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JIT &
LEAN OPERATIONS
Chapter 14
MIS 373: Basic Operations Management
LEARNING OBJECTIVES
• After this lecture, students will be able to
1.
2.
3.
4.
Explain the terms lean operations and JIT.
Describe the main characteristics of lean systems.
List some of the benefits and some of the risks of lean operation.
List the three goals of a lean system and explain the importance of
each.
MIS 373: Basic Operations Management
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LEAN OPERATIONS
• Lean operation
• A flexible system of operation that uses considerably less
resources than a traditional system
• Tend to achieve
•
•
•
•
Greater productivity
Lower costs
Shorter cycle times
Higher quality
• Goal:
• Achieve a system that matches supply to customer demand; supply
is synchronized to meet customer demand in a smooth uninterrupted
flow
• A balanced system
• One that achieves a smooth, rapid flow of materials and/or work through
the system
MIS 373: Basic Operations Management
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GOALS AND BUILDING BLOCKS
OF LEAN SYSTEMS
MIS 373: Basic Operations Management
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LEAN: SUPPORTING GOALS
1. Eliminate disruptions
•
Poor quality (lean systems do not carry extra inventory),
equipment breakdowns, schedule changes, late
deliveries.
2. Make the system flexible
•
•
Mix of products, levels of output.
Require reducing setup-times & lead-times.
3. Eliminate waste, especially excess inventory
•
http://videos.asq.org/waste-analysis
MIS 373: Basic Operations Management
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WASTE
 Seven sources of waste in lean systems:
1. Inventory
•
Idle resource, requires space, holding cost
2. Overproduction
•
Overuse of manufacturing resources
3. Waiting time
•
Require space, WIP
4. Unnecessary transporting
•
Handling cost
5. Processing waste
•
Unnecessary production steps, scrap, paperwork, redundancy (e.g.,
approvals)
6. Inefficient work methods
•
Reduced productivity, increased scrap, increased WIP
7. Product defects
•
Rework costs, customer dissatisfaction
MIS 373: Basic Operations Management
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LEAN: BUILDING BLOCKS
1. Product design
2. Process design
3. Personnel/
organizational
elements
4. Manufacturing
planning and
control
MIS 373: Basic Operations Management
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LEAN SERVICES
• In service the focus is often on the time needed to perform the
service - speed is often the order winner
• Provide services when they are needed
• Lean benefits can be achieved in the following ways:
• Eliminate disruptions
• e.g., avoid having service providers also answer phones.
• Make system flexible
• Train workers to handle more variety.
• Reduce setup and lead times
• Estimate what parts and tools are frequently needed and have them on hand
• Eliminate waste
• Eliminate errors and duplicate work.
• Minimize WIP
• e.g., orders waiting to be processed, calls waiting to be answered, packages
waiting for delivery, truck waiting to be loaded/unloaded etc.
• Simplify the process
• e.g., self-service systems such as in retail, ATMs, vending machines, service
systems
MIS 373: Basic Operations Management
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LEAN VS. TRADITIONAL
PHILOSOPHIES
Factor
Traditional
Lean
Inventory
Much to offset forecast
errors, late deliveries
Minimal necessary to operate
Deliveries
Few, large
Many, small
Lot sizes
Large
Small
Vendors
Long-term relationships
are unusual
Partners
Workers
Necessary to do the work
Assets
MIS 373: Basic Operations Management
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TRANSITIONING TO LEAN
SYSTEMS
1. Make sure top management is committed and that they know
what will be required
2. Decide which parts/processes will need the most effort to convert
3. Obtain support and cooperation of workers. Reassure workers
that their jobs are secure.
4. Begin by trying to reduce setup times while maintaining the
current system
5. Gradually convert operations, begin at the end and work
backwards. At each stage, make sure the conversion has been
successful before moving on.
6. Convert suppliers to JIT. Narrow the list of vendors.
7. Prepare for obstacles
MIS 373: Basic Operations Management
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OBSTACLES TO CONVERSION
1. Management may not be fully committed or willing to devote the
necessary resources to conversion
2. Workers/management may not be cooperative. Management
losses control as more responsibility is shifted to the workers.
Workers have increased responsibility.
3. It can be difficult to change the organizational culture to one
consistent with the lean philosophy
4. Suppliers may resist:
•
•
•
•
•
Not enough assistance from buyer to perform transformation
Uneasy about long term commitment to buyer
Small frequent deliveries may be difficult
Burden of quality control
Frequent engineering changes that may result from buyer’s lean
improvements
MIS 373: Basic Operations Management
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KEY BENEFITS/RISKS OF
LEAN SYSTEMS
• Key benefits:
• Reduced waste
• inventory levels
• scrap and rework
• space requirements
•
•
•
•
High quality
Flexibility
Reduced lead times
Increased productivity and
equipment utilization
MIS 373: Basic Operations Management
• Key Risks:
• Absence of buffers (personnel,
inventory) to fall back on if
something goes wrong.
• Possible loss off sale and lost
customers.
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RISKS OF JIT
• For Lean Factories, No Buffer (wsj.com 4/29/2011)
• The just-in-time approach to manufacturing, which has swept the world's
factories over the past two decades, has made a virtue out of keeping
inventories lean. But some manufacturers think it has gone too far, and that
having a little extra padding might be a healthier option.
• Prior to the recession—and now
in the recovery—we aren't just
lean, we've become anorexic
• One reason this recovery hasn't
been faster is that demand is
there—but there hasn't
necessarily been product on the
shelf to meet that demand
JIGSAW
• Decoding the DNA of the Toyota Production System
• http://hbr.org/1999/09/decoding-the-dna-of-the-toyota-productionsystem
• Lean Knowledge Work
• http://hbr.org/2011/10/lean-knowledge-work
• Lean Start-Up
• http://hbr.org/2013/05/why-the-lean-start-up-changes-everything
• The Lean Service Machine
• http://hbr.org/2003/10/the-lean-service-machine
KEY POINTS
• Lean systems produce high-quality goods or services using
fewer resources than traditional operations systems.
• Lean thinking helps business organizations to become more
productive, reduce costs, and be more market-responsive.
• Lean operations are designed to eliminate waste (value
stream mapping), minimize inventory (JIT deliveries),
maximize work flow (small batches with quick changeovers),
make only what is needed (demand pull), empower work
teams, do it right the first time (quality at the source), and
continually improve.
• Despite the benefits, lean systems have some potential risks.
MIS 373: Basic Operations Management
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