Just-In-Time and Just-In-Time and Lean ProductionLean Production
JIT In Services
Competition on speed & qualityCompetition on speed & quality Multifunctional department store Multifunctional department store
workersworkers Work cells at fast-food restaurantsWork cells at fast-food restaurants Just-in-time publishing for textbooks - Just-in-time publishing for textbooks -
on demand publishing a growing on demand publishing a growing industryindustry
Construction firms receiving material Construction firms receiving material just as neededjust as needed
Producing only what is needed, when it is Producing only what is needed, when it is neededneeded
A philosophy A philosophy An integrated management systemAn integrated management system JIT’s mandate: JIT’s mandate:
Eliminate all wasteEliminate all waste
What is JIT ?
....
Lean Operations:Best Implementation is Toyota Production System
• TPS is a production management system that aims for the “ideal” through continuous improvement
• Includes, but goes way beyond JIT. Pillars:– Synchronization
• Reduce transfer batch sizes• Level load production• Pull production control systems (vs. push): Kanban• Quality at source• Layout: Cellular operations
– Continuous Improvement (Kaizen): through visibility & empowerment
Toyota’s waste elimination in Operations
1. Overproduction
2. Waiting
3. Inessential handling
4. Non-value adding processing
5. Inventory in excess of immediate needs
6. Inessential motion
7. Correction necessitated by defects
Waste in Operations
Waste in Operations
Waste in Operations
Flexible Resources
Multifunctional workersMultifunctional workers General purpose machinesGeneral purpose machines Study operators & improve Study operators & improve
operationsoperations
The Push System
• Pre-planned issues of supplies/merchandise regardless of customer demand criteria
• Creates excess and shortages• not efficient over the long run
The Pull System
Material is pulled through the system when needed
Reversal of traditional push system where material is pushed according to a schedule
Forces cooperationPrevent over and underproduction
Kanban Production Control System
Kanban card indicates standard quantity of production
Derived from two-bin inventory system Kanban maintains discipline of pull production Production kanban authorizes production Withdrawal kanban authorizes movement of
goods
A Sample Kanban
Types of Kanbans
Bin Kanban - when bin is empty replenish Kanban Square
Marked area designed to hold items Signal Kanban
Triangular kanban used to signal production at the previous workstation
Material KanbanUsed to order material in advance of a process
Supplier KanbansRotate between the factory and suppliers
Components of Lead Time
Processing time Reduce number of items or improve
efficiencyMove time
Reduce distances, simplify movements, standardize routings
Waiting time Better scheduling, sufficient capacity
Setup time Generally the biggest bottleneck
Common Techniques for Reducing Setup Time
• Preset Buttons/settings• Quick fasteners• Reduce tool requirements• Locator pins• Guides to prevent misalignment• Standardization• Easier movement
Uniform Production
Results from smoothing production Results from smoothing production requirementsrequirements
Kanban systems can handle +/- 10% Kanban systems can handle +/- 10% demand changesdemand changes
Smooths demand across planning horizonSmooths demand across planning horizon Mixed-model assembly steadies Mixed-model assembly steadies
component productioncomponent production
Quality at the Source
Jidoka is authority to stop production lineJidoka is authority to stop production line Andon lights signal quality problemsAndon lights signal quality problems Undercapacity scheduling allows for Undercapacity scheduling allows for
planning, problem solving & maintenanceplanning, problem solving & maintenance Visual control makes problems visibleVisual control makes problems visible Poka-yoke prevents defects (mistake proof Poka-yoke prevents defects (mistake proof
the system)the system)
Kaizen
Continuous improvementContinuous improvement Requires total employment involvementRequires total employment involvement Essence of JIT is willingness of workers toEssence of JIT is willingness of workers to
Spot quality problemsSpot quality problemsHalt production when necessaryHalt production when necessaryGenerate ideas for improvementGenerate ideas for improvementAnalyze problemsAnalyze problemsPerform different functionsPerform different functions
Goals of JIT
1. Reduced inventory - where?
2. Improved quality3. Lower costs4. Reduced space
requirements5. Shorter lead time6. Increased productivity7. Greater flexibility
8. Better relations with suppliers
9. Simplified scheduling and control activities
10. Increased capacity11. Better use of human
resources12. More product variety13. Continuous Process
Improvement
Use JIT to finely tune an operating system Somewhat different in
USA than Japan JIT is still evolving JIT as an inventory reduction program isn’t
for everyone - JIT as a CPI program is! Some systems need Just-in-
Case inventory
JIT Implementation
Supply Chain Security
“the single biggest threat facing American traders is supply chain security”Website for C-T PAT
Why should you care about SC Security?
