Just In TimeManufacturing System

Lecture-3Dr. Biswajit Sarkar

Dept. of Industrial & Management EngineeringHanyang University

South Korea

Books Reference

• 1. Production/ Operations Management by William J. Stevenson, IRWIN publisher, ISBN 0-256-13900-8

No Mistake No Error

All are well organized.

Contents

• 1. Introduction

• 2. JIT Goals

• 3. Converting to a JIT system

• 4. Obstacles to convert in JIT system

• 5. Problems

• 6. Assignment

1. Introduction

• The term just-in-time (JIT) is used to refer to aproduction system in which both the movement ofgoods during production and deliveries fromsuppliers are carefully timed that at each step of theprocess the next (usually small) batch arrives forprocessing just the preceding batch is completed,thus, the name just-in-time. The result is a systemwith no idle items waiting to be processed, and noidle workers or equipment waiting for ideal toprocess.

1.1 JIT and MRP• JIT involves production planning and control which makes JIT one of

the two basic approaches to manufacturing planning and control; theother is MRP. JIT sometimes viewed as a system for repetitiveproduction operations while MRP is concerned about a system forbatch production.

• However, they are sometimes applied to similar positions, but thetwo systems functions are somewhat different. MRP systems arefairly complex requiring extensive and detailed shop floor controls.JIT systems, on the other hand, are much simpler, involving onlyminimal shop floor controls.

• MRP relies on computer-based component-scheduling system totrigger out production and deliveries whereas JIT relies on visual oraudible signals to trigger production and deliveries. The approachesare compared later in the chapter.

2. JIT Goals

• The ultimate goal of JIT is a balanced system; i.e., one thatachieves a smooth, rapid flow of materials through thesystem. The idea is to make the process time as short aspossible by using resources in the best possible way. Thedegree to which the overall goal achieved depends on howwell certain supporting goals are achieved.

Those goals are

• Eliminate disruptions

• Make the system flexible

• Reduce setup times and lead times

• Minimize inventory

• Eliminate waste

2.2.1 Disruption

• Disruptions have a negative influence on the systemby upsetting the smooth flow of products throughthe system, and they should be eliminated.

• Disruptions are caused by a variety of factors as

– poor quality

– equipment breakdowns

– changes to the schedule

– late deliveries.

2.2.2 FMS system

• A flexible manufacturing system is one that is robustenough to maintain a mix of products, often on adaily basis, and to handle changes in the level ofoutput while still maintaining balance andthroughput speed.

2.2.3. Setup times and lead times

• Setup times and delivery lead times prolong aprocess without adding any value to theproduct. Moreover, long setup times and longlead times negatively impact the flexibilityof the system. Hence, reduction of setup andlead times is important, and is one objectiveof continuous improvement.

2.2.4. Inventory

• Inventory is an idle resource, taking up space andadding cost to the system. It should beminimized or even eliminated wherever possible.

2.2.5. Waste• Waste represents unproductive resources;

eliminating waste enhance production.

• In JIT philosophy, wastes include

– Over-production

– Waiting time

– Unnecessary transporting

– Inventory storage

– Scrap

– Inefficient work methods

– Product defects

2.3. Building blocks • The design and operation of a JIT system provide

the foundation for accomplishing the goals. The foundation is made up of four building blocks:

– Product design

– Process design

– Personnel/organizational elements

– Manufacturing planning and control

• Speed and simplicity are two common threads that run through these building blocks.

2.3.1. Product design

• Three elements of product design are key to JIT systems:

• 1. Standard parts

• 2. Modular design

• 3. Quality

2.3.1.1. Standard parts

• The use of standard parts means that workers havefewer parts to deal with, and training times, and costsare reduced.

• Purchasing, handling, and checking quality are moreroutine and lend themselves to continuousimprovement. Another important benefit is the abilityto use standard processing.

2.3.1.2. Modular design • Modular design is an extension of standard parts.

Modules are groups of parts treated, a single unit.This greatly reduces the purchasing, handling,training, and so on.

• Standardization has simplified the bill of materials.

• Disadvantages of standardization are less productvariety and resistance to change standard design.

