

33
 Lowering Inventory
Reduces Waste

Work in process inventory level

(hides problems)

Unreliable Capacity
Scrap
Vendors Imbalances

34
 Lowering Inventory
Reduces Waste
Reducing inventory reveals
problems so they can be solved.

WIP
Unreliable Capacity
Scrap
Vendors Imbalances

35
 Lowering Inventory
Reduces Waste
Reducing inventory reveals
problems so they can be solved
and prevented in the future.

Unreliable WIP Capacity

Scrap
Vendors Imbalances

36
Reducing Lot Sizes Increases
the Number of Lots (DUH!!)
Customer Lot size = 5
orders 10 Lot 1 Lot 2

Lot size = 2
Lot 1 Lot 2 Lot 3 Lot 4 Lot 5

38
 Which Increases
Inventory Costs (Which you
learned in Chapter 12)
Cost

l Co st
Tota
Cost
ing
Hold
Setup Cost

Smaller Optimal Lot Size

Lot Size Lot Size

39
 Unless Setup Costs are
Simultaneously Reduced (Which
you also learned in Chapter 12)
Cost

l C o st
Tota C ost
olding
H

Setup Cost
New optimal Original Lot Size
lot size optimal
lot size

40
In Addition Frequent Orders can
Reduce Average Inventory
Q1 When average order size = 200,
average inventory is 100
Q2 When average order size = 100,
average inventory is 50
200
Inventory
100

Time

41
To Lower Total Cost It Requires
Small Lot Sizes and Lower
Setup Costs

Sum of ordering
and holding cost
Cost

T1

T2
S1
S2

Lot size

42
 Some Steps on How to Reduce
Setup Times 90 min
Initial Setup Time

Separate setup into preparation, and actual setup,

Step 1 doing as much as possible while the machine/process
is running (save 30 minutes)
60 min
Move material closer and improve
Step 2 material handling (save 20 minutes)
45 min
Standardize and
Step 3 improve tooling (save
15 minutes) 25 min
Use one-touch system to
Training operators and Step 4 15 min
eliminate adjustments (save
standardizing work 13 min
Step 5 10 minutes)
procedures (save 2
minutes)

43
 How JIT Uses Scheduling

Stresses the timing of operations

JIT requires
Communicating schedules to suppliers
Level schedules
Freezing the part of schedule nearest the due
date
Small lots
Kanban techniques

44
 Some JIT Scheduling Tactics
Communicate the schedule as early as possible to
suppliers
Make level schedules
Freeze part of the schedule
Ensure that everyone performs to the schedule
Seek one-piece-make and one-piece-move
Eliminate waste
Produce in small lots
Use kanbans
Make each operation produce a perfect part

45
 Small versus Large Lots
JIT can produce the same
amount of product in same
time if setup times are
JIT Small Lots lowered

A A B B B C A A B B B C

Time
Small lots also increase flexibility to meet
customer demands
Large-Lot Approach

A A A A B B B B B B C C

Time
46
How JIT Uses Kanban Cards
Japanese word for card
Pronounced kahn-bahn (not can-ban)
Works by authorizing/initiating production from
downstream operations
Pulls material through plant
May be a card, flag, verbal signal, whistle, or hand
signal, etc.
Uses fixed-size containers
To change the production rate (utilization) simply
add or remove containers or change container
size.

47
Kanban Signals Pull Material
Through the Process

48
 How JIT Uses Preventive
Maintenance (PM)
Is concerned with every activity
involved in keeping equipment in good
working order
Done to prevent failure
JIT requires
Scheduled & daily PM
Operators perform PM
They knows the machines
They are responsible for product quality

49
 How JIT Uses Quality
JIT exposes quality problems by reducing
inventory
JIT limits the number defects by using smaller
lot sizes, i.e., less can go wrong before it is
caught
JIT requires the use of some form of TQM
Statistical process control
Worker involvement
Inspect own work
Quality circles
Immediate feedback

50
 Some JIT Quality Tactics
Use statistical process control
Empower employees
Build failsafe methods (poka-yoke,
checklists, etc.)
Provide immediate feedback

51
 Employee Empowerment

Get employees involved in product &

process improvements
Employees know what it takes to make a
quality product
JIT requires 1995 Corel Corp.

Trusting employees
Cross-training
Training support
Fewer job classifications, i.e., job
enlargement

52
 A Few Words About
Using JIT for Service Businesses
All the techniques we just
discussed that are used in
manufacturing are also
used in services, i.e.,

Suppliers
Layouts
Inventory
Scheduling

53
 Some Attributes of Lean
Producers - They
use JIT to eliminate virtually all inventory
build systems to help employees product a perfect
part every time
reduce space requirements
develop close relationships with suppliers
educate suppliers
eliminate all but value-added activities
develop the workforce
make jobs more challenging
reduce the number of job classes and build worker
flexibility

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