JIT and Pull ProductionJIT and Pull Production

““We cannot solve today’s We cannot solve today’s problems with the problems with the thinking that caused thinking that caused them.”them.”

--Einstein--Einstein

Organizational Example?Organizational Example?

Toyota Production SystemToyota Production SystemVery Systemic…more than a production system, Very Systemic…more than a production system,

an approach to organizational management.an approach to organizational management.Pull production.Pull production.Paced at the rate necessary to meet customer Paced at the rate necessary to meet customer

demand.demand.Customer-facing processes set pace for Customer-facing processes set pace for

production.production.

Pull ProductionPull Production

Source: Toyota Motor Corporation—OM Consulting Div.

Eliminate WasteEliminate Waste

Waste ofCorrectionWaste of

Correction

Waste ofOver-

Production

Waste ofOver-

Production

Waste ofProcessingWaste of

Processing

Waste ofConveyance

Waste ofConveyance

Waste ofInventoryWaste ofInventory

Waste ofMotion

Waste ofMotion

Waste ofWaiting

Waste ofWaiting

Types of

Waste

Types of

Waste

Source: Toyota Motor Corporation—OM Consulting Div.

Beer RulesBeer Rules

R etailer(Goal=12 C ase

Inventory)

Brewery

Distributor

S tartB rew ing

Tw o W eeks

Four W eeks

Four W eeks

Cu

sto

mer

De

man

d

W eek (32 W eeks)

4 Cases — > 8 Cases

(Goal=12 C aseInventory)

(Goal=12 C aseInventory)

Brewery Inventory

Distributor Inventory

Retailer Inventory

Cumulative Beer Sold

Brewing Schedule

Transit from Brewery

Transit from Distributor

Distributor Ordering Rule

Retailer Ordering Rule

Customer Demand

Sales

Brewing

To Brewing

Deliver to Retailer

Deliver to Distributor

Deliver to Brew Stock

Selected Results

Brew Inv Out

Dist Inv Out

The Beer Game, After Senge, 1990.Run 1, Default Rules (From Text).

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Brewery

Retailer

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Default Rules

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Distribute Information

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RetailerDistributor

Reduce Inventory

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Reduce Delay (Transit Time)

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BreweryRetailer

Distributor

Reduce Delay, Reduce Inventory

Start With the PurposeStart With the Purpose

Focus on value.Focus on value.Provides a focus for alignment.Provides a focus for alignment.Extend it into the future…create a vision.Extend it into the future…create a vision.

Value of a shared vision.Value of a shared vision.

Create a cybernetic system.Create a cybernetic system.

SCM…Horizontal & Vertical SCM…Horizontal & Vertical IntegrationIntegration

Horizontal integration.Horizontal integration.Multiple divisions…multiple organizations.Multiple divisions…multiple organizations.

Seek synergy from buy-in.Seek synergy from buy-in.

Vertical Integration.Vertical Integration.Pull.Pull.

Seek alignment to customer requirements.Seek alignment to customer requirements.

InformationInformation

Key to integration.Key to integration.Timely.Timely.Accurate.Accurate.MeaningfulMeaningfulBest when united with flow of work.Best when united with flow of work.

Kanban.Kanban.

Technology…RulesTechnology…Rules

If it is mindful of and promotes/enhances If it is mindful of and promotes/enhances critical relationships…seriously consider it!critical relationships…seriously consider it!

If it is imposed upon or is destructive to If it is imposed upon or is destructive to critical relationships…reconsider it!critical relationships…reconsider it!

It’s about relationships, the foundation of It’s about relationships, the foundation of value creation!!value creation!!

Role of the CustomerRole of the Customer

Should focus on the relationship with the Should focus on the relationship with the ultimate customer.ultimate customer.

A chain of customers.A chain of customers.Who are the customers of purchasing; of Who are the customers of purchasing; of

SCM efforts?SCM efforts?

StrategyStrategy

Enhance relationship with the ultimate Enhance relationship with the ultimate customer.customer.

Create demand upstream by educating Create demand upstream by educating your suppliers, and their suppliers.your suppliers, and their suppliers.

Information and honesty are the currency Information and honesty are the currency of effective relationships.of effective relationships.

JIT foundations provide basis for JIT foundations provide basis for identifying strategic disconnects.identifying strategic disconnects.

AdvantagesAdvantages

JIT

Rel

atio

nshi

psJI

T R

elat

ions

hips

““You Don’t Have to Do This. You Don’t Have to Do This. Survival is Not Compulsory”Survival is Not Compulsory”

--W. Edwards Deming--W. Edwards Deming

Questions and Thoughts?Questions and Thoughts?