heizer om10 ch16-jit and lean operations
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10/16/2010
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1616 JIT and Lean Operations
JIT and Lean Operations
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PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e Operations Management, 10e Principles of Operations Management, 8ePrinciples of Operations Management, 8e
PowerPoint slides by Jeff Heyl
OutlineOutlineGlobal Company Profile: Toyota Motor CorporationJust-in-Time, the Toyota Production System, and Lean
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y ,Operations
Eliminate WasteRemove VariabilityImprove Throughput
Outline Outline –– ContinuedContinuedJust-in-Time
JIT PartnershipsConcerns of Suppliers
JIT Layout
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JIT LayoutDistance ReductionIncreased FlexibilityImpact on EmployeesReduced Space and Inventory
Outline Outline –– ContinuedContinuedJIT Inventory
Reduce VariabilityReduce InventoryReduce Lot Sizes
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Reduce Lot SizesReduce Setup Costs
JIT SchedulingLevel SchedulesKanban
Outline Outline –– ContinuedContinuedJIT QualityToyota Production System
Continuous ImprovementRespect for People
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Respect for PeopleStandard Work Practices
Lean OperationsBuilding a Lean Organization
Lean Operations in Services
Learning ObjectivesLearning ObjectivesWhen you complete this chapter you When you complete this chapter you should be able to:should be able to:
1. Define just-in-time, TPS, and lean operations
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operations2. Define the seven wastes and the
5 Ss3. Explain JIT partnerships4. Determine optimal setup time
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Learning ObjectivesLearning ObjectivesWhen you complete this chapter you When you complete this chapter you should be able to:should be able to:
5. Define kanban
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6. Compute the required number of kanbans
7. Explain the principles of the Toyota Production System
Toyota Motor CorporationToyota Motor Corporation
Largest vehicle manufacturer in the world with annual sales of over 9 million vehiclesSuccess due to two techniques JIT
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Success due to two techniques, JIT and TPSContinual problem solving is central to JITEliminating excess inventory makes problems immediately evident
Toyota Motor CorporationToyota Motor CorporationCentral to TPS is employee learning and a continuing effort to produce products under ideal conditionsRespect for people is fundamental
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Small building but high levels of productionSubassemblies are transferred to the assembly line on a JIT basisHigh quality and low assembly time per vehicle
TPS ElementsTPS Elements
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JIT/Lean OperationsJIT/Lean Operations
Good production systems require Good production systems require that managers address three issues that managers address three issues that are pervasive and fundamental that are pervasive and fundamental
to operations management:to operations management:
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to operations management: to operations management: eliminate waste, remove variability, eliminate waste, remove variability,
and improve throughputand improve throughput
JustJust--InIn--Time, TPS, and Time, TPS, and Lean OperationsLean Operations
JIT is a philosophy of continuous and forced problem solving via a focus on throughput and reduced inventory
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TPS emphasizes continuous improvement, respect for people, and standard work practicesLean production supplies the customer with their exact wants when the customer wants it without waste
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JustJust--InIn--Time, TPS, and Time, TPS, and Lean OperationsLean Operations
JIT emphasizes forced problem solvingTPS emphasizes employee
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TPS emphasizes employee learning and empowerment in an assembly-line environmentLean operations emphasize understanding the customer
Eliminate WasteEliminate Waste
Waste is anything that does not add value from the customer point of view
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Storage, inspection, delay, waiting in queues, and defective products do not add value and are 100% waste
Ohno’s Seven WastesOhno’s Seven WastesOverproductionQueuesTransportation
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InventoryMotionOverprocessingDefective products
Eliminate WasteEliminate Waste
Other resources such as energy, water, and air are often wastedEfficient, sustainable production
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minimizes inputs, reduces wasteTraditional “housekeeping” has been expanded to the 5 Ss
The 5 SsThe 5 SsSort/segregateSort/segregate – when in doubt, throw it outSimplify/straightenSimplify/straighten – methods analysis tools
