Lean/ JIT: A Way Of Life

1
Lean/ JIT A Way Of Life

• Lets talk about inventory first
• The western concept of holding inventory is based
  on our culture
• 1) we have lots of land and space available to
  build warehouses to store inventory cheaply . In
  Japan, they dont.
• 2) our culture promotes independence and
  innovation through antagonism Japans promotes
  harmony and cooperation

2
A Culture of holding inventory

• For example in western companies, departments
  have traditionally worked independently. Example
  procurement goes for its incentivized goal
  (lowest unit cost) which may be
  counter-productive to an MRP model which would
  function ideally with lot for lot ordering. The
  result is carrying additional inventory.

3
A Culture of holding inventory

• Another example Unionization promotes an
  antagonistic system with management and resulting
  work rules in which cross-training is
  dis-incentivized. The resulting band-aid
  inventory is built up at each station on the line
  to prevent bottlenecks that could be cured by
  cross-training.

4
The challenge

• How do we create an atmosphere in which the
  creativity and personal ownership of the western
  antagonistic system continues, while reaping the
  benefits of the Japanese harmonious system?
• One solution work pods of cross-trained
  individuals that are arranged along business
  processes and accountable to process leader and
  department leader. Requires management by a team
  as well

5
Getting back to inventory

• Because weve traditionally viewed it as cheap,
  we havent seen that inventory has a higher TCO
  (total cost of ownership)
• 1) Inventory hides root causes. If you have a
  machine thats constantly breaking down at one
  stage of the line, carrying inventory at that
  station is he band-aid to helping you cure the
  problem.

6
The Inventory TCO

• 2) Inventory fosters mediocrity people resist
  change (improvement). Carrying lots of inventory
  at all stages of the line helps a group resist
  improvement by giving the appearance of an
  operation running smoothly. However, smooth
  operations can be incredibly wasteful operations

7
Inventory TCO

• 3) Managing inventory doesnt add value! It
  doesnt matter to the end user of a product if it
  was produced in an MRP system or Lean/ JIT
  system except for the fact that the Lean/ JIT
  product may cost less because its company didnt
  have an army of inventory ants to document,
  finance, and move all the excess stuff around.

8
Beware the Japan trap!

• Lean/ JIT looks pretty good right about now
• Each system- western and Lean/ JIT has its merits
• The question which can be adapted to its best
  performance based on the culture of the company?
• Beware the management program of the week trap!
  Like any new philosophy of doing business, this
  one takes years of pain, suffering and commitment
  to implement

9
Lean/ JIT is a philosophy.

• Even though it was designed for manufacturing,
  each of its tenants apply to service processes as
  well.
• Romantic Lean/ JIT I read in a book about how
  Lean/ JIT worked for Toyota. Lean/ JIT is cool.
  Lets hang up some posters. Posters are cool.
• Pragmatic Lean/ JIT Were going to start
  working slowly, process by process, to eliminate
  waste and inefficiency from our process

10
The hard work of Lean/ JIT

• The culture of Lean/ JIT starts with management.
• Question Anyone seen Roger and Me? What
  challenges would GMs culture present that would
  be roadblocks on the implementation of Lean/ JIT?
• Unaccountable management
• Resulting Unionization
• Turf culture of brands and departments

11
The hard work of Lean/ JIT

• Managers have to believe theyre responsible for
  90 of the problems problems that can be cured
  by system improvements
• Top management needs to sow the seeds of Lean/
  JIT by being accountable, vulnerable, and driving
  fear from the work place.
• Question In a traditional antagonistic
  management system, what happens when the line
  shuts down?
• A someone gets yelled at.
• In Lean/ JIT system, breakdowns are an
  opportunity to fix root causes

12
The hardest thing you can ask an adult to do is
change his attitude

• If youve been on a line and gotten yelled at
  each time its crashed for 20 years, can you
  really be expected to stop the line now once we
  hang up a poster?
• Really wanna make Lean/ JIT work? Throw out the
  old manager/supervisor/foreman team. And get a
  new team the supports the front line with the
  current system for a year. Then start.

13
The relationship link of Lean/ JIT

• Requires cooperation between workers and
  management
• Requires cooperation among departments
• Requires cooperation among producer and supplier
• Supplier relationships- how many to have? What we
  do incentivize our suppliers on?

14
Lean/ JIT practical summary/services

• Lean/ JIT in its design is an approach to
  repetitive manufacturing or provision of services
  that emphasizes a continual effort to remove
  waste from the system.
• In the service setting, an example would be an
  effort to reduce keystrokes customer service
  agents make to enter an order to reduce the waste
  of time (a component of service inventory)

15
Lean/ JIT practical summary/services

• Lean/ JIT systems achieve important benefits
  through the use of small lot sizes, high quality,
  and a team approach
• Service e.g.Countrywide offices. Each person has
  a traditional role, yet each is cross trained to
  support the other. Each person can answer
  customer questions, providing high quality
  service instead of Ill have blah blah blah
  call you back GMAC) (waste!)

16
Lean/ JIT practical summary/services

• The main goal of Lean/ JIT is smooth production
  (I.e. level use of production resources and small
  lot sizes)
• Service e.g.Countrywide offices. An application
  flows through the approval process so there is
  continuous (Lean/ JIT) rather than batch (MRP)
  processing. Result no setup times limited WIP
  allows focus on each customer contract
• In GMACs batch environment, inventory is built
  up at the credit report desk, then waits to be
  worked on until the underwriter is ready.

17
Benefits of Small Lot Sizes Apply to Countrywide
18
Lean/ JIT practical summary/services

• An important feature of Lean/ JIT Systems is they
  rely on pull systems to move work through the
  line.
• Service At Countrywide, the underwriter is
  continuously intervening on behalf of the
  customer with the processor to see how the
  document is coming along. She is cross-trained to
  help if there is a bottleneck at the processor
  task. She is motivated to pull work to her task.
• Push (GMAC batch) system contrast additional
  data entry to track process for customer loans
  lost in the cracks longer wait times

19
Building Blocks of Lean/ JIT service

• Product design find the most important benefits
  for customers (At countrywide, accuracy and speed
  account for 80 of product value). Standardize
  forms.
• Process design (based on the benefits required).
  Who does what tasks? How far down to the front
  lines can we cascade tasks
• Organization elements (hallway conversations,
  mythology, MBWA)
• Planning and Control (back end customer
  satisfaction research, productivity measures

20
Lean/ JIT Goals summarized

• Eliminate disruptions
• Make system flexible
• Reduce setup and lead times
• Eliminate waste
• Minimize WIP
• Simplify the process

21
Forms of waste services
Waste from overproduction duplication of data
entry (e.g. each person entering customer and
name on their form/station Waste of waiting time
result of batch processing Transportation waste
In service sector, communications costs waste
to customer resulting from over-specialization Inv
entory waste batch processing lead times result
in loss of customer goodwill and repeat orders
22
Forms of waste services
Processing waste over-processing getting
unnecessary info or reports because weve
always done it that way Waste of motion
keystrokes, paper movement resulting from
over-specialization Waste from product defects
re-work costs resulting from lack of
communication between over-specialized workers