JUST IN TIME
Manuel Rincón, M.Sc.
October 22nd, 2004
Lecture Outline
1.
2.
3.
4.
Just-in-Time Philosophy
Suppliers
„ Goals of JIT
Partnerships
„ Concerns of Suppliers
JIT Layout
„ Distance Reduction
„ Increased Flexibility
„ Impact on Employees
„ Reduced Space and
Inventory
Inventory
„ Reduce Variability
„ Reduce Inventory
„ Reduce Lot Sizes
„ Reduce Setup Costs
5.
Scheduling
„ Level Schedules
„ Kanban
6. Quality
7. Employee Empowerment
8. Lean Production
9. JIT in Services
10. MRP vs. JIT
Just-In-Time
Introductory Quotation
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
© 1995 Corel Corp.
Just-In-Time
Supplier-Production-Distribution System
Supplier Distribution
Inventories
Customer
Distribution
Inventories
Productions Inventories
Raw Material
Inventory
Work-in-process
Inventory
Factory
Finished
Goods
Inventory
Retailer
Inventory
Raw material
in-transit
Orders
Component
Inventory
Sub-assembly
parts in-transit
Warehouse
Inventory
MRO
Inventory
Orders
Maintenance,
repair, and ordering
supplies in-transit
Purchasing
Production and
Inventory Control
Shipping and
Traffic
Just-In-Time
What is Just-in-Time?
† Definition
„ Delivery of parts to meet production
„ Production to meet customer demands
„ Means of production control
† Which aspects are under the control of the
company? Which are not?
Just-In-Time
What is Just-in-Time?
† 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.
Just-In-Time
What does Just-in-Time do?
† Attacks waste
„ Anything not adding value to the product
†From the customer’s perspective
† Exposes problems and bottlenecks
caused by variability
„ Deviation from optimum
† Achieves streamlined production
„ By reducing inventory
Just-In-Time
Types of Waste
†Overproduction
†Waiting
†Transportation
†Inefficient
processing
†Inventory
†Unnecessary motion
†Product defects
Just-In-Time
Example: JIT reduced waste at Hewlett-Packard
Waste Reduction (%)
Setup Time
20%
Scrap
30%
Finished Goods
Inventory
Space
30%
40%
Lead Time
50%
Raw Material
Inventory
Work-in-Process
Inventory
50%
82%
0%
20%
40%
60%
80%
100%
Just-In-Time
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
Just-In-Time
Push vs Pull systems
† 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
Just-In-Time
JIT contribution to Competitive Advantage
† Suppliers
„ reduced number of vendors
„ supportive supplier relationships
„ quality deliveries on time
Just-In-Time
JIT contribution to Competitive Advantage
† Layout
„ work-cell layouts with
testing at each step of the
process
„ group technology
„ movable, changeable,
flexible machinery
„ high level of workplace
organization and neatness
„ reduced space for
inventory
„ delivery direct to work
areas
Just-In-Time
JIT contribution to Competitive Advantage
† Inventory
„ small lot sizes
„ low setup times
„ specialized bins for holding set number of
parts
† Scheduling
„
„
„
„
zero deviation from schedules
level schedules
suppliers informed of schedules
Kanban techniques
Just-In-Time
JIT contribution to Competitive Advantage
† Preventive Maintenance
„ scheduled
„ daily routine
„ operator involvement
† Quality Production
„ statistical process control
„ quality by suppliers
„ quality within firm
Just-In-Time
JIT contribution to Competitive Advantage
† Employee Empowerment
„ empowered and cross-trained employees
„ few job classifications to ensure flexibility of
employees
„ training support
† Commitment
„ support of management, employees, and suppliers
Just-In-Time
Results
† Queue and delay reduction,
speeds throughput, frees
assets, and wins orders
† Quality improvement,
reduces waste and wins
orders
† Cost reductions, increases
margin or reduces selling
price
† Variability reductions in the
workplace, reduces waste
and wins orders
† Rework reduction, reduces
waste and wins orders
Just-In-Time
Yielding
† Faster response to the customer and
higher quality
A competitive advantage!