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Shine/sweepShine/sweep – clean dailyStandardizeStandardize – remove variations from processesSustain/selfSustain/self--disciplinediscipline – review work and recognize progress
The 5 SsThe 5 SsSort/segregateSort/segregate – when in doubt, throw it outSimplify/straightenSimplify/straighten – methods analysis toolsTwo additional Ss
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Shine/sweepShine/sweep – clean dailyStandardizeStandardize – remove variations from processesSustain/selfSustain/self--disciplinediscipline – review work and recognize progress
Safety – build in good practicesSupport/maintenance – reduce variability and unplanned downtime
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Remove VariabilityRemove Variability
JIT systems require managers to reduce variability caused by both internal and external factorsV i bilit i d i ti f th
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Variability is any deviation from the optimum processInventory hides variabilityLess variability results in less waste
Sources of VariabilitySources of Variability
1. Incomplete or inaccurate drawings or specifications
2. Poor production processes
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resulting in incorrect quantities, late, or non-conforming units
3. Unknown customer demands
Sources of VariabilitySources of Variability
1. Incomplete or inaccurate drawings or specifications
2. Poor production processes
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resulting in incorrect quantities, late, or non-conforming units
3. Unknown customer demands
Improve ThroughputImprove ThroughputThe time it takes to move an order from receipt to deliveryThe time between the arrival of
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raw materials and the shipping of the finished order is called manufacturing cycle timeA pull system increases throughput
Improve ThroughputImprove Throughput
By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement
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continual improvementManufacturing cycle time is reducedPush systems dump orders on the downstream stations regardless of the need
JustJust--InIn--Time (JIT)Time (JIT)Powerful strategy for improving operationsMaterials arrive where they are needed when they are needed
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neededIdentifying problems and driving out waste reduces costs and variability and improves throughputRequires a meaningful buyer-supplier relationship
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JIT and Competitive JIT and Competitive AdvantageAdvantage
16 - 25© 2011 Pearson Education, Inc. publishing as Prentice HallFigure 16.1
JIT and Competitive JIT and Competitive AdvantageAdvantage
16 - 26© 2011 Pearson Education, Inc. publishing as Prentice HallFigure 16.1
JIT PartnershipsJIT PartnershipsJIT partnerships exist when a supplier and purchaser work together to remove waste and drive down costs
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Four goals of JIT partnerships are:Removal of unnecessary activitiesRemoval of in-plant inventoryRemoval of in-transit inventoryImproved quality and reliability
JIT PartnershipsJIT Partnerships
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Figure 16.2
Concerns of SuppliersConcerns of SuppliersDiversificationDiversification – ties to only one customer increases riskSchedulingScheduling – don’t believe customers can create a smooth scheduleLead timeLead time – short lead times mean
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Lead timeLead time – short lead times mean engineering or specification changes can create problemsQualityQuality – limited by capital budgets, processes, or technologyLot sizesLot sizes – small lot sizes may transfer costs to suppliers
JIT LayoutJIT LayoutReduce waste due to movement
JIT Layout TacticsBuild work cells for families of productsInclude a large number operations in a small area
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Table 16.1
Minimize distanceDesign little space for inventoryImprove employee communicationUse poka-yoke devicesBuild flexible or movable equipmentCross-train workers to add flexibility
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Distance ReductionDistance ReductionLarge lots and long production lines with single-purpose machinery are being replaced by smaller flexible cells
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smaller flexible cellsOften U-shaped for shorter paths and improved communicationOften using group technology concepts
Increased FlexibilityIncreased Flexibility
Cells designed to be rearranged as volume or designs changeApplicable in office environments
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Applicable in office environments as well as production settingsFacilitates both product and process improvement
Impact on EmployeesImpact on EmployeesEmployees may be cross trained for flexibility and efficiencyImproved communications facilitate the passing on of
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facilitate the passing on of important information about the processWith little or no inventory buffer, getting it right the first time is critical
Reduced Space and Reduced Space and InventoryInventory
