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JIT/Lean Production
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 2
Chapter Objectives
Be able to: Describe what JIT/Lean is and differentiate between the Lean
philosophy and kanban systems. Discuss the Lean perspective on waste and describe the eight
major forms of waste, ormuda, in an organization.
Discuss the Lean perspective on inventory and describe how akanban system helps control inventory levels and synchronizethe flow of goods and materials across a supply chain.
Describe how the concepts of the Lean supply chain and LeanSix Sigma represent natural extensions of the Lean philosophy.
Explain how a two-card kanban system works. Calculate the number of kanban cards needed in a simple
production environment. Show how MRP and kanban can be linked together and illustrate
the process using a numerical example.
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 3
Some Statistics from
1986 ...
Framingham (GM)
40.7 hours
130 defects
2 weeks
Toyota Takaoka
16 hours
45 defects
2 hours
A comparison of:1) assembly hours
2) defects per 100 cars
3) average inventory levels
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 4
Post World War II
Growing and rebuilding world economy
Demand > Supply
US Manufacturing: Higher volumes
Capital substitution
Breakthrough improvements The production problem has been solved
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 5
View from Japan
Very little capital
War-ravaged workforce
Little space Poor or no raw materials
Lower demand levels
Little access to latest technologies
U.S. methods would not work
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 6
Japanese Approach to
Operations
Maximize use of people
Simplify first, add technology second
Gradual, but continuous improvement
Minimize waste (including poor quality)
Led to the development of the
approach known as Just-in-Time
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Just-in-Time
Repetitive production system
in which processing and movement ofmaterials and goods occurjust as they
are needed
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 8
Pre-JIT: Traditional Mass
Production
Big lot sizesLots of inventoryPUSH material to next
stage
Lower
per unitcost
Big purchase shipments
Big pushes of finished goods
to warehouses or customers
???
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 9
Post-JIT: Lean Production
Tighter coordination along the supply chainGoods are pulled along
only make and ship what is neededSmaller lots
Faster setupsLess inventory, storage spacePULL material to next stage
Minimalor no
inventoryholding
cost
Smaller shipments
Goods are pulled out ofplant by customer demand
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 10
JIT Goals(throughout the supply chain)
Eliminate disruptions
Make the system flexible
Reduce setup times and lead times
Minimize inventory
Elim inate waste
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 11
Waste
Definition:
Wasteis anything other than the minimum
amount of equipment, materials, parts,
space, and workers time, which are
absolutely essential to add value to the
product.
Shoichiro Toyoda
President, Toyota
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 12
Forms of Waste:(muda in Japanese)
Overproduction
Waiting
Unnecessary movement Wrong process
Unnecessary inventory
Excess motion Defects
Underutilization of employees
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 13
Inventory as a Waste
Requires more storage space
Requires tracking and counting
Increases movement activity Hides yield, scrap, and rework
problems
Increases risk of loss from theft,damage, obsolescence
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 14
Lean Perspective
Process of reducing inventory leads to reduction of
the other wastes and exposes problems in
order of severity (water and rocks analogy)
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 15
Lean Six Sigma & Supply
Chain in Lean Environment
Six Sigma methodology combines wellwith Lean goals, helps address the rocksas they become exposed when reducing
inventory. Supply chain choices affect many of the
wastes. Supplier variances such as leadtime and quality create need for safetystock a direction opposite reduction ofinventory goals
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 16
Examples of Eliminating
Wastes
Big Bobs Automotive Axles:
Wheels boughtfrom outsidesupplier
Axles made andassembled in house
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 17
BEFORE: Shipping in
Wheels
Bobs
Wheels
Warehouse
Truck Cost: $500 (from Peoria)
Maximum load of wheels: 10,000
Weekly demand of wheels: 500
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 19
BEFORE: Making Axles(Different lengths)
Manufacturing Minimum Batch1,000 Axles
Tool Bin Final Assembly
Push toFinalAssembly
Axle Maker
Setup: 8 hours
Setup cost: $800
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 20
BEFORE: Making Axles(Oops!)
Manufacturing Minimum Batch1,000 Axles
Tool Bin Final Assembly
Push to
FinalAssembly
Axle Maker
Setup: 8 hoursSetup cost: $800
Defect: Axles are not true!
What is the outcome
of detect ing defect ive
axles at the end?
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 21
After: Making Axles I(Different lengths)
Manufacturing
Final Assembly
Pull toFinalAssembly
Axle Maker
Setup: 15 min.
Setup cost: $25
Tools next to Maker
Nominimumbatch size
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 23
Building Blocks of JIT
Product design
Standard parts
Modular design
Quality
Process design
Personnel and organizational elements
Manufacturing planning and control
MPC
Staff ORG
Process Design
Product Design
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 24
Process Design
Focused Factories
Group Technology
Simplified layouts with little storagespace
Jidoka andPoka-Yoke
Minimum setups
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 25
Multi-Task Work Cells
Seats Assembly Packing
Legs
Backposts
Slats
500 chairs per hour
Plann ing takes p lace for o ne area:
What does the BOM look l ike? What about lead t imes?
