JIT & Lean Manufacturing - ADDVALUE - Nilesh Arora

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“JIT & Lean Manufacturing”

Adding Value In Totality !!

Session Topics

• What is JIT?• Benefits of JIT• Value Added Management• Push vs. Pull• Buffered vs. Lean Manufacturing• Performance Measures

• Management philosophy of continuous and forced problem solving

• Supplies and components are ‘pulled’ through system to arrive where they are needed when they are needed.

What is Just-in-Time?

• Attacks waste– Anything not adding value to the product

• Customer’s perspective• Exposes problems and bottlenecks

– Caused by variability• Deviation from optimum

• Achieves streamlined production– By reducing inventory

What Does Just-in-Time Do?

Waste is ‘anything other than the minimum amount of equipment, materials, parts, space, and worker’s time, which are absolutely essential to add value to the product.’

— Shoichiro Toyoda President, Toyota

What is Waste

Just-In-Time Manufacturing

JIT seeks to reduce waste. Waste is viewed as a symptom of some unsolved problem. Types of waste include:– Overproduction– Waiting Time– Movement– Inventory – Product Defects– Process Waste

Just-In-Time Manufacturing

JIT is used for many activities including:• Inventory Reduction• Quality Improvement• Lead Time Reduction• Continuous Improvement (Kaizen)• Preventive Maintenance

Major Objective of JIT

Identify the causes of system variance (waste) and eliminate or control these causes. By attacking the causes of variance, JIT can reduce the dependency of the manufacturing process on wasteful buffers like excessive inventory, long lead times, and idle capacity.

Variability Occurs Because

• Employees, machines, and suppliers produce units that do not conform to standards, are late, or are not the proper quantity

• Engineering drawings or specifications are inaccurate

• Production personnel try to produce before drawings or specifications are complete

• Customer demands are unknown

Benefits of JIT

• Shorter Lead Times (Faster Response)• Lower Defect Rates• Reduced Inventories• Enhanced Flexibility

Advantages Of Faster Response Times

– Increased Productivity– Increased Quality– Reduced Risk– Increased Profitability– Increased Market Share– Increased Product Variety

Value Added Management

A Strategy for Time-Based Competition

Focus on:Reducing Lead TimesProcess Flow AnalysisEliminating or Reduce Non-Value Adding ActivitiesWIP StorageMaterial MovementInspectionReworkUnscheduled MaintenanceChangeovers

Value Added Management

Value-Added Activity TimeThe time required to perform those activities essential to the production of a product, or the delivery of a service.

Value Added Management

Non Value-Adding ActivitiesAny activity that does not add value to the product being built, or the service being offered. Non value-adding activities are waste.

Value Added Management

Examples of Non-Value Added Activities– Administrative Processes & Paperwork– Process Delays– Material Movement– Material Storage– Inspection– Rework– Unscheduled Maintenance– Machine Changeovers

Value Added Management

Cycle Time ImprovementsImprovements to cycle times are achieved by reducing or eliminating non value-adding activities

Value Added Management

Identifying Non Value-Adding ActivitiesThe key to identifying non value-adding activities is process flow analysis.

Value Added Management

Value-Added Time AnalysisWorksheet

ProcessActivity

TotalTime

ValueAdded Time

Non ValueAdded Time

Non Value-Adding ValueAdding

95% 5%

Total Mfg. Lead Time

Traditional Response

Non Value-Adding ValueAdding

98%2%

Value-Adding ResponseNon

ValueAdding

ValueAdding

50% 50%

Lead Time ReducedNon Value-Adding Time Reduced

VALUE ADDED MANAGEMENT

Value Added Ratio

V.A.R. = Value Added Time Total Cycle Time

Improved By:• Eliminating or Reducing Non Value-Adding Time WIP Storage/FGI Storage Material Movement Rework Unscheduled Maintenance Changeover Time

ANYTHING THAT DOES NOT ADD VALUE FOR THE CUSTOMER

Increase V.A.R. by Reducing Cycle Time

Forces Continuous ProcessFlow Analysis

Drives Quality Improvement

Value Added Management Results

– Oregon Cutting Systems Output Per Hour Up 55% Lead Time from 21 to 1 day

– Abbott Laboratories Production Cost Down 40%

Lead Time Reduced > 80%

– Lockheed Defect Rate Reduced 80% Rework Down

91% Lead Time Down by 95%

– Texas Instruments Lead Time Down 15.8 to 3.7 days

JIT & Inventory

• Why do companies hold inventories?• What are some advantages to holding

inventories?• What are some problems with holding

inventories?