With reduced space, inventory must be in very small lots
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yUnits are always moving because there is no storage
JIT InventoryJIT InventoryInventory is at the minimum level necessary to keep operations runningJIT Inventory TacticsUse a pull system to move inventory
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Table 16.2
p y yReduce lot sizesDevelop just-in-time delivery systems with suppliersDeliver directly to point of usePerform to scheduleReduce setup timeUse group technology
Reduce VariabilityReduce Variability
Inventory level
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Process downtimeScrap
Setup time
Late deliveries
Quality problems
Figure 16.3
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Inventory level
Reduce VariabilityReduce Variability
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Figure 16.3
Process downtimeScrap
Setup time
Late deliveries
Quality problems
Inventory level
Reduce VariabilityReduce Variability
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Figure 16.3
Process downtime removed
No scrap
Setup time
reducedLate
deliveries
Quality problems removed
Reduce InventoryReduce InventoryReducing inventory uncovers the “rocks”Problems are exposed
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Ultimately there will be virtually no inventory and no problemsShingo says “Inventory is evil”
Reduce Lot SizesReduce Lot Sizes
200 –
ento
ry
Q2 When average order size = 100i t i 50
Q1 When average order size = 200average inventory is 100
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Figure 16.4
100 –Inve
Time
average inventory is 50
Reduce Lot SizesReduce Lot SizesIdeal situation is to have lot sizes of one pulled from one process to the nextOften not feasible
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Can use EOQ analysis to calculate desired setup timeTwo key changes necessary
Improve material handlingReduce setup time
Lot Size ExampleLot Size ExampleD = Annual demand = 400,000 unitsd = Daily demand = 400,000/250 = 1,600 per dayp = Daily production rate = 4,000 unitsQ = EOQ desired = 400H = Holding cost = $20 per unitS S t t (t b d t i d)
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S = Setup cost (to be determined)
Q = 2DSH(1 - d/p) Q2 = 2DS
H(1 - d/p)
S = = = $2.40(Q2)(H)(1 - d/p)
2D(3,200,000)(0.6)
800,000
Setup time = $2.40/($30/hour) = 0.08 hr = 4.8 minutes
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Reduce Setup CostsReduce Setup Costs
High setup costs encourage large lot sizesReducing setup costs reduces lot
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g psize and reduces average inventorySetup time can be reduced through preparation prior to shutdown and changeover
Lower Setup CostsLower Setup Costs
Sum of ordering and holding costs
Holding cost
st
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Figure 16.5
Setup cost curves (S1, S2)T1
S1
T2
S2
Cos
Lot size
Reduce Setup TimesReduce Setup TimesInitial Setup Time
M t i l l d
Step 1
Separate setup into preparation and actual setup, doing as much as possible while the
machine/process is operating (save 30 minutes)
90 min —
60 min —
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Figure 16.6
Use one-touch system to eliminate adjustments (save 10 minutes)Step 4
Step 5Training operators and standardizing work procedures (save 2 minutes)
Step 2Move material closer and improve material handling
(save 20 minutes)
Step 3Standardize and improve tooling
(save 15 minutes)
45 min —
25 min —
15 min —13 min —
—Repeat cycle until subminute setup is achievedStep 6
JIT SchedulingJIT SchedulingSchedules must be communicated inside and outside the organizationLevel schedules
Process frequent small batches
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Process frequent small batchesFreezing the schedule helps stability
KanbanSignals used in a pull system
Table 16.3
Better scheduling improves performanceJIT SchedulingJIT Scheduling
JIT Scheduling TacticsCommunicate schedules to suppliersMake level schedulesF t f th h d l
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Freeze part of the schedulePerform to scheduleSeek one-piece-make and one-piece moveEliminate wasteProduce in small lotsUse kanbansMake each operation produce a perfect part
Level SchedulesLevel Schedules
Process frequent small batches rather than a few large batchesMake and move small lots so the l l h d l i i l
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level schedule is economical“Jelly bean” schedulingFreezing the schedule closest to the due dates can improve performance
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Scheduling Small LotsScheduling Small Lots
A B CA AAB B B B B CJIT Level Material-Use Approach
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A CA AA B B B B B C CB B B BA A
Large-Lot Approach
TimeFigure 16.7
KanbanKanbanKanban is the Japanese word for cardThe card is an authorization for the next container of material to be producedA sequence of kanbans
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qpulls material through the processMany different sorts of signals are used, but the system is still called a kanban
KanbanKanban1. User removes a
