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Principles of Principles of Operations ManagementOperations Management

Principles of Principles of Operations ManagementOperations Management

Just-In-Time SystemsJust-In-Time SystemsChapter 11Chapter 11

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Learning ObjectivesLearning ObjectivesLearning ObjectivesLearning Objectives

Explain Just-in-Time (JIT)Explain Just-in-Time (JIT) Compare ‘pull’ & ‘push ’ systemsCompare ‘pull’ & ‘push ’ systems List the types of wasteList the types of waste Describe the 7 JIT requirementsDescribe the 7 JIT requirements State at least 5 characteristics of JIT State at least 5 characteristics of JIT

vendor partnershipsvendor partnerships Explain the relationship between Explain the relationship between

lot size, setup cost, & inventorylot size, setup cost, & inventory

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What is Just-in-Time?What is Just-in-Time?What is Just-in-Time?What is Just-in-Time?

Management philosophy of continuous Management philosophy of continuous & forced problem solving& forced problem solving

‘‘Pull’ system of production & Pull’ system of production & purchasingpurchasing Downstream work centers request Downstream work centers request

delivery from upstream work centersdelivery from upstream work centers

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What Does What Does Just-In-Time Do?Just-In-Time Do?

What Does What Does Just-In-Time Do?Just-In-Time Do?

Attacks wasteAttacks waste Anything not adding value to the productAnything not adding value to the product

Customer’s perspectiveCustomer’s perspective

Exposes problems & bottlenecksExposes problems & bottlenecks Caused by variabilityCaused by variability

Deviation from optimumDeviation from optimum

Achieves streamlined productionAchieves streamlined production By reducing inventoryBy reducing inventory

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Types of WasteTypes of WasteTypes of WasteTypes of Waste

OverproductionOverproduction WaitingWaiting TransportationTransportation Inefficient processingInefficient processing InventoryInventory Unnecessary motionUnnecessary motion Product defectsProduct defects

© 1995 Corel Corp.

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Streamlined ProductionStreamlined ProductionStreamlined ProductionStreamlined Production

Flow with JITFlow with JIT

Traditional FlowTraditional Flow

CustomersCustomersSuppliersSuppliers

CustomersCustomers

SuppliersSuppliers

Production Process Production Process (stream of water)(stream of water)

Inventory Inventory (stagnant ponds)(stagnant ponds) MaterialMaterial

(water in (water in stream)stream)

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Just-in-Time Just-in-Time Success Factors Success Factors

Just-in-Time Just-in-Time Success Factors Success Factors

SuppliersSuppliersSuppliersSuppliers

Preventive Preventive MaintenanceMaintenance

Preventive Preventive MaintenanceMaintenance

LayoutLayoutLayoutLayout

InventoryInventoryInventoryInventory

SchedulingSchedulingSchedulingScheduling

QualityQualityQualityQuality

Employee Employee Empower-Empower-

mentment

Employee Employee Empower-Empower-

mentment

JITJIT

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Suppliers Suppliers Suppliers Suppliers

Incoming material & finished goods Incoming material & finished goods involve wasteinvolve waste

Buyer & supplier form JIT partnerships Buyer & supplier form JIT partnerships JIT partnerships eliminateJIT partnerships eliminate

Unnecessary activitiesUnnecessary activities In-plant inventoryIn-plant inventory In-transit inventoryIn-transit inventory Poor suppliers Poor suppliers

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Characteristics of Characteristics of JIT PartnershipsJIT Partnerships

Characteristics of Characteristics of JIT PartnershipsJIT Partnerships

Few, nearby suppliersFew, nearby suppliers Long-term contract agreementsLong-term contract agreements Steady supply rateSteady supply rate Frequent deliveries in small lotsFrequent deliveries in small lots Buyer helps suppliers meet qualityBuyer helps suppliers meet quality Suppliers use process control chartsSuppliers use process control charts Buyer schedules inbound freightBuyer schedules inbound freight

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Supplier Worries Supplier Worries Supplier Worries Supplier Worries

Lack of flexibilityLack of flexibility Long-term contract with 1 customerLong-term contract with 1 customer

Poor customer schedulingPoor customer scheduling Frequent engineering changesFrequent engineering changes Strict quality assuranceStrict quality assurance Small lot sizesSmall lot sizes Close physical proximityClose physical proximity

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LayoutLayoutLayoutLayout

JIT objective: Reduce movement of JIT objective: Reduce movement of people & materialpeople & material Movement is wasteMovement is waste

JIT requiresJIT requires Work cells for product familiesWork cells for product families Moveable or changeable machinesMoveable or changeable machines Short distancesShort distances Little space for inventoryLittle space for inventory Delivery directly to work areasDelivery directly to work areas

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Work Cells vs. Process Work Cells vs. Process LayoutLayout

Work Cells vs. Process Work Cells vs. Process LayoutLayout

Process LayoutProcess Layout Work CellWork Cell

SawSaw

LatheLathe

GrinderGrinder

HeatHeatTreatTreat

LatheLathe

LatheLathe

LatheLathe SawSaw

HeatHeatTreatTreat

GrinderGrinder

GrinderGrinder

PressPress

PressPress 11

11

22

33

4455

22

66

SawSaw

PressPress

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InventoryInventoryInventoryInventory

