JUST IN TIME AT VOLKSWAGEN

Volkswagen means "people's car”

IntroductionType :Subsidiary of Volkswagen Group Founded : May 28, 1937 Founder :Ferdinand PorscheHeadquarters :Wolfsburg, Germany Area served :Worldwide Industry: Automotive Products: car

Brazilian plant employs 1000 workersBrazilian plant employs 1000 workers** 200 work for VW and are responsible for 200 work for VW and are responsible for

overall quality, marketing, research, and overall quality, marketing, research, and designdesign

800 work for other contractors and do the 800 work for other contractors and do the assembly workassembly work

Important elements of this concept VW is buying not only materials, but also the

labor and related services Suppliers are integrated tightly into VW’s

own network, right down to assembly work in the plant

Purchase costs in the auto industry exceed 60% of the sales dollar, so any savings are significant

ToyotaToyota's performance…has been stunning. The company has not lost money in a single quarter since 1951. As U.S. automotive powerhouses are drowning in red ink, Toyota earned its highest ever net profit in 2006—$17 billion.

EmersonThe company, which makes everything from electric motors and air-conditioner compressors to computerized equipment that can run an oil refinery, reported improved results in fiscal 2004 for the third consecutive year, with sales up 12% to an all-time high of $15.62 billion. Emerson is benefiting hugely from the rebound in the U.S. industrial economy and China's economic boom

Parker-HannifinDonald E. Washkewicz…was promoted to president of Parker Hannifin (PH ), the world's No. 1 maker of motion-control products -- hydraulic and pneumatic components for aircraft, construction equipment, and even theme-park robots.

In the past, you had to justify your machine tool by the setup time: It takes me 25 hours to set this thing up, at $50 an hour, so I've got to run a batch of 1 million widgets to justify that setup time. What you ended up doing was using all your capacity to make inventory that nobody needed. In the meantime, your customer service suffered because you didn't want to break in on that machine run to fill new orders. Nobody wins.

Just-in-TimeJIT philosophy means getting the right

quantity of goods at the right place and the right time

JIT exceeds the concept of inventory reductionJIT is an all-encompassing philosophy found on

eliminating wasteWaste is anything that does not add valueA broad JIT view is one that encompasses the

entire organization

APICS Definition of JIT

“A philosophy of manufacturing based on planned elimination of waste and continuous improvement of productivity ……”

APICS Definition of JIT“The primary elements of Just-in-Time are:

to have only the required inventory when needed;

to improve quality to zero defects;to reduce lead times by reducing setup times,

queue lengths, and lot sizes;to incrementally revise the operations

themselves;and to accomplish these things at minimum

cost”.

JIT SynonymsIBM - Continuous Flow ManufacturingHP - Stockless Production

- Repetitive Manufacturing SystemGE - Management by SightMotorola - Short Cycle ManufacturingJapanese - The Toyota SystemBoeing - Lean Manufacturing

Philosophy of Just-in-TimeJIT originated in Japan, post WWIIDriven by a need survive after the devastation

caused by the warJIT gained worldwide prominence in the 1970sToyota Motor Co. developed JIT

The Philosophy of JIT - continuedOften termed “Lean Systems”All waste must be eliminated- non value itemsBroad view that entire organization must focus

on the same goal - serving customersJIT is built on simplicity- the simpler the betterFocuses on improving every operation-

Continuous improvement - KaizenVisibility – all problems must be visible to be

identified and solvedFlexibility to produce different models/features

Three Elements of JIT

• Management philosophy• Pull system though the plant

WHAT IT IS

• Employee participation• Industrial engineering/basics• Continuing improvement• Total quality control• Small lot sizes

WHAT IT REQUIRES

• Attacks waste• Exposes problems and bottlenecks• Achieves streamlined production

WHAT IT DOES

• Stable environment

WHAT IT ASSUMES

JIT Production

The role of inventory in traditional and JIT systems: The water and the rocks metaphor

Material quality problems Long

setups

Poor training Break

downs

Material handling

Water = Inventory

The role of inventory in traditional and JIT systems: The water and the rocks metaphor

Material quality problems Long

setups

Poor training Break

downs

Material handling

Traditional systems use inventory (water) to buffer the process from problems (rocks) that cause disruption.