standard sized container
2. Signal is seen by the producing
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the producing department as authorization to replenish
Part numbers mark location
Signal marker on boxes
Figure 16.8
KanbanKanban
Final assembly
Work cell
Material/Parts Supplier Finished
goodsCustomer
order
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Figure 16.9
KanbanKanban
Kanban
More KanbanMore Kanban
When the producer and user are not in visual contact, a card can be usedWhen the producer and user are in visual contact a light or flag or empty
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visual contact, a light or flag or empty spot on the floor may be adequateSince several components may be required, several different kanban techniques may be employed
More KanbanMore Kanban
Usually each card controls a specific quantity or partsMultiple card systems may be used if there are several components or
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there are several components or different lot sizesIn an MRP system, the schedule can be thought of as a build authorization and the kanban a type of pull system that initiates actual production
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More KanbanMore Kanban
Kanban cards provide a direct control and limit on the amount of work-in-process between cellsIf there is an immediate storage area a
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If there is an immediate storage area, a two-card system can be used with one card circulating between the user and storage area and the other between the storage area and the producer
The Number of Kanban CardsThe Number of Kanban Cardsor Containersor Containers
Need to know the lead time needed to produce a container of partsNeed to know the amount of safety
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stock needed
Number of kanbans(containers)
Demand during Safetylead time + stockSize of container=
Number of Kanbans ExampleNumber of Kanbans ExampleDaily demand = 500 cakesProduction lead time = 2 days(Wait time + Material handling time + Processing time)
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g )Safety stock = 1/2 dayContainer size = 250 cakes
Demand during lead time = 2 days x 500 cakes = 1,000
Number of kanbans = = 51,000 + 250
250
Advantages of KanbanAdvantages of Kanban
Allow only limited amount of faulty or delayed materialProblems are immediately evident
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Puts downward pressure on bad aspects of inventoryStandardized containers reduce weight, disposal costs, wasted space, and labor
JIT QualityJIT Quality
Strong relationshipJIT cuts the cost of obtaining good quality because JIT exposes poor quality
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qualityBecause lead times are shorter, quality problems are exposed soonerBetter quality means fewer buffers and allows simpler JIT systems to be used
JIT Quality TacticsJIT Quality Tactics
Use statistical process controlEmpower employeesBuild fail-safe methods (poka-
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Build fail safe methods (pokayoke, checklists, etc.)Expose poor quality with small lot JITProvide immediate feedback
Table 16.4
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Toyota Production SystemToyota Production SystemContinuous improvement
Build an organizational culture and value system that stresses improvement of all processes, kaizenPart of everyone’s job
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y jRespect for people
People are treated as knowledge workersEngage mental and physical capabilitiesEmpower employees
Toyota Production SystemToyota Production System
Standard work practiceWork shall be completely specified as to content, sequence, timing, and outcomeInternal and external customer-supplier
i di
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connection are directProduct and service flows must be simple and directAny improvement must be made in accordance with the scientific method at the lowest possible level of the organization
Lean OperationsLean Operations
Different from JIT in that it is externally focused on the customerStarts with understanding what the
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Starts with understanding what the customer wantsOptimize the entire process from the customer’s perspective
Building a Lean OrganizationBuilding a Lean Organization
Transitioning to a lean system can be difficultLean systems tend to have the following attributes
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following attributesUse JIT techniquesBuild systems that help employees produce perfect partsReduce space requirements
Building a Lean OrganizationBuilding a Lean Organization
Develop partnerships with suppliersEducate suppliersEliminate all but value-added acti ities
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activitiesDevelop employeesMake jobs challengingBuild worker flexibility
Lean Operations in ServicesLean Operations in Services
The JIT techniques used in manufacturing are used in services
Suppliers
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LayoutsInventoryScheduling
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