Traditionally, inventory exists in case Traditionally, inventory exists in case problems ariseproblems arise

JIT objective: Eliminate inventoryJIT objective: Eliminate inventory JIT requiresJIT requires

Small lot sizesSmall lot sizes Low setup timeLow setup time Containers for fixed number of partsContainers for fixed number of parts

JIT inventory: Minimum inventory to JIT inventory: Minimum inventory to keep system runningkeep system running

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Reducing Lot Sizes Reducing Lot Sizes Increases # LotsIncreases # Lots

Reducing Lot Sizes Reducing Lot Sizes Increases # LotsIncreases # Lots

Customer Customer orders 10orders 10

Lot size = 5Lot size = 5

Lot 1Lot 1 Lot 2Lot 2

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

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... Which Increases ... Which Increases Inventory CostsInventory Costs

... Which Increases ... Which Increases Inventory CostsInventory Costs

Lot SizeLot Size

CostCost

Holding CostHolding Cost

Total CostTotal Cost

Setup CostSetup Cost

Optimal Optimal Lot SizeLot Size

Smaller Smaller Lot SizeLot Size

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SchedulingSchedulingSchedulingScheduling

Involves timing of operationsInvolves timing of operations JIT requiresJIT requires

Communicating schedules to suppliersCommunicating schedules to suppliers Level material use schedulesLevel material use schedules Freezing part of schedule nearest due dateFreezing part of schedule nearest due date

May freeze monthly output rateMay freeze monthly output rate Small lotsSmall lots Kanban techniquesKanban techniques

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Level Material Use Level Material Use SchedulesSchedules

Level Material Use Level Material Use SchedulesSchedules

Reduce ripple effect of small variations in Reduce ripple effect of small variations in schedules (e.g., final assy) schedules (e.g., final assy)

Production quantities evenly distributed Production quantities evenly distributed over time (e.g., 7/day)over time (e.g., 7/day)

Build same mix of products Build same mix of products everyevery day day Results in many small lotsResults in many small lots ItemItemMonthly QuantityMonthly Quantity Daily QuantityDaily Quantity

AA 4040 22BB 6060 33

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AAAA

AAAA AAAA BBBB BBBB BBBB CCCC

Small vs. Large LotsSmall vs. Large LotsSmall vs. Large LotsSmall vs. Large Lots

JIT Small LotsJIT Small Lots

Large-Lot ApproachLarge-Lot Approach

TimeTime

TimeTime

AAAA AAAA BBBB BBBB BBBB CCCC

AAAA AAAA AAAA BBBB BBBB BBBB BBBB BBBB BBBB CCCC CCCC

JIT produces same amount in same time if lower setup time

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KanbanKanbanKanbanKanban

Japanese word for cardJapanese word for card Pronounced ‘kahn-bahn’ (not ‘can-ban’)Pronounced ‘kahn-bahn’ (not ‘can-ban’)

Authorizes production from Authorizes production from downstream operationsdownstream operations ‘‘Pulls’ material through plantPulls’ material through plant

May be a card, flag, verbal signal etc.May be a card, flag, verbal signal etc. Used often with fixed-size containersUsed often with fixed-size containers

Add or remove containers to change Add or remove containers to change production rateproduction rate

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Preventive Preventive Maintenance (PM)Maintenance (PM)

Preventive Preventive Maintenance (PM)Maintenance (PM)

All activities involved in keeping All activities involved in keeping equipment in working orderequipment in working order

Done to Done to preventprevent failure failure JIT requiresJIT requires

Scheduled & daily PMScheduled & daily PM Operator performs PMOperator performs PM

Knows machinesKnows machinesResponsible for product qualityResponsible for product quality

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QualityQualityQualityQuality

JIT exposes quality problems by JIT exposes quality problems by reducing inventoryreducing inventory

JIT limits # defects with small lotsJIT limits # defects with small lots JIT requires TQMJIT requires TQM

Statistical process controlStatistical process control Worker involvementWorker involvement

Inspect own workInspect own workQuality circlesQuality circles

Immediate feedbackImmediate feedback

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Employee Employee EmpowermentEmpowerment

Employee Employee EmpowermentEmpowerment

Getting employees involved in Getting employees involved in product & process improvementsproduct & process improvements Know job bestKnow job best

JIT requiresJIT requires EmpowermentEmpowerment Cross-trainingCross-training Training supportTraining support Few job classificationsFew job classifications

© 1995 Corel Corp.

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ConclusionConclusionConclusionConclusion

Explained Just-in-Time (JIT)Explained Just-in-Time (JIT) Compared ‘pull’ & ‘push ’ systemsCompared ‘pull’ & ‘push ’ systems Listed the types of wasteListed the types of waste Described the 7 JIT requirementsDescribed the 7 JIT requirements Stated at least 5 characteristics of JIT Stated at least 5 characteristics of JIT

vendor partnershipsvendor partnerships Explained the relationship between Explained the relationship between

lot size, setup cost, & inventorylot size, setup cost, & inventory