Lean Production and theLean Production and theJust-in-Time PhilosophyJust-in-Time Philosophy

Lean ProductionLean Production

Elimination of All Waste – Waste is Anything that Does Not Add Value to Product.

Continuous Improvement of Productivity

Seven Sources of Waste (Toyota)Seven Sources of Waste (Toyota) Process – Minimize Scrap, Lot Sizes, Costs

Methods – Minimize Wasted Motions & Effort

Movement – Minimize Moving & Storing Parts

Defects – Eliminate

Wait Time – Minimize

Overproduction – Eliminate

Inventory – Eliminate or Reduce

Additional Ways to Eliminate WasteAdditional Ways to Eliminate Waste

Limited Product Range

Standardization of Components

Poke-Yoke (Fail Safe)

Kaizen

Takt Time

Value Stream Mapping

Value Stream Mapping ExampleValue Stream Mapping Example

Just-In-Time (JIT) Is Pursuit ofJust-In-Time (JIT) Is Pursuit of

Zero Inventories

Zero Transactions

Zero “Disturbances” – Routine Execution of Schedule

Total Quality Management (TQM)

How Does JIT Minimize Inventories?How Does JIT Minimize Inventories?

1. Lot-Size Stocks – Allows Routine Batching of Orders and Quantity Discounts

JIT Reduces Set Up and Order Costs by Automation, Group Technology, Contracts.

Lot Sizes and Inventory Are Reduced.

Vendor Contracts Allow Firm to Receive Quantity Discounts without Inventory.

How Does JIT Minimize Inventories?How Does JIT Minimize Inventories? Lot-Size Stocks

• Suppose Demand = 5, Holding Cost = $2, and Set Up = $5

Lot Size Holding Set Up Total 1 $1.00 $25.00 $26.00 5*

5.00 5.00 10.00 1010.00 2.50 12.50

• Q* = 5 and Cost = $10.00

How Does JIT Minimize Inventories?How Does JIT Minimize Inventories? Lot-Size Stocks

• Suppose Demand = 5, Holding Cost = $2, and Set Up = $.20

Lot Size Holding Set Up Total 1*$1.00 $1.00 $2.00 5

5.00 0.20 5.20 10 10.00 0.10 10.10

• Q* = 1 and Cost = $2.00

How Does JIT Minimize Inventories?How Does JIT Minimize Inventories?

2. Safety (Buffer) Stocks – Extra Inventory Set Aside for Uncertain Demand or Problems.

JIT Advocates Customer Contracts.

JIT Seeks to Eliminate Problems through Redundancy and Flexible Work Force.

How Does JIT Minimize Inventories?How Does JIT Minimize Inventories?

3. Anticipation (Seasonal) Stocks – Allows Anticipation of Seasonal Surges in Demand.

JIT Advocates Chase Production Planning Strategy.

JIT Reduces Change in Production Costs (Setup, Hiring, Changeover).

How Does JIT Minimize Inventories?How Does JIT Minimize Inventories?

4. Transportation Stocks – Inventory in Transit from One Point to Another.

JIT Advocates Reduced Distances between Transit Points.

JIT and Product DesignJIT and Product Design

Quality at the Source

Standard and Modular Parts

Reducing “Real” Levels – Bill of Materials

Design for Cellular Manufacturing

Work Cell ExampleWork Cell Example

Work Cell ExampleWork Cell Example

JIT and Process DesignJIT and Process Design

Setup Time Reduction – Job Shops Become More Like Assembly Lines.

Production Flexibility

Cellular Manufacturing

Process Inventory and Throughput Time Reduction

JIT and Job DesignJIT and Job Design

Skilled and Motivated Work Force

Continual Learning and Improvement

Cross Training

Worker Flexibility

Surge Capacity Must Be Available

JIT Ratio AnalysisJIT Ratio Analysis1. Lead Time to Work Content

Production Lead Time / Work Content 5

2. Process Speed to Sales Rate (Takt Time) Process Speed / Sales Rate or Use 5

3. Pieces to Work Stations or Operators Number of Pieces / Number of Stations 5

Kanban SystemsKanban SystemsSingle-Card

One Card per Item, Lot, or Container

Cards in Rack Imply Production on Part

Cards Indicating Assemble Part Can Be Used to Trigger Ordering More Parts

Kanban SystemsKanban SystemsTwo-Card

First Card Is Transport or Withdrawal or Conveyance Card – Placed in Stock of Exiting Part, Authorizes Replacement

Second Card Is Production Card – Placed in Work Center Box to Authorize Production

Kanban SystemsKanban Systems

Use of Two-Card KanbanUse of Two-Card Kanban

Kanban SystemsKanban Systems

Each Container – Only One Kanban

No Partials – Each Container Filled, Empty, or Being Filled or Empty

Production or Movement Must be Authorized by Kanban

Number of Kanban ContainersNumber of Kanban ContainersN = DT(1+X)/C

N = Number of Containers (or Cards)D = Demand or Usage RateT = Mean Waiting or Lead Time for Part

Replenishment + Mean Production Time Using Parts

X = Inefficiency (1- Efficiency) (0 is Best)C = Capacity of Standard Container

Number of Kanban ContainersNumber of Kanban ContainersExample:

D = 100 Parts per HourT = 90 Minutes (1.5 Hours)X = 0.1C = 84 PartsN = (100)(1.5)(1.1)/84 = 1.96 ≈ 2