Just-In-Time
JIT Success Factors
Employee
Empowerment
Quality
Preventive
Maintenance
Suppliers
JIT
Layout
Inventory
Scheduling
Just-In-Time
Suppliers
† Incoming material and finished goods involve
waste
† Buyer and supplier form JIT partnerships
† JIT partnerships eliminate
„
„
„
„
Unnecessary activities
In-plant inventory
In-transit inventory
Poor suppliers
Just-In-Time
Characteristics of JIT Partnership
Few
Nearby
Repeat business
Analysis to enable desirable suppliers
to become or stay price competitive
„ Competitive bidding mostly limited to
new purchases
„ Buyer resists vertical integration and
subsequent wipeout of supplier
business
„ Suppliers encouraged to extend JIT to
their suppliers
„
„
„
„
Just-In-Time
Characteristics of JIT Partnership
„ Steady output rate
„ Frequent deliveries in small-lot
quantities
„ Long term contract agreements
„ Minimal paperwork
„ Delivery quantities fixed for whole
contract term
„ Little or no permissible overage or
underage
„ Suppliers package in exact quantities
„ Suppliers reduce their production lot
sizes or store unreleased material
Just-In-Time
Characteristics of JIT Partnership
„ Minimal product specifications
imposed on suppliers
„ Help suppliers to meet quality
requirements
„ Close relationship between
buyers’ and suppliers quality
assurance people
„ Suppliers use process control
charts instead of lot-sampling
techniques
Just-In-Time
Characteristics of JIT Partnership
„ Scheduling of inbound freight
„ Gain control by use of company-owned or contract
shipping and warehousing
Just-In-Time
Goals of JIT partnership
‘ Elimination
 Elimination
“ Elimination
³ Elimination
of
of
of
of
unnecessary activities
in-plant inventory
in-transit inventory
poor suppliers
Just-In-Time
Supplier Worries
† Diversification
† Poor customer scheduling
† Frequent engineering changes
† Quality assurance
† Small lot sizes
† Physical proximity
Just-In-Time
Streamlined Production
Traditional Flow
Production Process
(stream of water)
Suppliers
Flow with JIT
Suppliers
Customers
Inventory (stagnant
ponds)
Material
(water in
stream)
Customers
Just-In-Time
Layout
† 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
Just-In-Time
Work Cell vs Process Layout
Process Layout
Lathe
Lathe
5
4
1
Press
Saw
Saw
2
Heat
Treat
3
Press
6
Work Cell
2
Saw
Press
Lathe
Lathe
Grinder
Grinder
Grinder
1
Heat
Treat
Just-In-Time
Layout Tactics
† Build work cells for families of products
† Minimize distance
†
†
†
†
†
Design little space for inventory
Improve employee communication
Use poka-yoke devices
Build flexible or movable equipment
Cross train workers to add flexibility
Just-In-Time
Inventory
† Traditional: inventory
exists in case problems
arise
† JIT objective: Eliminate
inventory
† JIT requires
„ Small lot sizes
„ Low setup time
„ Containers for fixed number
of parts
† JIT inventory: Minimum
inventory to keep system
running
Just-In-Time
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
† Reduce setup time
† Use group technology
Just-In-Time
Lowering Inventory… Waste Reduction
Work in process inventory level
(hides problems)
Unreliable
Vendors
Scrap
Capacity
Imbalances
Just-In-Time
Lowering Inventory… Waste Reduction
Reducing inventory reveals
problems so they can be solved.
Unreliable
Vendors
WIP
Scrap
Capacity
Imbalances
Just-In-Time
Lowering Inventory… Waste Reduction
Reducing inventory reveals
problems so they can be solved.