• Using a tactic that is sometimes referred to as delayeddifferentiation, a decision concerning which productswill be produced can be delayed while the standardportions are produced.

2.3.1.3. Quality

• The small lot sizes and the absence of buffer stock result in lowin-process inventories, production must be stopped.

• Obviously, shutting down an entire process is costly and cutsinto planned output levels, so it becomes imperative to try toavoid shutdowns, and to quickly resolve problems when theydo appear JIT systems use a three-part approach to quality.

• One part is to design quality into the product and theproduction process. High quality levels can occur because JITsystems produce standardized products that lead tostandardized job methods, workers who are very familiar withtheir jobs, and the use of standardized equipment.

• The cost of product design quality can be spread over manyunits, yielding a low cost per unit. Thus, product design andprocess design must go perfectly.

2.3.2. Process design

• There are seven aspects which are related with process design

– Small lot sizes

– Setup time reduction

– Manufacturing cells

– Limited work in process

– Quality improvement

– Product flexibility

– Little inventory storage

2.3.2.1. Small lot sizes

• Small lot sizes in both the production process and deliveriesfrom suppliers field a number of benefits that enable JITsystems to operate effectively.

• With small lots moving through the system, in-processinventory is considerably less than it is with large lots. Thisreduces carrying costs, space requirements, and disorder inthe workplace.

• Inspection and rework costs are less when problems withquality occur, because there are fewer items in a lot toinspect and rework.

2.3.2.1. Small lot sizes• Small lots also permit greater flexibility in scheduling. Repetitive

systems typically produce a variety of products.

• In traditional systems, this usually means long production runs ofeach product, one after the other. Although this spreads the setupcost for a run over many items, it also results in long cycles over theentire range of products.

• In the JIT philosophy, the ideal lot size is one unit, a quantity that maynot always be realistic owing to practical considerations requiringminimum lot sizes.

• The goal is still to reduce the lot size as much as possible becausesmall lot sizes have numerous benefits.

2.3.2.2. Setup time reduction

• Setup tools, equipment and setup procedures must besimple and standardized. Multi-purpose equipment orattachments can help to reduce setup time. For instance,machine with multiple axles that can easily be rotated intoplace for different job requirements can drastically reducejob changeover time.

• It is possible to reduce setup cost and time by capitalizingon similarities in recurring operators. For instance, partsthat are similar in shape, materials, and so on. It mayrequire very similar setups. Processing them in a sequenceon same equipment, it can reduce the need of completelychange a setup; only minor adjustment may be necessary.

2.3.2.3. Manufacturing cells

• One characteristic of many JIT systems is multiplemanufacturing cells. The cells contain severalmachines and tools needed to process families ofparts having similar processing requirements. Thecells are highly specialized and efficient productioncenters.

• Among the important benefits of manufacturingcells are reduced changeover times, highutilization of equipment, and ease of cross-trainingoperators.

2.3.2.4. Limited work in process

• The combination of high cell efficiency and small lot sizes results in very little work-in-process inventory.

2.3.2.5. Quality improvement

• The occurrence of quality defects during the process can disrupt theorderly flow of work. Consequently, problem solving is moreimportant when defects occur.

• There is never-ending mission for quality improvement, which oftenfocuses on finding and eliminating the causes of problems so they donot continually crop up.

• JIT systems sometimes minimize defects through the use ofautonomation. This refers to the automatic detection of defectsduring production. It can be used with machines or manualoperations. It consists of two mechanisms: one for detecting defectswhen they occur and another for stopping.

2.3.2.6. Product flexibility

• Reduce downtime due to changeovers by reducingchangeover time.

• Use preventive maintenance on key equipment toreduce breakdowns and downtime.

• Cross-train workers can help when bottlenecks occur orother workers are absent.

• Trained workers can handle equipment adjustmentsand minor repairs.

• Use off-line buffers. Store infrequently used safetystock away from the production area to decreasecongestion and to avoid continually turning it over.

• Reserve capacity for important customers.

2.3.2.7. Little inventory storage

Figure 1 Large rocks are hidden by a high waterFigure 2 Lower water level reveals rocksFigure 3 The rocks are removed, the water level (inventory) can be lowered

2.3.3. Personnel /Organizational Elements

• There are five important issues as

– workers as assets

– Cross-trained workers

– Continuous improvement

– Cost accounting

– leadership/ project management

2.3.3.1. Workers as assets

• A fundamental principle of the JIT philosophy is thatworkers are assets.

