Just-In-Time and Lean Production

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• Just-In-Time and Lean Production

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JIT In Services

• Competition on speed quality
• Multifunctional department store workers
• Work cells at fast-food restaurants
• Just-in-time publishing for textbooks - on demand
  publishing a growing industry
• Construction firms receiving material just as
  needed

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What is JIT ?

• Producing only what is needed, when it is needed
• A philosophy
• An integrated management system
• JITs mandate Eliminate all waste

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Lean Operations Best Implementation is Toyota
Production System

• TPS is a production management system that aims
  for the ideal through continuous improvement
• Includes, but goes way beyond JIT. Pillars
• Synchronization
• Reduce transfer batch sizes
• Level load production
• Pull production control systems (vs. push)
  Kanban
• Quality at source
• Layout Cellular operations
• Continuous Improvement (Kaizen) through
  visibility empowerment

....
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Toyotas waste elimination in Operations

• 1. Overproduction
• 2. Waiting
• 3. Inessential handling
• 4. Non-value adding processing
• 5. Inventory in excess of immediate needs
• 6. Inessential motion
• 7. Correction necessitated by defects

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Waste in Operations
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Waste in Operations
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Waste in Operations
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Flexible Resources

• Multifunctional workers
• General purpose machines
• Study operators improve operations

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The Push System

• Pre-planned issues of supplies/merchandise
  regardless of customer demand criteria
• Creates excess and shortages
• not efficient over the long run

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The Pull System

• Material is pulled through the system when needed
• Reversal of traditional push system where
  material is pushed according to a schedule
• Forces cooperation
• Prevent over and underproduction

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Kanban Production Control System

• Kanban card indicates standard quantity of
  production
• Derived from two-bin inventory system
• Kanban maintains discipline of pull production
• Production kanban authorizes production
• Withdrawal kanban authorizes movement of goods

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A Sample Kanban
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Types of Kanbans

• Bin Kanban - when bin is empty replenish
• Kanban Square
• Marked area designed to hold items
• Signal Kanban
• Triangular kanban used to signal production at
  the previous workstation
• Material Kanban
• Used to order material in advance of a process
• Supplier Kanbans
• Rotate between the factory and suppliers

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Components of Lead Time

• Processing time
• Reduce number of items or improve efficiency
• Move time
• Reduce distances, simplify movements, standardize
  routings
• Waiting time
• Better scheduling, sufficient capacity
• Setup time
• Generally the biggest bottleneck

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Common Techniques for Reducing Setup Time

• Preset Buttons/settings
• Quick fasteners
• Reduce tool requirements
• Locator pins
• Guides to prevent misalignment
• Standardization
• Easier movement

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Uniform Production

• Results from smoothing production requirements
• Kanban systems can handle /- 10 demand changes
• Smooths demand across planning horizon
• Mixed-model assembly steadies component production

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Quality at the Source

• Jidoka is authority to stop production line
• Andon lights signal quality problems
• Undercapacity scheduling allows for planning,
  problem solving maintenance
• Visual control makes problems visible
• Poka-yoke prevents defects (mistake proof the
  system)

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Kaizen

• Continuous improvement
• Requires total employment involvement
• Essence of JIT is willingness of workers to
• Spot quality problems
• Halt production when necessary
• Generate ideas for improvement
• Analyze problems
• Perform different functions

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Goals of JIT

1. Reduced inventory - where?
2. Improved quality
3. Lower costs
4. Reduced space requirements
5. Shorter lead time
6. Increased productivity
7. Greater flexibility

1. Better relations with suppliers
2. Simplified scheduling and control activities
3. Increased capacity
4. Better use of human resources
5. More product variety
6. Continuous Process Improvement

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JIT Implementation

• Use JIT to finely tune an operating system
• Somewhat different in USA than Japan
• JIT is still evolving
• JIT as an inventory reduction program isnt for
  everyone - JIT as a CPI program is!
• Some systems need Just-in-Case inventory

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Supply Chain Security
the single biggest threat facing American
traders is supply chain security Website for
C-T PAT
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Why should you care about SC Security?