• Is it a US problem?• Global Problem• Heathrow Airport delays
Superbowl weekend 2005• RFID – is this the solution?• ISO Guidelines for SC Security• Terrorism Insurance
Supply Chain Security
What’s the cost of 9/11 to the Supply Chain?
Fortune Magazine - $50-80 billion a year
• inefficient supply chains• higher transportation costs• increased inventory
Problem?• Terrorism/Piracy• Obsolescence• Pilferage• Information Breach• Proprietary Data – Camera Phones; Thumb Drives• Cyberspace Security• RFID Data Security• 66% of Sealift Containers arrive at 20 Major Ports• >58 % of all inbound containers come through
New York/New Jersey, Los Angeles, Long Beach• ~44% through Los Angeles/Long Beach in 2003• Lengthening of Supply Chains – coupled with
Globalization
04/21/2304/21/23
Recent Headlines• IMB identifies rash of false shipments into North
Africa• Pirates intensify attacks in new areas, with first
Somali hijacking reported in Red Sea • Maersk Alabama Captain Held by Pirates• Peanut Corporation of America• Somali piracy is worst in world – BBC News• Russia Sends Warship to Somali Coast to Fight
Piracy – Bloomberg.com• UN adopts new Somalia piracy resolution
04/21/23 31
Supply Chain Headlines
• “New Budget includes $10.2 Billion for Border Security.”
• “Battling the Bad Guys: 2005 Was a Tough Year” Dec 2005 Baseline Magazine
• “Major Data Theft Leads to Major Legal Problems” Baseline Magazine
• “Polo Ralph Lauren – Lost Point of Sale Data”
• “Somali pirates hijack fourth vessel in a week ,” January 2, 2010
More Headlines
• “Somali pirates hijack cargo ship near Seychelles,” April 11, 2010, AP News
• “Somali pirates attempt attack on Dutch warship,” March 17, 2010
• “New suite of ISO supply chain management standards to reduce risks of terrorism, piracy and fraud”
04/21/23 32
Examples
• Major Distributor, Dec 2006• Locks on trucks• SAFE Port Initiative • Scanning of Containers• C-TPAT• ISO Standards for Supply Chain Security
Threats in the international market-place know no borders.
Terrorism Risk Insurance
U.S. Terrorism Risk Insurance Act (TRIA) – property and casualty insurance experts are helping clients with interests in the United States make informed decisions about terrorism coverage.
U.S. President George W. Bush signed the Terrorism Risk Insurance Act (TRIA) into law in November 2002 to stimulate business investment that had slowed to a trickle after the events of September 11, 2001. The law creates a three-year federal program that backs up insurance companies and guarantees that certain terrorist-related claims will be paid.
TRIA is a short-term measure designed to give the insurance market time to recover and develop new solutions.
On December 26, 2007, the President signed into law the Terrorism Risk Insurance Program Reauthorization Act of 2007 which extends the Terrorism Risk Insurance Act through December 31, 2014. The law extends the temporary federal Program that provides for a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism.
Supply Chain Security
“We have proved to our management that good security is good business.”— Ann Lister of Texas Instruments
Risk
Supply Chains are inherently complex, dynamic, and fluid, characterized by uncertainty, ambiguity, and friction. These characteristics cloud the operating environment: they create risks
Risk Assessment
• Terrorism• Port Security – over 12 million
containers annually to the US; 200 million world wide
• Port Security – 300 US Ports• Longshoremen Strike – 2002• Potential Airport Attack – LAX;
MPS; LGA
Risk Assessment
“If you do things the way you’ve always done them, you’ll get the same things you’ve always got.”
-Darrell Waltrip
This is not your Dad’s Supply Chain!Security is an integral part of the Supply Chain and Homeland Defense
What are Supply Chain Hazards?