• Well-trained and motivated workers are the heartof a JIT system.

• They are given mere authority to make decisionsthan their counterparts in more traditional systems,but they are also expected to do more.

2.3.3.2. Cross-trained workers

• Workers are cross-trained to perform several partsof a process and operate a variety of machines.

• This adds to system flexibility because workers areable to help one another when bottlenecks occur orwhen a co-worker is absent.

2.3.3.3. Continuous improvement

• Workers in a JIT system have greater responsibilityfor quality than workers in traditional systems.

• They are expected to be involved in problem solvingand continuous improvement.

• JIT workers typically receive extensive training instatistical process control, quality improvement,and problem solving.

• Problem solving is a cornerstone of any J IT system.Of interest are problems that interrupt, or have thepotential to interrupt, the smooth flow of workthrough the system.

2.3.3.4. Cost accounting

• A feature of some JIT systems is the method of allocating overhead.

• Traditional accounting methods sometimes change overhead allocation becausethey allocate it on the basis of direct labor hours. However, that approach does notalways accurately reflect the consumption of overhead by different jobs.

• The number of direct labor hours in some industries has declined significantly overthe years and now frequently accounts for a relatively small portion of the totalcost. Conversely, other costs now represent a major portion of the total cost.Therefore, labor-intensive jobs may be assigned a disproportionate share ofoverhead, one that does not truly reflect actual costs. That in turn can causemanagers to make poor decisions.

• One alternative method of allocating overhead is activity-based costing. Activity-based costing first identifies traceable costs and then assigns those costs to varioustypes of activities such as machine setups, inspection, machine hours, direct laborhours, and movement of materials. Specific jobs are then assigned overhead basedon the percentage of activities they consume.

2.3.3.5. leadership or project management

• A feature of JIT systems relates to leadership. Managersare expected to be leaders and facilitators, not ordergivers.

• Two-way communication between workers andmanagers is encouraged.

• Project managers are often given full authority over allphases of a project. They remain with the project frombeginning to end; in the more traditional forms ofproject management, the project manager often has torely on the cooperation of other managers toaccomplish project goals.

2.3.4. Manufacturing Planning and Control

• There are five issues related with it

– Level loading

– Pull systems

– Visual systems

– Close vendor relationships

– Reduced transaction processing

2.3.4.1. Level loading

• JIT systems place a strong emphasis on achievingstable, level daily mix schedules.

• Toward the end, the master production schedule isdeveloped to provide level capacity loading. Thatmay entail a rate-based production scheduleinstead of the more familiar quantity-basedschedule.

• Some adjustments may be needed in day-to-dayschedules to achieve level capacity requirements.

2.3.4.2. Pull systems

• The terms push and pull are used to describe two different systemsfor manufacturing work through a production process. In a pushsystem, when work is finished at a workstation, the output is pushedto the next station. In case of the final operation, it is pushed on tofinal inventory.

• In a pull system, control of moving the work rests with the followingoperation; each workstation pulls the output from the precedingstation as it is needed; output of the final operation is pulled bycustomer demand or the master schedule.

• Thus, in a pull system, work is moved in response to demand fromthe next stage in the process, whereas in a push system, work ispushed on as it is completed, without regard to the next station'sreadiness for the work.

2.3.4.3.Visual systems

• Another way to describe the pull system is that workflow is dictated by "next-step demand." Such demandcan be communicated in a variety of ways, including ashout or a wave, but by far the most commonly useddevice is the kanban card.

• Kanban is a Japanese word meaning "signal" or "visiblerecord." When a worker needs materials or work fromthe preceding station, he or she uses a kanban card.

• Kanban card is the authorization to move or work onparts. In kanban systems, no part or lot can be movedor worked on without one of these cards.

