Operations
Management
Just-in-Time Systems
Supplement 12
S12-1
Outline
 Just-In-Time Philosophy.
 Role of inventory.
 Suppliers.
 Layout.
 Scheduling.
 Quality.
 Lean Production.
S12-2
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.
 Originated in Japan; developed over 40 years.
 Popularized by Toyota; now used globally.
S12-3
Why is Production Difficult?
 Demand is uncertain and variable.
 Same equipment and people are used to make
a variety of products.
 Switching products takes time.
 Things go wrong:

Materials are defective.

Deliveries are variable (late).

Equipment fails, people make mistakes, etc.
S12-4
One Solution: Inventory
Use inventory to:
 Match supply with varying demand.
 Allow production of a variety of products on
the same equipment.
 Overcome defective materials, late deliveries,
equipment failures, mistakes, etc.
S12-5
“Traditional” Production
 Forecast demand.
 Produce in large lots (to reduce expensive
setups).
 PUSH product to customer.
 Large lot sizes mean:



Large work-in-process inventories.
Large final product inventories.
Slow response to changes and defects.
S12-6
Another Solution: Just-In-Time
Use just-in-time to identify and solve
problems that create inventory.
 Reduce setup costs to switch products.
 Eliminate defective materials, late deliveries,
equipment failures, mistakes, etc.
S12-7
“Just-in-Time” Production
 Produce in small lots to replenish stock actually
sold.
 Sales PULL product (and parts) through plant.
 Small lot sizes mean:
Small work-in-process inventories.
 Small final product inventories.
 Quick response to changes and defects.

S12-8
Push versus Pull
Push system: material is pushed (according
to forecasts) downstream (along assembly
line, to warehouses, etc.).
Pull system: material is pulled (by sales to
customers) downstream (along assembly
line, to warehouses, etc.) just as it is needed.
S12-9
What Does Just-in-Time Do?
 Reduces waste and improves quality.

Waste = Anything not adding value to the product.
 Exposes problems caused by variability.

Variability in demand, deliveries, materials, equipment,
specifications, etc.
 Achieves streamlined production by reducing inventory.

Reduces delays and increases throughput.
 Reduces cost and/or increases profit!
 Provides faster response to the customer.
S12-10
Waste
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
S12-11
Types of Waste
 Overproduction.
 Waiting.
 Transportation.
 Inefficient processing.
 Inventory.
 Unnecessary motion.
 Product defects.
S12-12
Just-in-Time
Success Factors
Employee
Empowerment
Quality
Suppliers
Layout
JIT
Preventive
Maintenance
Inventory
Scheduling
S12-13
Inventory
 JIT objective: Eliminate inventory.
 JIT requires:
Small lot sizes.
 Low setup time.
 Just-in-time deliveries.
 Deliveries direct to point of use (not stockroom).

 JIT inventory: Minimum inventory to keep
system running.
S12-14
Lowering Inventory
Reduces Waste
Work in process inventory level
(hides problems)
Unreliable
Vendors
Capacity
Imbalances
Scrap
S12-15
Lowering Inventory
Reduces Waste
Reducing inventory reveals
problems so they can be solved.
Unreliable
Vendors
WIP
Scrap
S12-16
Capacity
Imbalances
Large Lot Sizes = Large Inventory
Inventory
Level
Average inventory = (Lot size)/2
Lot Size 200
Average inventory
= 100
Time
S12-17
To Lower Inventory, Reduce Lot Size
Inventory
Level
Average inventory = (Lot size)/2
Average
inventory = 40
Lot Size 200
Lot Size 80
Time
S12-18
EPQ Minimizes Total Costs
Cost
Setup Cost
Lot Size
Optimal
Lot Size
S12-19
Reducing Setup Costs Reduces
Lot Size and Total Cost!
Cost
Setup Cost
New
optimal lot
size
Original
optimal
lot size
Lot Size
S12-20
Steps to Reduce Setup Time
 Separate setup into preparation (while machine
is running) and actual setup (while machine is
stopped).

Do as much as possible while the machine is
running.
 Move material closer and improve material
handling.
 Standardize and improve tooling.
S12-21
Suppliers
 JIT objective: Frequent on-time deliveries of
small lots of high quality.
 Buyer and supplier form JIT partnerships to
eliminate:

Unnecessary activities.

In-plant inventory.

In-transit inventory.

Poor suppliers.
S12-22
Characteristics of JIT Partnerships
Few nearby suppliers.
Frequent deliveries in small-lot quantities.
 Deliver small lots several times each day.
Suppliers encouraged to extend JIT to their
suppliers.
Steady output rate & long term contracts.
 Minimal paperwork.
S12-23
Layout
 JIT objective: Reduce movement of people and
material.
 JIT requires:

Delivery directly to work areas – not to stockroom.

Short distances to ensure on-time deliveries.

Little space for inventory.

Flexibility: Moveable or changeable machines.
 Often use work cells.
S12-24
Scheduling
 JIT objective: Simple system to pull product
through plant in small lots.
 JIT requires:

Communicating schedules to suppliers.

“Level” schedules: production each day equals demand.

Freezing part of schedule nearest due date.

Small lots.

Kanban techniques.
S12-25
Kanban
 Japanese word for card.

Pronounced ‘kahn-bahn’ .

Authorizes production from downstream operations.

‘Pulls’ material through plant.
 May be a card, flag, verbal signal etc.
 Used often with fixed-size containers.

Add/remove containers to change production rate.
S12-26
Figure S12.5
S12-27
Preventive Maintenance (PM)
 JIT objective: Prevent failure.
 JIT requires:

Scheduled & daily preventive maintenance.

Operator performs preventive maintenance.

Operator knows machine and is responsible for
product quality.
 Cleanliness and simplicity are keys.
S12-28
Quality
 JIT exposes quality problems by reducing
inventory.
 JIT limits number of defects produced with
small lots.
 JIT requires TQM.

Statistical process control.

Worker involvement & empowerment.

Immediate feedback.
S12-29
Lean Production
 Use JIT to eliminate virtually all inventory.
 Build systems to help employees produce a
perfect part every time.
 Reduce space requirements.
 Develop close relationships with suppliers.
 Educate suppliers and workers.
 Eliminate all but value-added activities.
 Enrich jobs.
S12-30
Just-In-Time and Japan
 Area of Japan = 144,000 square miles.
California = 158,000 square miles
 Missouri = 70,000 square miles

 Population of Japan is about 1/2 of USA.
 Japan is islands (80% mountainous).
Land is expensive.
Facilities are not far apart.
Natural resources are limited.
Minimizing waste is crucial.
S12-31