• Is it a US problem?
• Global Problem
• Heathrow Airport delays Superbowl weekend 2005
• RFID is this the solution?
• ISO Guidelines for SC Security
• Terrorism Insurance

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Supply Chain Security

• Whats the cost of 9/11 to the Supply Chain?
• Fortune Magazine - 50-80 billion a year
• inefficient supply chains
• higher transportation costs
• increased inventory

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Problem?

• Terrorism/Piracy
• Obsolescence
• Pilferage
• Information Breach
• Proprietary Data Camera Phones Thumb Drives
• Cyberspace Security
• RFID Data Security
• 66 of Sealift Containers arrive at 20 Major
  Ports
• gt58 of all inbound containers come through New
  York/New Jersey, Los Angeles, Long Beach
• 44 through Los Angeles/Long Beach in 2003
• Lengthening of Supply Chains coupled with
  Globalization

10/3/2013
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Recent Headlines

• IMB identifies rash of false shipments into North
  Africa
• Pirates intensify attacks in new areas, with
  first Somali hijacking reported in Red Sea
• Maersk Alabama Captain Held by Pirates
• Peanut Corporation of America
• Somali piracy is worst in world BBC News
• Russia Sends Warship to Somali Coast to Fight
  Piracy Bloomberg.com
• UN adopts new Somalia piracy resolution

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Supply Chain Headlines

• New Budget includes 10.2 Billion for Border
  Security.
• Battling the Bad Guys 2005 Was a Tough Year
  Dec 2005 Baseline Magazine
• Major Data Theft Leads to Major Legal Problems
  Baseline Magazine
• Polo Ralph Lauren Lost Point of Sale Data
• Somali pirates hijack fourth vessel in a week ,
  January 2, 2010

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More Headlines

• Somali pirates hijack cargo ship near
  Seychelles, April 11, 2010, AP News
• Somali pirates attempt attack on Dutch warship,
  March 17, 2010
• New suite of ISO supply chain management
  standards to reduce risks of terrorism, piracy
  and fraud

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Examples

• Major Distributor, Dec 2006
• Locks on trucks
• SAFE Port Initiative
• Scanning of Containers
• C-TPAT
• ISO Standards for Supply Chain Security

Threats in the international market-place know no
borders.
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Terrorism Risk Insurance
U.S. Terrorism Risk Insurance Act (TRIA)
property and casualty insurance experts are
helping clients with interests in the United
States make informed decisions about terrorism
coverage.
U.S. President George W. Bush signed the
Terrorism Risk Insurance Act (TRIA) into law in
November 2002 to stimulate business investment
that had slowed to a trickle after the events of
September 11, 2001. The law creates a three-year
federal program that backs up insurance companies
and guarantees that certain terrorist-related
claims will be paid.TRIA is a short-term
measure designed to give the insurance market
time to recover and develop new solutions.
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On December 26, 2007, the President signed into
law the Terrorism Risk Insurance Program
Reauthorization Act of 2007 which extends the
Terrorism Risk Insurance Act through December
31, 2014. The law extends the temporary federal
Program that provides for a transparent system
of shared public and private compensation for
insured losses resulting from acts of terrorism.
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Supply Chain Security

• We have proved to our management that good
  security is good business. Ann Lister of Texas
  Instruments

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Risk

• Supply Chains are inherently complex, dynamic,
  and fluid, characterized by uncertainty,
  ambiguity, and friction. These characteristics
  cloud the operating environment they create
  risks

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Risk Assessment

• Terrorism
• Port Security over 12 million containers
  annually to the US 200 million world wide
• Port Security 300 US Ports
• Longshoremen Strike 2002
• Potential Airport Attack LAX MPS LGA

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Risk Assessment

• If you do things the way youve always done
  them, youll get the same things youve always
  got.
• -Darrell Waltrip

This is not your Dads Supply Chain! Security is
an integral part of the Supply Chain and
Homeland Defense
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What are Supply Chain Hazards?

• Theft/Pilferage
• Competition
• Information Systems
• Cell Phones
• Thumb Drives
• Camera Phones
• Disgruntled Employees
• Lack of Training

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Problems?

• 66 of Sealift Containers arrive at 20 Major
  Ports
• gt58 of all inbound containers come through New
  York/New Jersey, Los Angeles, Long Beach
• 44 through Los Angeles/Long Beach in 2003
• Lengthening of Supply Chains coupled with
  Globalization
• Top 5 Hottest Global Markets China, Mexico,
  Eastern Europe, Southeast Asia, India

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What is a Catastrophic Risk?

