Lean Systems and JIT
Lean Production
Lean Production can be defined as an
integrated set of activities designed to
achieve high-volume production using
minimal inventories (raw materials,
work in process, and finished goods)
Lean Production also involves the
elimination of waste in production effort
Lean Production also involves the timing of
production resources (i.e., parts arrive at
the next workstation “just in time”)
Adding value
Overview of JIT
Toyota Production System (post-WWII)
reducing costs, eliminating waste, and improving
productivity
Just-in-Time (1980s)
way of planning operations
reduces variability of demand
enhances responsiveness
conducts value-adding operations as close to
consumption as possible
JIT and Lean Management
 Big JIT (also called Lean Management)
is a philosophy of operations management that
seeks to eliminate waste in all aspects of a firm’s
production activities:
human relations, vendor relations, technology, and
the management of materials and inventory
 Little JIT
focuses more narrowly on scheduling goods
inventory and providing service resources where
and when needed
Question: If you had a 7 a.m. flight out of Newark, what
time would you leave Allentown? A 7 p.m. flight? Is there a
difference in elapsed time? Why?
The Toyota Production System
Based on two philosophies:
1. Elimination of waste
2. Respect for people
Toyota Production System Video
Toyota Production System’s Four Rules
1.
All work shall be highly specified as to
content, sequence, timing, and outcome
2. Every customer-supplier connection must be
direct, and there must be an unambiguous
yes-or-no way to send requests and receive
responses
3. The pathway for every product and service
must be simple and direct
4. Any improvement must be made in
accordance with the scientific method,
under the guidance of a teacher, at the
lowest possible level in the organization
Waste in Operations
1.
Waste from overproduction
2. Waste of waiting time
3. Transportation waste
4. Inventory waste
5. Processing waste
6. Waste of motion
7. Waste from product defects
8. Underutilization of people
Exercise
Take an activity from a job or personal life
(e.g. a sport, study, Muhlenberg processes, a
class)
Identify areas of waste
Identify opportunities for eliminating waste
and improving the performance
Write down and share with the class
Minimizing Waste: Inventory
Hides Problems
Machine
downtime
Scrap
Work in
process
queues
(banks)
Paperwork
backlog
Vendor
delinquencies Change
orders
Engineering design
redundancies
Inspection
backlogs
Example: By
identifying defective
items from a vendor
early in the
production process
the downstream work
is saved
Design
backlogs
Decision
backlogs
Example: By
identifying defective
work by employees
upstream, the
downstream work is
saved
Here the customer starts
the process, pulling an
inventory item from
Final Assembly…
Then subassembly work is
pulled forward by
that demand…
Customers
JIT Demand-Pull
Logic
Fab
Vendor
Fab
Vendor
Fab
Vendor
Fab
Vendor
Sub
Final
Assembly
The process continues
throughout the entire
production process and
supply chain
Sub
SUPPLY CHAIN AND E-COMMERCE
CONSIDERATIONS IN JIT
Supplier structural
improvements
 reduced inventory at
suppliers results in lower
fixed costs
 suppliers provide small quantities
with frequent deliveries
Supplier infrastructural
improvements
 emphasis on win-win
relationship
Customer structural
improvements
 design for manufacturability
and procurement
 establish EDI systems to
remove demand uncertainty
 reduce inventories of
purchased materials
Customer infrastructural
improvements
 frequent small orders
 eliminate just-in-case
inventories
 smoother demand patterns
SCHEDULING AND CAPACITY MANAGEMENT
IN JIT SYSTEMS
JIT planning and control:
 relies on a level master
schedule
 prefers excess capacity
to excess inventory
 works with suppliers and
customers to reduce
complexity & uncertainty
 improves system’s
responsiveness to
customer requirements
Level master schedule:
 same mix of productservice bundles created
repeatedly for period
for which the master
schedule is frozen
 Independent demand
inventory models balance
order and holding costs
 economics are just as
valid for JIT systems
JIT in Services (Examples)
Organize Problem-Solving
Groups
Upgrade Housekeeping
Upgrade Quality
Clarify Process Flows
Revise Equipment and Process
Technologies
Level the Facility Load
Eliminate Unnecessary
Activities
Reorganize Physical
Configuration
Introduce Demand-Pull
Scheduling
Develop Supplier Networks
Supplier Networks:
Trends In Supplier Policies
1. Locate near to the customer
2. Consider establishing small warehouses near to the
customer or consolidating warehouses with other
suppliers
3. Use standardized containers and make deliveries
according to a precise delivery schedule
4. Become a certified supplier and accept payment at
regular intervals rather than upon delivery
Potential Supplier Concerns with
JIT Purchasing
 Desire for diversification
 -- concerned about all
business stemming from
single customer.
 Poor customer scheduling
 -- concerned that customer
will be unable to develop
smooth, consistent schedule.
 Engineering changes
 -- concerned that customer
will promulgate frequent
engineering changes with
inadequate lead time.
 Quality assurance
 -- production with zero
defects may be considered
unrealistic.
 Small lot sizes
 -- many suppliers are
unaccustomed to working with
small lot sizes.
 Proximity
 -- delivery of small lot sizes
over long distances may not
be economical.
Critique of JIT
Contrast pragmatic JIT vs. romantic JIT
 Pragmatic JIT
 focuses on concrete details of production process
 use practical tools to address problems
 continuous improvement
 Romantic JIT
 appeals to “revolutionary rhetoric”
 cutting inventories is a prompt to reform
 against tradeoffs
HBR: Does Manufacturing Need a JIT
Revolution? By Paul Zipkin
Critique of JIT
Problems
 System of beliefs and collection of methods
 Successes due to genius of Ohno and Shingo (of Toyota) –
they did make tradeoffs
 Moves inventories to suppliers but does not reduce overall
 Workers in JIT environments under high levels of pressure
-- burn out!
HBR: Does Manufacturing Need a JIT Revolution? By Paul Zipkin