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 26
Personnel and Organizational
Elements
Workers as assets
Cross-trained workers
Greater responsibility at lower levels
Leaders as facilitators, not order givers
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 27
Top Management
Long-term planningProduct line decisions
Expansion issues
Middle management
Planning, purchasinghiring, and capital decisionsMoni tor costs
Supervisors
Control activities in specific areasMonitor qual i ty, del ivery, etc.
Direct Labor
Perform predetermined tasks
Technical Staff
Work methods, QCProcess improvements,
MIS
Planning Info
Control Info
Detailed Methods,
Schedules
Classic Organizational View
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 28
JIT Organization View
Top Management
Long-term planningProduct line decisions
Expansion issues
Middle management
Planning, with less purchasing,hiring, and capital decisionsMonitor costs and assist labor
Direct Labor (self-supervising)
Task performance and schedule attainmentControl specific areas of activity
Monitor quality, delivery, etc.Participate in hiring and continuous
improvement
Technical Staff
Training and TechnicalSupport
Planning Info
Control Info
TechnicalIdeas
Pl i d C t l
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 29
Planning and Control
Systems
Small JIT
Stable and level schedules
Mixed Model Scheduling
Pull versus Push
Kanban Systems
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 30
Kanban
Uses simple visual signals to control
productionpull processing
Examples: empty slot in hamburger chute
empty space on floor
kanban card
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 31
Kanban Example
Workcenter B uses parts produced by Workcenter A
How can we control the flow of materials so that B alwayshas parts and A doesnt overproduce?
Workcenter A Workcenter B
K b d Si l t
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 32
When a container is opened by Workcenter B, its kanban card isremoved and sent back to Workcenter A.This is a signal to Workcenter A to produce another box of parts.
Kanban card: Signal to
produce
Workcenter A Workcenter B
Kanban Card
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 33
Empty Box: Signal to pull
Empty box sent back. Signal to pull another full box intoWorkcenter B.Question: How many kanban cards here? Why?
Workcenter A Workcenter B
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 34
How Many Kanbans?
y = number of kanban cardsD = demand per unit of time
T = lead timeC = container capacityX = safety factor
C
x)DT(1y
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 35
Example
Hourly demand = 300 units
Lead time = 3 hours
Each container holds 300 units
Assuming no variation in lead-time or
demand (x = 0):
y = (300 3) / 300 = 3 kanban cards
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 36
Example: 8:00 AM
11:00 AM toNoon
10:00 to 11:00AM
9:00 to 10:00AM
8:00 to 9:00AM
Process B:300 per hour
Process A:300 per hour
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 37
One Hour Later at 9:00 AM
Noon to 1:00PM
11:00 AM toNoon
10:00 to 11:00AM
9:00 to 10:00AM
Process B:300 per hour
Process A:300 per hour
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 38
Extended Out Further . . .
B
A
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 39
Note:
For a kanban system to work, we NEED
CONSISTENT demand across the work
centers
Example - think McDonalds
How do we ensure this?
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 40
Mixed Model Sequencing
Largest integer that divides evenly into dailyrequirement is 10:
A: 40 / 10 = 4
B: 40 / 10 = 4C: 10 / 10 = 1
Mixed model sequence: A-B-A-B-A-B-A-B-C
Product MonthlyDemand
DailyRequirement
A 800 40
B 800 40
C 200 10
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2008 Pearson Prentice Hall --- Introduction to Operations and SupplyChain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 16, Slide 41
Mini-Quiz: Mixed Model Scheduling
and Establishing Kanbans
What would sequence be if NO
minimum job size?
Product Monthly
Demand
Daily
Requirement
D 1200 60
E 400 20
F 600 30
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2008 Pearson Prentice Hall --- Introduction to Operations and Supply
Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 42
Sequence with Minimum of 5:
60 / 4 = 15 Ds20 / 4 = 5 Es
30 / 4 = 7.5Fs
5D - 7F - 5D - 5D - 5E - 5D - 8F - 5D - 5D - 5E
Sequence of 55 (27.52)
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2008 Pearson Prentice Hall --- Introduction to Operations and Supply
Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 43
Kanbans Required: Product D
Hourly Requirements = 60/8 = 7.5Lead time = 2 hoursContainer size = 2 unitsSafety factor = 10%
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2008 Pearson Prentice Hall --- Introduction to Operations and Supply
Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 44
Kanban Cards Required:
Impl icat ion s? Impact of container size?
cardsorcards
containerperunits
t imeleadhourhourunitsCards
9,25.8
)2(
1.1)2()/5.7(
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2008 Pearson Prentice Hall --- Introduction to Operations and Supply
Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 45
Implementing JIT
EliminateSurprises
IncreaseFlexibility
Simplify
Drive OutWaste
What aboutautomation?
Putting the Squeeze on
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2008 Pearson Prentice Hall --- Introduction to Operations and Supply
Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 16, Slide 46
Putting the Squeeze on
Resources . . .
Squeeze!
Simplify
Eliminate Uncertainty
Increase Flexibility
NO
PAIN? YES
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Case Study in JIT/LeanProduction
A Bumpy Road for Toyota