Lecture 27 - JustinTime Manufacturing. The contents of this chapter include all of the following: Origin of JIT; supply chain; characteristics of JIT; Importance of JIT; JIT, TPS, lean production; eliminating waste; seven sources of waste; 5S’s; function of JIT inventory; supplier partnership; advantages of setup reduction; sources of variability; JIT and competitive advantage.
Lecture 27 JustinTime Manufacturing Books • Introduction to Materials Management, Sixth Edition, J. R. Tony Arnold, P.E., CFPIM, CIRM, Fleming College, Emeritus, Stephen N. Chapman, Ph.D., CFPIM, North Carolina State University, Lloyd M. Clive, P.E., CFPIM, Fleming College • Operations Management for Competitive Advantage, 11th Edition, by Chase, Jacobs, and Aquilano, 2005, N.Y.: McGrawHill/Irwin • Operations Management, 11/E, Jay Heizer, Texas Lutheran University, Barry Render, Graduate School of Business, Rollins College, Prentice Hall Objectives • • • • • • • • • • • • • Origin of JIT Supply Chain Characteristics of JIT Importance of JIT JIT, TPS, Lean Production Eliminating Waste Seven Sources of Waste 5S’s Function of JIT inventory Supplier partnership Advantages of setup reduction Sources of variability JIT and competitive advantage Toyota Motor Corporation Largest vehicle manufacturer in the world with annual sales of over million vehicles ỵ Success due to two techniques, JIT and TPS ỵ Continual problem solving is central to JIT ỵ Eliminating excess inventory makes problems immediately evident þ Toyota Motor Corporation Central to TPS is a continuing effort to produce products under ideal conditions ỵ Respect for people is fundamental ỵ Small building but high levels of production ỵ Subassemblies are transferred to the assembly line on a JIT basis ỵ High quality and low assembly time per vehicle þ Origins of JIT The Toyota Production System by Taiichi Ohno Various titles by Shigeo Shingo Supply Chain (Logistics System) S U P P L I E R S MANUFACTURER Physical Supply Manufacturing Planning and Control DISTRIBUTION SYSTEM Physical Distribution DOMINANT FLOW OF PRODUCTS AND SERVICES DOMINANT FLOW OF DEMAND & DESIGN INFORMATION C U S T O M E R Characteristics of JIT Environments • • • • Flow manufacturing Process flexibility Total quality management Total productive maintenance Characteristics of JIT Environments • • • • Uninterrupted flow Continuous process improvement Supplier partnerships Total employee involvement Importance of JIT JIT is not primarily an inventory reduction program. Its primary purpose is to focus attention on problems Deming on: JIT The great advantage of the [JIT] system is the discipline behind it processes in control; quality, quantity, and regularity predictable Out of the Crisis Advantages of Setup Reduction • • • • • Reduced EOQ Reduced queue & mfg. Lead time Reduced WIP Improved quality Improved process and material flow Inventory Management Terms • Holding Costs – • Ordering Costs – • Includes costs of supplies, forms, order processing, clerical support, etc Setup Costs – • The costs associated with holding or “carrying” inventory over time The costs to prepare a machine or process for manufacturing an order Safety Stock – Extra stock held to prevent a stockout, held for uneven demand Danger of Blind JIT Implementation • • Coupling your customers to problems Inadequate resources to address problems in a timely manner Remove Variability JIT systems require managers to reduce variability caused by both internal and external factors ỵ Variability is any deviation from the optimum process ỵ Inventory hides variability ỵ Less variability results in less waste ỵ SourcesofVariability Incomplete or inaccurate drawings or specifications Poor production processes resulting in incorrect quantities, late, or nonconforming units Unknown customer demands Sources of Variability Incomplete or inaccurate drawings or specifications Poor production processes resulting in incorrect quantities, late, or nonconforming units ools t e v i t c e f f on are e i t c u d Unknown customer demands e r y tor lity and inven of variabi Both JIT g causes n i y f i t n e d in i Improve Throughput The time it takes to move an order from receipt to delivery ỵ The time between the arrival of raw materials and the shipping of the finished order is called manufacturing cycle time ỵ A pull system increases throughput ỵ ImproveThroughput By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement ỵ Manufacturing cycle time is reduced ỵ Push systems dump orders on the downstream stations regardless of the need ỵ JustưInưTime(JIT) • • • • Powerful strategy for improving operations Materials arrive where they are needed when they are needed Identifying problems and driving out waste reduces costs and variability and improves throughput Requires a meaningful buyersupplier relationship JIT and Competitive Advantage JIT and Competitive Advantage JIT Partnerships JIT partnerships exist when a supplier and purchaser work together to remove waste and drive down costs ỵ Four goals of JIT partnerships are: ỵ Removal of unnecessary activities ỵ Removal of in-plant inventory ỵ Removal of in-transit inventory ỵ Improved quality and reliability ỵ JITPartnerships ConcernsofSuppliers Diversification ties to only one customer increases risk ỵ Scheduling dont believe customers can create a smooth schedule ỵ Changes short lead times mean engineering or specification changes can create problems ỵ Quality limited by capital budgets, processes, or technology ỵ Lot sizes – small lot sizes may transfer costs to suppliers þ End of Lecture 27 ... Types? ?of? ?Inventory • • • • Raw? ?Material? ?Inventory WorkInProcess? ?Inventory? ?(WIP) Finished Goods? ?Inventory Maintenance/Repair/Operating Supplies (MRO) Inventory? ?Turns • Inventory? ?turns: a measure? ?of? ?how effectively ... partnerships are: þ Removal of unnecessary activities ỵ Removal of in-plant inventory ỵ Removal of in-transit inventory ỵ Improved quality and reliability ỵ JITPartnerships ConcernsofSuppliers Diversification... quantity,? ?and? ?regularity predictable Out? ?of? ?the Crisis JustInTime, TPS,? ?and? ?Lean Operations JIT is a philosophy of continuous and forced problem solving via a focus on throughput and reduced