• Traditional: inventory exists in case problems arise• JIT objective: Reduce inventory• JIT requires

– Small lot sizes– Low setup time– Containers for fixed number of parts

• JIT inventory: Minimum inventory to keep system running

Inventory

14

Inventory Hides Problems

Work inprocess queues(banks)

Changeorders

Engineering designredundancies

Vendordelinquencies

Scrap

Designbacklogs

Machine downtime

Decisionbacklogs

Inspectionbacklogs

Paperworkbacklog

Scrap

Work in process inventory level(hides problems)

Unreliable Vendors

Capacity Imbalances

Lowering Inventory Reduces Waste

Scrap

Reducing inventory revealsproblems so they can be solved.

Unreliable Vendors

Capacity Imbalances

WIP

Lowering Inventory Reduces Waste

Scrap

Reducing inventory revealsproblems so they can be solved.

Unreliable Vendors

Capacity Imbalances

WIP

Lowering Inventory Reduces Waste

JIT Inventory Tactics

• Use a pull system to move inventory• Reduce lot size• Reduce setup time• Develop Just-in-Time delivery systems with

suppliers• Deliver directly to point of use• Perform-to-schedule• Use group technology

Customer orders 10

Lot size = 5Lot 1 Lot 2

Lot size = 2Lot 1 Lot 2 Lot 3 Lot 4 Lot 5

Reducing Lot Sizes Increases the Number of Lots

Lot Size

Cost

Holding CostTotal Cost

Setup Cost

Optimal Lot Size

…Which Increases Inventory Costs

SmallerLot Size

Unless Setup Costs are Reduced

Lot Size

Cost

Holding CostTotal Cost

Setup Cost

Original optimal lot size

New optimal lot

size

20

Minimizing Waste: Reducing Setup Times

• What are the consequences of long setup times?

• What are the advantages of short setup times?

Steps to Reduce Setup Time

Separate setup into preparation, and actual setup, doing as much as possible while the machine/process is running

Move material closer and improve material handling

Standardize and improve tooling

Use one-touch system to eliminate adjustments

Training operators and standardizing work procedures

Step 1

Step 2

Step 3

Step 4Step 5

Push versus Pull

• Push system: material is pushed into downstream workstations regardless of whether resources are available

• Pull system: material is pulled to a workstation just as it is needed

Push Scheduling

Moves an order to the next operation or work center in its route immediately on completion of the current activity whether or not that work center can begin processing it.

Traditional Push System

MATERIAL

Inv.

Process Process

Work-In-ProcessStaging Area

Process

Work-In-ProcessStaging Area

FINISHED

GOODS

Inv.

Material Is Moved Down Stream After Processing at Each StageWork-In-Process Inventories Develop

Traditional Efficiency Measures Encourage Overproduction

Push Scheduling Benefits

• Implementation is relatively simple• Eliminates the need to coordinate between

work centers• Keeps a work center busy as long as work

remains in its queue

Push Scheduling Problems

• High WIP Levels• Higher Quality Problems• Hides Processing Problems• Requires dispatching rules to sequence

orders

Pull Scheduling

Orders are processed and transferred in response to signals from downstream work centers

Alternative Pull System

MATERIAL

Inv.