2.3.4.3.Visual systems

• The ideal number of kanban cards can be computed using the formula

N=DT(1+X)/C

• N=Total number of containers

• D=Planned usage rate of using work center

• T=Average waiting time for replenishment of parts plus average production time for a container of parts

• X=Policy variable set by management that reflects possible inefficiency in the system

• C=Capacity of a standard container

Problem

• Usage at a work center is 300 parts per day, and astandard container holds 25 parts. It takes an averageof 0.12 day for a container to complete a circuit fromthe time a kanban card is received until the container isreturned empty. Compute the number of kanban cardsneeded if X = 0.20

• Solution:

• D=300 parts per day, T=0.12 day, C=25 parts percontainer, X=0.20.

• N=300*0.12*(1+0.20)/25=1.728

2.3.4.4.Close vendor relationships

• JIT systems typically have close relationships with vendors,who are expected to provide frequent small deliveries ofhigh-quality goods.

• Traditionally buyers have assumed the role of monitoringthe quality of purchased goods, inspecting shipments forquality and quantity, and returning poor-quality goods tothe vendor for rework.

• The ultimate goal of the buyer is to be able to certify avendor as a producer of high-quality goods. The implicationof certification is that a vendor can be relied on to deliverhigh-quality good, without the need for buyer inspection.

2.3.4.5. Reduced transaction processing

• The transactions can be classified as logistical, balancing, quality, or changetransactions.

• Logistical transactions include ordering, execution, and confirmation of materialstransported from one location to another. Related costs cover shipping andreceiving personnel, expediting orders, data entry, and data processing.

• Balancing transactions include forecasting, production planning, productioncontrol, procurement, scheduling, and order processing. Associated costs relate tothe personnel involved in these and supporting activities.

• Quality transactions include determining and communicating specifications,monitoring. recording, and follow-up activities. Costs relate to appraisal,prevention, internal failure and external failure.

• Change transactions primarily involve engineering changes and the ensuingchanges generated in specifications, bills of material, scheduling, processinginstructions, and on Engineering changes are among the most costly of alltransactions.

• JIT systems cut transaction costs by reducing the number and frequency oftransaction.

3. CONVERTING TO A JIT SYSTEM• Planning a Successful Conversion

– Make sure top management is committed to the conversionand that they know what will be required.

– Make sure that management is involved in the process andknows what it will cost, how long it will take to complete theconversion, and what results can be expected.

– Study the operations carefully; decide which parts will needthe most effort to convert.

– Obtain the support and cooperation of workers. Preparetraining programs that include sessions in setups,maintenance of equipment, cross-training for multiple tasks,cooperation, and problem solving.

– Make sure workers are fully informed about what JIT is andwhy it is desirable.

– Reassure workers that their jobs are secure.

3. CONVERTING TO A JIT SYSTEM• Planning a Successful Conversion

– Try to reduce setup times during maintaining the current system.

– Gradually convert operations, beginning at the end of the processand working backward. At each stage, make sure the conversionhas been relatively successful before moving on.

– Do not reduce inventories until problems have been resolved.

– Convert suppliers to JIT and be prepared to work closely withthem. Start by narrowing the list of vendors, identifying those whoare willing to embrace the JIT philosophy.

– Give preference to vendors who have long-term track records ofreliability. Use vendors located nearby as quick response time isimportant.

– Insist on high standards of quality and obedience to strict deliveryschedules.

4. Obstacles to Conversion in JIT

• There are numerous obstacles to conversion. The mostcrucial are:

– Management may not be totally committed to devotethe necessary resources to conversion. This is perhapsthe most serious weakness because the conversion isprobably hopeless without total commitment.

– Workers or management may not display a cooperativespirit. The system is predicated on cooperation.Managers may resist because JIT shifts some of theresponsibility from management to workers and givesworkers more control over the work. Workers may resistbecause of the increased responsibility and stress.

4. Obstacles to Conversion in JIT

– Suppliers may resist for several reasons:

• Buyers may not be willing to commit the resourcesnecessary to help them adapt to the JIT systems.

• They may be uneasy about long-term commitmentsto a buyer.

• Frequent, small deliveries buy be difficult, especially ifthe supplier has other buyers who use traditionalsystems.

• The burden of quality control will shift to the supplier.

• Frequent engineering changes resulting fromcontinuing JIT improvements by the buyer.

Assignment 3Comparison of JIT and traditional

manufacturing philosophies