Unreliable
Vendors
Scrap
WIP
Capacity
Imbalances
Just-In-Time
To lower inventory… reduce lot sizes…
Inventory Level
Lot Size 200
Average
inventory = 40
Average inventory
= 100
Lot Size 80
Average inventory = (Lot size)/2
Time
Just-In-Time
Reducing lot sizes increases the number of lots
Customer
orders 10
Lot size = 5
Lot 2
Lot 1
Lot size = 2
Lot 1 Lot 2 Lot 3 Lot 4 Lot 5
Just-In-Time
…which increases inventory costs…
Cost
t
s
o
C
l
Tota
H old
s
o
C
in g
t
Setup Cost
Smaller Optimal
Lot Size Lot Size
Lot Size
Just-In-Time
…unless setup costs are reduced…
Cost
To
t
s
o
C
ta l
H old
s
o
C
in g
t
Setup Cost
New optimal
lot size
Original
optimal
lot size
Lot Size
Just-In-Time
Steps to reduce Setup Time
90 min
Initial Setup Time
Step 1
Separate setup into preparation, and actual setup,
doing as much as possible while the
machine/process is running (save 30 minutes)
Move material closer and improve
material handling (save 20
Step 2
minutes)
Standardize and
improve tooling
Step 3
(save 15 minutes)
Step 4
Step 5
60 min
45 min
Use one-touch system to
eliminate adjustments (save 10
minutes)
Training operators and
standardizing work procedures
(save 2 minutes)
25 min
15 min
13 min
Just-In-Time
Scheduling
† Involves timing of operations
† JIT requires
„
„
„
„
„
Communicating schedules to suppliers
Level schedules
Freezing part of schedule nearest due date
Small lots
Kanban techniques
Just-In-Time
JIT Scheduling Tactics
† Communicate the schedule to
suppliers
† Make level schedules
† Freeze part of the schedule
† Perform to schedule
† Seek one-piece-make and onepiece-move
† Eliminate waste
† Produce in small lots
† Use kanbans
† Make each operation produce a
perfect part
Just-In-Time
Level Schedules
† Reduce ripple effect of small variations in
schedules (e.g., final assembly)
† Production quantities evenly distributed over time
(e.g., 7/day)
† Build same mix of products every day
„ Results in many small lots
„ Item
Monthly Quantity
A
40
B
60
Daily Quantity
2
3
Just-In-Time
Small lots vs Large lots
JIT produces same amount
in same time if setup times
are lowered
JIT Small Lots
A
A
B
B
B
C
A
A
B
B
B
C
C
C
Time
Small lots also increase flexibility to meet
customer demands
Large-Lot Approach
A
A
A
A
B
B
B
B
B
B
Time
Just-In-Time
Small lots vs Large lots
Just-In-Time
Kanban
† Japanese word for card
„ Pronounced ‘kahn-bahn’ (not
‘can-ban’)
† Authorizes production from
downstream operations
„ ‘Pulls’ material through plant
† May be a card, flag, verbal
signal etc.
† Used often with fixed-size
containers
„ Add or remove containers to
change production rate
Just-In-Time
Kanban
TIME TO DELIVER:
KANBAN SYSTEM
6.00 8.00 10.00
12.00 14.00 16.00
18.00 20.00 22.00
1234567890123
12345678900012345678900012345678
Toyota-Kioshu
Assembly Plant,
Inc.
1234567890123
Name of the
supplier:
SUPPLIERS
CUSTOMER
INVENTORY
Delivery cycle of
the product:
2–6–2
Item number:
00000001
BOX
TYPE/CAPACITY:
AA / 25 pieces
Item back
number:
001-001-00
Item name:
¼ ” SCREW
To be use
on product:
201
Additional
information:
none
Just-In-Time
Kanban
Just-In-Time
Preventive Maintenance
† All activities involved
in keeping equipment
in working order
† Done to prevent failure
† JIT requires
„ Scheduled & daily PM
„ Operator performs PM
† Knows machines
† Responsible for product
quality
Just-In-Time
Quality
† JIT exposes quality problems by reducing
inventory
† JIT limits number defects with small lots
† JIT requires TQM
„ Statistical process control
„ Worker involvement
• Inspect own work
• Quality circles
„ Immediate feedback
Just-In-Time
JIT Quality Tactics
†
†
†
†
Use statistical process control
Empower employees
Build failsafe methods (poka-yoke, checklists, etc.)
Provide immediate feedback
Just-In-Time
Employee Empowerment
† Getting employees involved in product &
process improvements
„ Employees know job best!
† JIT requires
„
„
„
„
Empowerment
Cross-training
Training support
Few job classifications
© 1995 Corel Corp.
Just-In-Time
JIT in Services
All the techniques
used in
manufacturing are
used in services
Suppliers
Layouts
Inventory
Scheduling
Just-In-Time
Attributes of Lean Producers
They…
† use JIT to eliminate virtually all inventory
† build systems to help employees product a
perfect part every time
† reduce space requirements
† develop close relationships with suppliers
† educate suppliers
† eliminate all but value-added activities
† develop the workforce
† make jobs more challenging
† reduce the number of job classes and build
worker flexibility
Just-In-Time
MRP vs JIT
† How would a grocery store
operate using
„ MRP
„ JIT
„ Mixed MRP/JIT
† What factors would
contribute to making the
store operate better under
one paradigm vs. the
other?
Just-In-Time
Chain of Events
Demand (predictable or unpredictable?)
Forecast (accurate or inaccurate?)
Production (capacity fixed or flex?)
Purchases (planned?)