SignalSupplier

Process Process Process

SignalSignalSignal

CUSTOMER

DEMANDFGI

Signal

Pull Systems Move Material In Response To A Signal From a Downstream ProcessMinimal WIP Buildup/Reduced Space RequirementsReduced Material Inventory/ More Frequent Supplier DeliveriesMinimal Finished Goods Inventory Emphasis on Throughput Not Efficiencies

Pull Scheduling Benefits

• Simplifies scheduling—each center builds only what is required when needed

• Orders are driven by real demand thus minimizing inventory accumulation

• Makes problems immediately apparent• Prevents additional load from piling up

extra work at the bottleneck in the event of some problem

Pull Scheduling Problems

• Challenging to implement• Success requires coordination among

related work centers• Requires good planning• Must limit interventions requesting changes

in product mix, quantity, or due dates.

• JIT objective: Reduce movement of people and material

– Movement is waste!

• JIT requires– Work cells for product families– Moveable or changeable machines– Short distances– Little space for inventory– Delivery directly to work areas

Layout

Process Layout Work Cell

SawSaw

LatheLathe

GrinderGrinder

HeatHeatTreatTreat

LatheLathe

Lathe

Lathe SawSaw

HeatHeatTreatTreat

GrinderGrinder

GrinderGrinder

PressPress

PressPress 1

1

2

3

45

2

6

SawSaw

PressPress

Work Cell versus Process Layout

Layout Tactics

• Distance reduction– Build work cells for families of products

• Increased flexibility– Flexible or movable equipment

• Impact on employees– Cross-training; immediate feedback– ‘Poka-yoke’ self-testing functions

• Reduced space and inventory– Design little space for inventory

Just-In-Time Manufacturing

• 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

Just-in-Time

JIT

Technology ManagementStructured FlowsSet-Up ReductionSmall Lot Sizes

People ManagementHousekeepingControl Through VisibilityTotal QualityProblem SolvingEmployee Involvement

Systems ManagementBalanced LinesTPMSupplier PartnershipsPull System

Buffered Manufacturing

Buffered Manufacturing Has Limited Goals:– Acceptable Number Of Defects– Acceptable Inventory Levels– Limited Product Variety– Acceptable Levels Of Waste

Lean Manufacturing

Lean Manufacturing Seeks Perfection– Strives To Reduce Costs– Strives For Zero Defects– Strives To Reduce Inventory– Strives For Greater Product Variety– Strives To Reduce Cycle Times– Seeks To Eliminate Waste– Seeks Continuous Process Improvement

Lean Manufacturing

Key Features Of Lean Manufacturing– Transfers Tasks To Workers Adding

Value– Quickly Uncovers & Solves Problems

• Getting employees involved in product & process improvements– Know job best

• JIT requires– Empowerment– Cross-training– Training support– Few job classifications

© 1995 Corel Corp.

Employee Empowerment

Lean Manufacturing

Basic Tenets of Lean Manufacturing– Produce Only What Is Demanded– Produce At The Market Rate Of Demand– Produce With Perfect Quality– Produce With No Waste– Develop Employees’ Productive Potential

Traditional Performance Measures

Traditional Measures Focus On Outputs. This Leads To– Long Production Runs– Large Inventories– Large Buffers– Long Lead Times– Poorer Quality– Lack Of Responsiveness

Time-Based Performance Measures

Time-Based Measures Track Process Improvements• Value-Added Ratio• Setup Times & Number• Throughput Times• Quality• Delivery Speed & Reliability

New Management Measures

Customer FocusedOn-Time DeliveryDefectsCustomer Satisfaction

Production FocusedThroughputWIPFGILead Time

Process FocusedValue Added RatioChangeover Times

Driversof

CompetitiveMfg.

Measuresare

StableCapable

Improving

New Business Paradigm

Total Quality Leadership - Culture- Customers- Suppliers - Process Improvement

People- Business Planning - Communication - Recognition

Competing Through ManufacturingJust-In-Time - Pull Manufacturing Philosophies

Value-Added ManagementProcess Flow Analysis - Focus on Time

New Performance MeasuresTime-Based - Quality Based - Customer Focused

Homework Assignment

• Estimate the value added ratio for some process in your organization.

• Identify 3 sources of waste in your operation? Is it possible to eliminate the waste?

• What performance measures do you use? Do the measures help or hinder your continuous improvement efforts? Can you suggest better performance measures?

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