Just-in-Time and Lean Operations
Developments of JIT and Lean Operations
1960’s: Developed as Toyota Production System by Taiichi Ohno and his colleagues
1970’s: U.S. and European auto makers began to apply JIT to improve quality and productivity
1990’s and beyond: Expanded the JIT concept to streamline all types of operations
Definition of JIT
A set of techniques to increase
productivity, improve quality, and
reduce cost of an operations
A management philosophy to promote
elimination of waste and continuous
improvement of productivity
What Could Be the Expected Benefits of JIT?
Expected Benefits of JIT
Reduction in throughput times Reduction in WIP Improvement in quality Improvement in productivity Reduction in resource requirements Improvement in customer satisfaction improvements in return on assets
Main Elements of JIT
Elimination of waste Quality at the source Balanced and flexible work flow Respect for people Continuous improvement (Kaizen) Simplification and visual control Focus on customer needs Partnerships with key suppliers
What is A “Waste?”
Wastes
Anything that exceeds the minimum resources needed for the appropriate value
Toyota’s seven deadly wastes:• Overproduction (excessive production resources)
• Inventory
• Waiting
• Transportation
• Processing
• Motion
• Defective parts
Why is Inventory Reduction Important?
Importance of Inventory Reduction
Inventory costs money - carrying costs, obsolescence costs, and opportunity costs
Inventory covers up problems and bottlenecks.
Inventory reduction forces organization and employees to eliminate sources of problems and work as a team.
Quality at the Source
Jidoka – autonomation (automatic
detection of defects, e.g., Poka-yoke)
Employee empowerment
Statistical process control
Prevention orientation (elimination of root
causes through PDSA cycle)
Balanced and Flexible Work Flow
Yo-i-don (ready, set, go) system Stable production schedule Set-up time reduction Flow-shop and cellular layouts Shojinka (flexible & multi-skilled workforce) Teamwork Total productive maintenance (TPM)
Respect for People
Productivity improvement needs employee support Demonstrate by
• providing cross-training opportunities
• creating a safe and equitable work environment
• encouraging people to achieve their potential by giving them greater responsibility and authority
• promoting teamwork (formal and informal)
• developing partnerships with unions
Continuous Improvement (Kaizen)
Employee suggestion system Process improvement 5S’s
• Seiri - organization
• Seiton - tidiness
• Seiso - purity
• Seiketsu - cleanliness
• Shitsuke - discipline
Simplification and Visual Control
Standard and simple product designs
Andon boards
Kanban pull system
Flag systems
Music as signals
Performance display systems
Focus on Customer Needs
Customer needs determine the “value” of a product or service
Be responsive to customers needs (present and future)
Strive to “delight,” not just “satisfy” customers
Partnerships with Suppliers
Reduce number of suppliers Use long-term contracts Emphasize price, delivery, and services Improve communication Share information Develop local just-in-time delivery Provide technical support to suppliers
JIT Implementation
Top management commitment Steering committee Education program Pilot project planning Employee training Pilot implementation Pilot post mortem Feedback to steering committee Expansion to next project
Advancements in JIT (JIT II)
Backwards Integration of staff and line functions to suppliers (e.g., purchasing)
Requires EDI or web access to materials and logistics systems
On-site supplier representative(s) with transaction processing authority
Goal: link suppliers’ cycle to firm’s cycle to mutually reduce wait and move times
How Can JIT Be Applied to Non-Manufacturing Operations?
JIT for Non-Manufacturing Operations (Lean Operations)
Implement demand-pull operations Eliminate unnecessary activities Standardize process flows Increase process flexibility Reorganize physical layouts Upgrade housekeeping and workplace
organization
JIT for Non-Manufacturing Operations (Lean
Operations)
Develop supplier partnership networks Level work load Organize problem-solving groups Improve quality Develop effective suggestion systems Cross-train employees Promote teamwork
What Are Toyota’s Secrets of Success?
Toyota’s Secrets of Success(Steve Spear, HBR, May 2004)
There is no substitute for direct observation
Proposed changes should always be structured as experiments
Workers and managers should experiment as frequently as possible
Managers should coach, not fix
Suggested Readings
Monden, Yasuhiro (1993). Toyota Production System: An Integrated Approach to Just-In-Time, 3rd edition, Institute of Industrial Engineers.
Womack, James P. and Jones, Daniel T. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation, The Free Press.
Jeffrey K. Liker (2004). The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer, McGraw-Hill.