• Inaccurate receipts?
• Customer Satisfaction?
• Sloppy Warehousing?
• National Emergency?
• Hurricane?
• Or, Only when it makes it to CNN?

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Important?

• September 11, 2001 - 2 billion per day lost
• Longshoremen Strike, 2002 300-500 ships backed
  up
• Potential loss of attack to major port - 20
  billion estimate
• 2008 estimate 12 million containers into US up
  to 490 million containers world wide 2009 - 10
  million containers

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New Problem?

• There were no secure rear areas. General
  Joseph Heiser on Vietnam Logistics
• Sun Tzu Chapter 1, The Art of War
• Native Americans
• American Civil War Great Train Chase
• Pirates of the Caribbean

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Supply Chain Security

• A Global Perspective

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Top 5 European Ports

• Rotterdam 9.743 million TEUs in 2009
• Hamburg 7.088 million TEUs (9.7 mil in 2008)
• Antwerp 7.3 million TEUs (8.6 in 2008)
• Bremen 4.565 million TEUs (5.5 in 2008)
• Valencia 3.65 million (3.6 in 2008)

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Other Key Ports

• Singapore 25.87 million TEUs
• Shanghai 25 million
• Hong Kong 20.9 million
• Shenzhen 18.25 million
• Pusan 11.98 million

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Rotterdam

• gt 900 intermodal barge moves daily to 72
  locations
• gt 200 rail moves
• 220 million people within 600 miles of Rotterdam

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Rail

• gt 15 of cargo to Germany via rail
• 13 of Belgium cargo
• 14 of French cargo
• US Rail 4 major bridges over the Mississippi
  River

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Other issues

• 9000 distribution centers in the Netherlands
• 2000 - 64.4 billion USD in logistics and
  distribution in The Netherlands

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SAFE Port Act

• The SAFE Port Act codified into law a number of
  programs to improve security of U.S. ports, such
  as
• Additional requirements for maritime facilities
• Creation of the Transportation Worker
  Identification Credentials
• Establishment of interagency operational centers
  for port security

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Safe Port Act

• Container Security Initiative
• Foreign port assessments
• Customs Trade Partnership Against Terrorism

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Container Security Initiative

• CSI consists of four core elements
• Using intelligence and automated information to
  identify and target containers that pose a risk
  for terrorism.
• Pre-screening those containers that pose a risk
  at the port of departure before they arrive at
  U.S. ports.
• Using detection technology (X-Rays) to quickly
  pre-screen containers that pose a risk. Using
  smarter, tamper-evident containers.

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Containers - Concerns

• Cost to X-Ray containers
• Manpower
• Delays
• Radiation

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Transportation Worker Identification Credentials

• Port Employees
• Long Shoremen
• Unescorted access personnel

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C-TPAT

• Voluntary
• November 2001
• 9000 members
• Canada has a program very similar to C-TPAT named
  FAST Free and Secure Trade.

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C-TPAT

• According to US Customs and Border Protection
  Agency, the benefits of participating in C-TPAT
  could include
• Playing an active role in the war against
  terrorism
• A reduced number of CBP inspections.
• Priority processing for CBP inspections.

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Orlando International Airport

• No staffing of doors for employee entrance to
  baggage claim areas
• Guns smuggled into planes by employees
• no requirement for us to staff those doors OIA
  Spokesperson TSA not my job!
• Identified as security issues in 2004
• 2006 ½ of TSA Screeners failed test that
  measured how well employees could identify
  explosives, guns and other weapons on the scanner
  but can identify bottles of mouthwash and
  toothpaste

Source Mike Thomas, Orlando Sentinel, Mar 15,
2007, p. B-1
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Food Security
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BioTerrorism?

• Peter Pan Peanut Butter e coli 2007
• E-coli from fresh Spinach 2006
• Chi Chis e-coli from green onions 2003
• Taco Bell e coli 2005
• None were terrorist attacks but impacted supply
  chains
• US Salmonella/e-coli scare 2008
• Salmonella epidemic 2009 - gt3921 separate items
  recalled