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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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