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Just-In-Time and Lean Production

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Title: Just-In-Time and Lean Production


1
Chapter 15
  • Just-In-Time and Lean Production

2
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

3
What is JIT ?
  • Producing only what is needed, when it is needed
  • A philosophy
  • An integrated management system
  • JITs mandate Eliminate all waste

4
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

....
5
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

6
Waste in Operations
7
Waste in Operations
8
Waste in Operations
9
Flexible Resources
  • Multifunctional workers
  • General purpose machines
  • Study operators improve operations

10
The Push System
  • Pre-planned issues of supplies/merchandise
    regardless of customer demand criteria
  • Creates excess and shortages
  • not efficient over the long run

11
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

12
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

13
A Sample Kanban
14
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

15
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

16
Common Techniques for Reducing Setup Time
  • Preset Buttons/settings
  • Quick fasteners
  • Reduce tool requirements
  • Locator pins
  • Guides to prevent misalignment
  • Standardization
  • Easier movement

17
Uniform Production
  • Results from smoothing production requirements
  • Kanban systems can handle /- 10 demand changes
  • Smooth demand across planning horizon
  • Mixed-model assembly steadies component production

18
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)

19
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

20
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

21
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

22
Chapter 14
  • Resource Planning

23
Enterprise Resource Planning (ERP)
  • Organizes and manages a companys business
    processes by sharing information across
    functional areas
  • Connects with supply-chain and customer
    management applications
  • Largest ERP provider SAP

24
ERP Modules
25
ERP Implementation
  • First step is to analyze business processes
  • Which processes have the biggest impact on
    customer relations?
  • Which process would benefit the most from
    integration?
  • Which processes should be standardized?

26
Customer Relationship Management (CRM)
  • Plans and executes business processes that
    involve customer interaction
  • Changes focus from managing products to managing
    customers
  • Point-of-sale data is analyzed for patterns used
    to predict future behavior

27
Supply Chain Management
  • Supply chain planning
  • Supply chain execution
  • Supplier relationships
  • Distinctions between ERP and SCM are becoming
    increasingly blurred

28
ERP and MRP
  • MRP (material requirements planning) was the
    precursor to ERP
  • Primarily a production planning and control
    system
  • MRP evolved to MRP II (manufacturing resource
    planning)
  • ERP and ERP II continue to extend the links
    through all business processes

29
Material Requirements Planning
  • Computerized inventory control production
    planning system
  • Schedules component items when they are needed -
    no earlier and no later

30
When to Use MRP
  • Dependent and discrete items
  • Complex products
  • Job shop production
  • Assemble-to-order environments

31
Material Requirements Planning
32
Master Production Schedule
  • Drives MRP process with a schedule of finished
    products
  • Quantities represent production not demand
  • Quantities may consist of a combination of
    customer orders demand forecasts
  • Quantities represent what needs to be produced,
    not what can be produced

33
Basic MRP Processes
  1. Exploding the bill of material
  2. Netting out inventory
  3. Lot sizing
  4. Time-phasing requirements

34
MRP Outputs
  • Planned orders
  • Work orders
  • Purchase orders
  • Changes to previous plans or existing schedules
  • Action notices
  • Rescheduling notices

35
Capacity Requirements Planning (CRP)
  • Computerized system that projects load from
    material plan
  • Creates load profile
  • Identifies underloads and overloads

36
Capacity Terms
  • Load profile
  • Compares released and planned orders with work
    center capacity
  • Capacity
  • Productive capability includes utilization and
    efficiency
  • Utilization
  • of available working time spent working

37
More Capacity Terms
  • Efficiency how well the machine or worker
    performs compared to a standard output
  • Load
  • The standard hours of work assigned to a facility
  • Load percent
  • The ratio of load to capacityLoad
    (load/capacity)x100

38
Capacity Requirements Planning
39
Initial Load Profile
40
Remedies for Underloads
  1. Acquire more work
  2. Pull work ahead that is scheduled for later time
    periods
  3. Reduce normal capacity

41
Remedies for Overloads
  1. Eliminate unnecessary requirements
  2. Reroute jobs to alternative machines or work
    centers
  3. Split lots between two or more machines
  4. Increase normal capacity
  5. Subcontract
  6. Increase the efficiency of the operation
  7. Push work back to later time periods
  8. Revise master schedule

42
Adjusted Load Profile
43
Chapter 16
  • Scheduling

44
Scheduling
  • Specifies when labor, equipment, facilities are
    needed to produce a product or provide a service
  • Last stage of planning before production occurs

45
Scheduling by Process Type
  • Process Industry
  • Linear programming
  • EOQ with noninstantaneous replenishment
  • Mass Production
  • Assembly line balancing
  • Project
  • Project -scheduling techniques (PERT, CPM)

46
Objectives in Scheduling
  • Meet customer due dates
  • Minimize job lateness
  • Minimize response time
  • Minimize completion time
  • Minimize time in the system
  • Minimize overtime
  • Maximize machine or labor utilization
  • Minimize idle time
  • Minimize work-in-process inventory
  • Efficiency

47
Shop Floor Control
Scheduling and monitoring day to day production
of a job
  1. Loading - Check availability of material,
    machines labor
  2. Sequencing - Release work orders to shop issue
    dispatch lists for individual machines
  3. Monitoring - Maintain progress reports on each
    job until it is complete

48
Loading
  • Allocate work to machines (resources)
  • Perform work on most efficient resources
  • Use assignment method of linear programming to
    determine allocation

49
Sequencing
  • Prioritize jobs assigned to a resource
  • If no order specified use first-come first-served
    (FCFS)
  • Many other sequencing rules exist
  • Each attempts to achieve to an objective