The role of inventory in traditional and JIT systems: The water and the rocks metaphor

Material quality problems Long

setups

Poor training Break

downs

Material handling

JIT systems view inventory as waste and work to lower inventory levels to expose and correct the problems (rocks) that cause disruption.

The role of inventory in traditional and JIT systems: The water and the rocks metaphor

Material quality problems Long

setups

Poor training Break

downs

Material handling

Lowering the level of inventory is relatively easy to do. However, the problems that arise must be corrected quickly … Otherwise, without decoupling inventory, the process will flounder.

What is kanban? developed at Toyota 1950s to manage line material flows. Kanban ( Kan=card, Ban= signal ) simple movement system

“cards” to signal & communicate reorder information boxes/containers to take “lots” of parts from one work station

to another (client-server). Server only delivers components to client work station as & when

needed (called/pulled). minimise storage in the production area. Workstations only produce/deliver components when called (they

receive card + empty container). The work-station produces enough to fill the container Kanban = an authorization to produce more inventory We thus limit the amount of inventory in process.

What does a Kanban card look like?Kanban No.Kanban No. 5678990 5678990 part No: part No: 66789X66789Xdescription description 16ga. Copper 16ga. Copper

WireWireunits units Ft.Ft.reorder/lot qty reorder/lot qty 2020store location store location Row 12, Bin 6Row 12, Bin 6supplier supplier BICCBICCsupplier tel supplier tel 0208-891-01210208-891-0121supplier part supplier part RT45502RT45502routing processName/location of next procesName/location of preceding

processcontainer type & capacitynumber of containers released

• accurate data: correct part nos, accurate data: correct part nos, quantities & measure'tsquantities & measure'ts

• visible - chart if material ordered visible - chart if material ordered & when& when

• fool proof for no stockoutsfool proof for no stockouts• minimum inventoryminimum inventory• clear & complete info. to clear & complete info. to

supplierssuppliers• link inventory directly to demandlink inventory directly to demand• Tie in with POP: issuing orders, Tie in with POP: issuing orders,

receiving & authorising accounts receiving & authorising accounts payablepayable

• accurate data: correct part nos, accurate data: correct part nos, quantities & measure'tsquantities & measure'ts

• visible - chart if material ordered visible - chart if material ordered & when& when

• fool proof for no stockoutsfool proof for no stockouts• minimum inventoryminimum inventory• clear & complete info. to clear & complete info. to

supplierssuppliers• link inventory directly to demandlink inventory directly to demand• Tie in with POP: issuing orders, Tie in with POP: issuing orders,

receiving & authorising accounts receiving & authorising accounts payablepayable

The Pull System

Traditional Process Focused Layout

Jumbled flows, long cycles, difficult to schedule

JIT Cellular ManufacturingProduct focused cells, flexible equipment,

high visibility, easy to schedule, short cycles

Firestone Tire CompanyFirestone Tire Company

OEM & DistributionOEM & Distribution

Warehousing & Warehousing & TransportationTransportation

Tire & Inner TubeTire & Inner TubeManufacturingManufacturing

Synthetic Rubber Synthetic Rubber Processing and cord Mfg. Processing and cord Mfg.

Chemical Processing Chemical Processing OperationsOperations

Raw Material miningRaw Material mining

Natural RubberNatural Rubber

Rubber RefineryRubber Refinery

Rubber PlantationRubber Plantation

ShipmentShipment

VISION 2020Imagine a roadway completely free of

accidents. How much time would you save if you never had to search for another parking space? What if your car truly made life easier and at the same time caused absolutely no harm to the environment?