Just-In-Time
Issues to Consider
™
™
™
™
™
™
Forecast
Inventory/Backlog
Lead Times
Capacity constraints
Supplier information
Decide when to place an order
and how much
™ May choose supplier
Just-In-Time
Compare MRP with JIT
† Consider necessary production lead
times
„ How can JIT compress the schedule?
„ What elements of the schedule must
remain?
„ How does JIT overcome the necessary
productions schedules and lead times to
deliver products JIT?
Just-In-Time
Planning Horizon
Assembly
Subassembly
Fabrication
Procurement
1
2
3
4
5
6
7
8
9
10
Just-In-Time
Assembly Time Chart
Procurement of
raw material D Fabrication
of part E
Subassembly A
Procurement of
raw material F
Procurement of
part C
Final assembly
and inspection
Procurement of
part H
Fabrication
of part G
Procurement of
raw material I
1
2
3
Subassembly B
4
5
6
7
8
9
10
11
Just-In-Time
Inventory hides Problems
†
†
†
†
†
†
Machine downtime
Scrap
Vendor Delinquencies
Change orders
WIP
Inspection, paperwork,
order entry, decision
backlogs
Just-In-Time
JIT focus on eliminating Waste
†
†
†
†
†
†
Over production
Waiting Times
Transportation
Idle inventory
Waste of motion
Production defects
Just-In-Time
How to accomplish JIT?
†
†
†
†
†
†
†
Design Process for JIT
Total Quality Control
Stable Schedule
Kanban Pull System
Work with Vendors
Reduce Inventory
Improve Product Design
Just-In-Time
Pre-conditions to work through JIT
†
†
†
†
†
Stable Schedule
Stable Design
Perfect Supplier Quality and Delivery
Perfect Production Quality
Good Data
Just-In-Time
Concepts applied in JIT Systems
†
†
†
†
†
†
†
Focused factory networks
Group technology
Quality at the source
JIT production
Uniform plant loading
Kanban production control system
Minimized set-up times
Just-In-Time
Shouldn’t everyone use JIT?
† For any company, how will the business situation
change if JIT is implemented?
† Can (shouldn’t) Just in Time Production to meet
customer needs?
† What do we need to do from an operational
standpoint to make JIT work?
† What are the costs? What will be the benefits?
† Best to view JIT as a set of practices which can
provide ideas on ways to improve production.
Just-In-Time
JIT Delivery
†
Steady planned production
schedule
„
†
†
†
†
†
Can this be achieved if
there are lots of
changes to the mix or
volume of what is
delivered?
Short transportation
distance to customer site
High supplier quality
Great communications
with supplier
Fast and efficient
movement, handling and
tracking of parts coming
into production.
Information System
Just-In-Time
JIT Production
†
†
†
†
†
†
Available JIT supply
Reliable capacity (machines, labor, etc.)
Special equipment, containers, and transportation
Regular or known demand (Is this possible?)
Quality Output
Toyota Production Control System
Just-In-Time
The Production Control Difference
†
†
†
†
†
†
Given the short lead times and
high variation required of today’s
production
One of the primary
implementable items of JIT is as
a production control system.
Focus on eliminating waste
where practical
Queue limitation
Pull system
Attack quality problems at the
source
Just-In-Time
What are the benefits of JIT?
†
†
†
†
†
Radical reductions in inventory
Squeeze out system variation
Usefulness of supplier relationships to improve quality and
flow control
What is the cost to change the business to run this way?
Training, new systems?
If you don’t, you can’t compete (Walmart)
Just-In-Time
MRP vs. JIT
† How do we tradeoff?
„ the needed to “build in advance of an
order”(hold inventory) at several strategic
points in the line so we can deliver on time.
„ the need to minimize inventory to reduce costs
and improve efficiency.
Just-In-Time
MRP vs. JIT
† Consider an IBM situation:
„ Suppose customers will wait only 4 weeks for
delivery.
„ What length of forecasts will you need?
„ Should you hold inventory? At what stage in
production? How much? Why?
„ How will demand or supply variability affect your
decision?
† Should we implement JIT here?
Just-In-Time
What will you consider?
†
†
†
†
†
†
†
Cost of parts
Amount of value add at each stage
Shelf life and quality issues
Reduction of flexibility at each step
Risk of over purchasing/producing vs. shortage
Ability to hold and handle inventory
Remaining lead time and needs of market place
Just-In-Time
Just-In-Time
JUST IN TIME
Manuel Rincón, M.Sc.
October 22nd, 2004