Appendix 3: Appendix 3: Perfect Pizza 1994 volume planning
1. Why do you think that integrating an ERP system with those of suppliers and customers is so difficult?
Integrating an ERP system with those of suppliers and customers is difficult for two reasons.
First, assuming that suppliers’ and customers’ ERP systems are relatively stable, they will all have marginal differences that have been built into the systems to make them appropriate for each individual business. Furthermore, they are all unlikely to have software supplied by the same company. SAP may be the largest company supplying ERP software, but there are many others too. Also, each individual ERP system will be of a different level of sophistication. Some companies may have relatively old systems, whereas others may have state-of-the-art systems.
The software that manages the interface between these systems can be extremely complex and expensive. Second, the assumption that each company’s ERP systems are stable is rarely the case in practice. As the sandwich company admits, because companies are implementing their own new systems, integrating with a network of companies is like trying to hit a moving target.
Therefore, integration must cope with the future plans for systems investment of all companies in the network and be sufficiently flexible to cope with at least some of the changes not yet planned.
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C H A P T E R 1 5
Lean operations and JIT Teaching guide
Introduction
Again, this is a topic with an important, but not always obvious, message. This underlying message concerns the link between an organization’s general ‘approach’ to how it thinks about operations management and what it actually does in practice. In teaching JIT it is relatively easy to make this linkage. In other words, a company’s philosophy of operations (if it has one) really does have an impact on what it does. If it has a high tolerance of in-process inventory, it will find it difficult to identify where improvement should be taking place. If it does not value the contribution, which everyone throughout the operation can make to improvement, it will never release the full potential within its workforce. If it values high utilization above fast throughput time, it will not understand the real underlying costs of its operations processes. This is an important message and fortunately there are plenty of opportunities while teaching JIT to continually reinforce this message.
Key teaching objectives
• To distinguish between the different contributions of JIT to operations management generally (it is a philosophy, it is a set of techniques, it is a way of planning and controlling movement through processes)
• To get students to understand the benefits of low between-stage inventory in spite of its counterintuitive feel
• To link in JIT to the topics covered in other areas of the subject
• To explain some of the criticisms of JIT
• To demonstrate the fundamental difference between pull and push control Exercises/discussion points
Again, there are several cases in the companion volume to this book (Johnston, R. et al, 3rd edition, ISBN 0273 65531-0), which can be used to support this lesson. The Aylesbury Pressings case, can be used for this topic.
• Exercise – JIT is one of those topics, which lends itself to games of various sorts. The type of games explained in Chapter 9 of this teaching guide can be repeated, this time with the intention of demonstrating the effect of between-stage inventory and/or pull control.
• Exercise – Different games can be devised especially to demonstrate JIT. Here are two ideas.
1. Take a cheap and easily available product which students an easily disassemble and assemble as a mock assembly line. We use electrical plugs. These have to be of the type with enough bits inside them to make the total disassembly/assembly task into four or five stages. Equip the four or five ‘volunteer’ students with appropriate technology (screwdrivers) and set the process running. Initially allow as much inventory to build up as they wish (this is why a small product is useful). Take key measures over a three- or four-minute period such as the number produced, the total throughput time, the amount space of used, the total inventory in the system, and so on. Then run the game again, this time with ‘kanban squares’ of (say) one or two units only between the stages.
Demonstrate how this increases throughput time and reduces inventory.
2. As an alternative to a simple product such as the domestic electrical plug, devise a product made with Lego bricks. This involves some initial outlay in order to purchase enough Lego to allow the game to run for some minutes. However, the advantage is that it is easier to balance the amount of work at each stage in the line and also one can allow ‘design changes’ and improvements in the system more easily.
• Exercise – With smaller groups such as smaller MBA classes or even executive classes, let everybody participate in these games in teams of five or six people. After the first one or two runs, set them the challenge of improving the process. While they are doing this, walk among them with a video camera and try and capture shots of them attempting to improve the process. It is not usually difficult to find examples of single individuals dominating discussion, groups splitting into two to do their own thing, poor communication, arguments and so on. The session can then be broadened out and illustrated using selected highlights from this video. This is especially useful for covering the continuous improvement and human issues in JIT.
• Teaching tip – There is still in circulation an old video showing the above being done at Hewlett-Packard. The video dates from about 1980 and unfortunately the clothes worn by the people in the video make this obvious. Nevertheless, if you have fashion-indifferent students and can get hold of the video, it does demonstrate the principles well.
• Teaching tip – Lead a discussion on how JIT principles could be used in a retail operation.
Lead this discussion back into a discussion of supply chain and how the whole supply chain, from raw materials suppliers through to the retail operation, can be governed using JIT principles.
Case study teaching notes Boys and Boden (B&B)
Boys and Boden (B&B) is a small, independent building materials merchant which also undertakes the production of specialist, bespoke joinery items such as windows, doors and staircases for local and regional customers. The newly appointed General Manager is considering whether the production of staircases would be improved by the creation of a
‘staircase cell’ run on JIT principles. He learnt about these manufacturing approaches in his MBA Operations Management course, but in the context of high volume, repetitive
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manufacture; a very different environment from the ‘one-offs’ situation at B&B. He aspires to not only improve delivery reliability, but also to regain control of costs, in order to restore profitability. It may also be possible to reduce the lead time (the case suggests that six weeks is needed for a special staircase), providing a further potential competitive advantage.
Some notes on the Boys and Boden case