Just-in-Time and Lean Operations

Developments of JIT and Lean Operations

1960’s: Developed as Toyota Production System by Taiichi Ohno and his colleagues

1970’s: U.S. and European auto makers began to apply JIT to improve quality and productivity

1990’s and beyond: Expanded the JIT concept to streamline all types of operations

Definition of JIT

A set of techniques to increase

productivity, improve quality, and

reduce cost of an operations

A management philosophy to promote

elimination of waste and continuous

improvement of productivity

What Could Be the Expected Benefits of JIT?

Expected Benefits of JIT

Reduction in throughput times Reduction in WIP Improvement in quality Improvement in productivity Reduction in resource requirements Improvement in customer satisfaction improvements in return on assets

Main Elements of JIT

Elimination of waste Quality at the source Balanced and flexible work flow Respect for people Continuous improvement (Kaizen) Simplification and visual control Focus on customer needs Partnerships with key suppliers

What is A “Waste?”

Wastes

Anything that exceeds the minimum resources needed for the appropriate value

Toyota’s seven deadly wastes:• Overproduction (excessive production resources)

• Inventory

• Waiting

• Transportation

• Processing

• Motion

• Defective parts

Why is Inventory Reduction Important?

Importance of Inventory Reduction

Inventory costs money - carrying costs, obsolescence costs, and opportunity costs

Inventory covers up problems and bottlenecks.

Inventory reduction forces organization and employees to eliminate sources of problems and work as a team.

Quality at the Source

Jidoka – autonomation (automatic

detection of defects, e.g., Poka-yoke)

Employee empowerment

Statistical process control

Prevention orientation (elimination of root

causes through PDSA cycle)

Balanced and Flexible Work Flow

Yo-i-don (ready, set, go) system Stable production schedule Set-up time reduction Flow-shop and cellular layouts Shojinka (flexible & multi-skilled workforce) Teamwork Total productive maintenance (TPM)

Respect for People

Productivity improvement needs employee support Demonstrate by

• providing cross-training opportunities

• creating a safe and equitable work environment

• encouraging people to achieve their potential by giving them greater responsibility and authority

• promoting teamwork (formal and informal)

• developing partnerships with unions

Continuous Improvement (Kaizen)

Employee suggestion system Process improvement 5S’s

• Seiri - organization

• Seiton - tidiness

• Seiso - purity

• Seiketsu - cleanliness

• Shitsuke - discipline

Simplification and Visual Control

Standard and simple product designs

Andon boards

Kanban pull system

Flag systems

Music as signals

Performance display systems

Focus on Customer Needs

Customer needs determine the “value” of a product or service

Be responsive to customers needs (present and future)

Strive to “delight,” not just “satisfy” customers

Partnerships with Suppliers

Reduce number of suppliers Use long-term contracts Emphasize price, delivery, and services Improve communication Share information Develop local just-in-time delivery Provide technical support to suppliers

JIT Implementation

Top management commitment Steering committee Education program Pilot project planning Employee training Pilot implementation Pilot post mortem Feedback to steering committee Expansion to next project

Advancements in JIT (JIT II)

Backwards Integration of staff and line functions to suppliers (e.g., purchasing)

Requires EDI or web access to materials and logistics systems

On-site supplier representative(s) with transaction processing authority

Goal: link suppliers’ cycle to firm’s cycle to mutually reduce wait and move times

How Can JIT Be Applied to Non-Manufacturing Operations?

JIT for Non-Manufacturing Operations (Lean Operations)

Implement demand-pull operations Eliminate unnecessary activities Standardize process flows Increase process flexibility Reorganize physical layouts Upgrade housekeeping and workplace

organization

JIT for Non-Manufacturing Operations (Lean

Operations)

Develop supplier partnership networks Level work load Organize problem-solving groups Improve quality Develop effective suggestion systems Cross-train employees Promote teamwork

What Are Toyota’s Secrets of Success?

Toyota’s Secrets of Success(Steve Spear, HBR, May 2004)

There is no substitute for direct observation

Proposed changes should always be structured as experiments

Workers and managers should experiment as frequently as possible

Managers should coach, not fix

Suggested Readings

Monden, Yasuhiro (1993). Toyota Production System: An Integrated Approach to Just-In-Time, 3rd edition, Institute of Industrial Engineers.

Womack, James P. and Jones, Daniel T. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation, The Free Press.

Jeffrey K. Liker (2004). The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer, McGraw-Hill.