• Theft/Pilferage• Competition• Information Systems• Cell Phones• Thumb Drives• Camera Phones• Disgruntled Employees• Lack of Training
Problems?• 66% of Sealift Containers arrive at 20
Major Ports• >58 % of all inbound containers come
through New York/New Jersey, Los Angeles, Long Beach
• ~44% through Los Angeles/Long Beach in 2003
• Lengthening of Supply Chains – coupled with Globalization
• Top 5 “Hottest Global Markets”: China, Mexico, Eastern Europe, Southeast Asia, India
What is a Catastrophic Risk?
• Inaccurate receipts?• Customer Satisfaction?• Sloppy Warehousing?• National Emergency?• Hurricane?• Or, Only when it makes it to
CNN?
Important?• September 11, 2001 - $2 billion per
day lost• Longshoremen Strike, 2002 – 300-500
ships backed up• Potential loss of attack to major port
- $20 billion estimate• 2008 estimate ~ 12 million
containers into US; up to 490 million containers world wide; 2009 - ~10 million containers
New Problem?• “There were no ‘secure’ rear
areas.” General Joseph Heiser on Vietnam Logistics
• Sun Tzu – Chapter 1, The Art of War• Native Americans• American Civil War – Great Train
Chase• Pirates of the Caribbean
Supply Chain Security
A Global Perspective
Top 5 European Ports
• Rotterdam – 9.743 million TEUs in 2009
• Hamburg – 7.088 million TEUs (9.7 mil in 2008)
• Antwerp – 7.3 million TEUs (8.6 in 2008)
• Bremen – 4.565 million TEUs (5.5 in 2008)
• Valencia – 3.65 million (3.6 in 2008)
Other Key Ports
• Singapore – 25.87 million TEUs• Shanghai – 25 million• Hong Kong – 20.9 million • Shenzhen – 18.25 million• Pusan – 11.98 million
Rotterdam
• > 900 intermodal barge moves daily to 72 locations
• > 200 rail moves• 220 million people within 600
miles of Rotterdam
Rail
• > 15% of cargo to Germany via rail
• ~ 13% of Belgium cargo • ~ 14 of French cargo
• US Rail – 4 major bridges over the Mississippi River
Other issues
• 9000 distribution centers in the Netherlands
• 2000 - $64.4 billion USD in logistics and distribution in The Netherlands
SAFE Port Act
• The SAFE Port Act codified into law a number of programs to improve security of U.S. ports, such as:
• Additional requirements for maritime facilities
• Creation of the Transportation Worker Identification Credentials
• Establishment of interagency operational centers for port security
Safe Port Act
• Container Security Initiative• Foreign port assessments • Customs Trade Partnership
Against Terrorism
Container Security Initiative• CSI consists of four core elements:
• Using intelligence and automated information to identify and target containers that pose a risk for terrorism.
• Pre-screening those containers that pose a risk at the port of departure before they arrive at U.S. ports.
• Using detection technology (X-Rays) to quickly pre-screen containers that pose a risk. Using smarter, tamper-evident containers.
Containers - Concerns
• Cost to X-Ray containers • Manpower• Delays• Radiation
Transportation Worker Identification Credentials
• Port Employees• Long Shoremen• Unescorted access personnel
C-TPAT• Voluntary• November 2001• 9000 members• Canada has a program very
similar to C-TPAT named FAST – Free and Secure Trade.
C-TPAT• According to US Customs and
Border Protection Agency, the benefits of participating in C-TPAT could include:–Playing an active role in the
war against terrorism –A reduced number of CBP
inspections. –Priority processing for CBP
inspections.
Orlando International Airport• No staffing of doors for employee entrance
to baggage claim areas• Guns smuggled into planes by employees• “no requirement for us to staff those
doors” OIA Spokesperson; TSA – “not my job!”
• Identified as security issues in 2004• 2006 – ½ of TSA Screeners failed test that
measured how well employees could identify explosives, guns and other weapons on the scanner – but can identify bottles of mouthwash and toothpaste
Source: Mike Thomas, Orlando Sentinel, Mar 15, 2007, p. B-1
Food Security
BioTerrorism?• Peter Pan Peanut Butter – e coli –
2007• E-coli from fresh Spinach – 2006• Chi Chi’s e-coli – from green onions
– 2003• Taco Bell – e coli 2005• None were terrorist attacks but
impacted supply chains• US Salmonella/e-coli scare 2008• Salmonella epidemic 2009 - >3921
separate items recalled