50
Sequencing Rules
  • FCFS - first-come, first-served
  • LCFS - last come, first served
  • DDATE - earliest due date
  • CUSTPR - highest customer priority
  • SETUP - similar required setups
  • SLACK - smallest slack
  • CR - critical ratio
  • SPT - shortest processing time
  • LPT - longest processing time

51
Critical Ratio Rule
Ties scheduling to Gantt Chart or PERT/CPM and
project crashing
52
Sequencing Jobs Through Many Machines/Processes
  • Facility is dynamic, new jobs added
  • Develop global sequencing rules
  • First-in-system, first-served (FISFS)
  • Work-in-next-queue (WINQ)
  • Fewest remaining operations (NOPN)
  • Slack per remaining operation (S/OPN)
  • Remaining work (RWK)
  • Study system via simulation

53
Monitoring
  • Gantt Chart
  • Shows both planned and completed activities
    against a time scale
  • Input / Output Control
  • Monitors the input and output from each work
    center

54
Advanced Planning and Scheduling Systems
  • Infinite - assumes infinite capacity
  • Loads without regard to capacity
  • Then levels the load and sequences jobs
  • Finite - assumes finite (limited) capacity
  • Sequences jobs as part of the loading decision
  • Resources are never loaded beyond capacity

55
Advanced Planning and Scheduling Systems
  • Advanced planning and scheduling (APS)
  • Add-ins to ERP systems
  • Constraint-based programming (CBP) identifies a
    solution space and evaluates alternatives
  • Genetic algorithms based on natural selection
    properties of genetics
  • Manufacturing execution system (MES) monitors
    status, usage, availability, quality

56
Theory of Constraints
  • Not all resources are used evenly
  • Concentrate on the bottleneck resource
  • Synchronize flow through the bottleneck
  • Use process and transfer batch sizes to move
    product through facility

57
Theory of Constraints
  • What to Change
  • What to Change to
  • How to cause the change

58
  • Quality Management

Quality is a measure of goodness that is
inherent to a product or service. Bottom line
perspective has to be from the Customer fitness
for use
59
What Is Quality?
  • The degree of excellence of a thing (Websters
    Dictionary)
  • The totality of features and characteristics
    that satisfy needs (ASQ)
  • Fitness for use
  • Quality of design

60
Quality
  • Quality Management not owned by any functional
    area cross functional
  • Measure of goodness that is inherent to a product
    or service

61
FedEx and Quality
  • Digitally Assisted Dispatch System communicate
    with 30K couriers
  • 1-10-100 rule ? 1 if caught and fixed as
    soon as it occurs, it costs a certain amount of
    time and money to fix ? 10 if caught later
    in different department or location as much as
    10X cost ? 100 if mistake is caught by
    the customer as much as 100X to fix

62
Product Quality Dimensions
  • Product Based found in the product attributes
  • User Based if customer satisfied
  • Manufacturing Based conform to specs
  • Value Based perceived as providing good value
    for the price

63
Dimensions of Quality (Garvin)
  • Performance
  • Basic operating characteristics
  • Features
  • Extra items added to basic features
  • Reliability
  • Probability product will operate over time

64
Dimensions of Quality (Garvin)
  • Conformance
  • Meeting pre-established standards
  • Durability
  • Life span before replacement
  • Serviceability
  • Ease of getting repairs, speed competence of
    repairs

65
Dimensions of Quality (Garvin)
  • Aesthetics
  • Look, feel, sound, smell or taste
  • Safety
  • Freedom from injury or harm
  • Other perceptions
  • Subjective perceptions based on brand name,
    advertising, etc

66
Service Quality
  • Time Timeliness
  • Customer waiting time, completed on time
  • Completeness
  • Customer gets all they asked for
  • Courtesy
  • Treatment by employees

67
Service Quality
  • Consistency
  • Same level of service for all customers
  • Accessibility Convenience
  • Ease of obtaining service
  • Accuracy
  • Performed right every time
  • Responsiveness
  • Reactions to unusual situations

68
Quality of Conformance
  • Ensuring product or service produced according to
    design
  • Depends on
  • Design of production process
  • Performance of machinery
  • Materials
  • Training

69
Quality Philosophers
  • Walter Shewhart Statistical Process Control
  • W. Edwards Deming
  • Joseph Juran strategic and planning based
  • Armand Fiegenbaum total quality control entire
    business must be involved in quality improvement

70
Demings 14 Points
  1. Create constancy of purpose
  2. Adopt philosophy of prevention
  3. Cease mass inspection
  4. Select a few suppliers based on quality
  5. Constantly improve system and workers
  6. Institute worker training

71
Demings 14 Points
  1. Instill leadership among supervisors
  2. Eliminate fear among employees
  3. Eliminate barriers between departments
  4. Eliminate slogans
  5. Remove numerical quotas

72
Demings 14 Points
  1. Enhance worker pride
  2. Institute vigorous training and education
    programs
  3. Develop a commitment from top management to
    implement these 13 points

73
The Deming Wheel(or PDCA Cycle)
Also known as the Shewart Cycle
74
Six Sigma
  • Quality management program that measures and
    improves the operational performance of a company
    by identifying and correcting defects in the
    companys processes and products

75
Six SigmaStarted By Motorola
  • Define
  • Measure
  • Analyze
  • Improve
  • Control

Made Famous by General Electric 40 of GE
executives bonuses tied to 6 sigma implementation

76
Malcolm Baldrige National Quality Award
  • Category 3 determine requirements,
    expectations, preferences of customers and
    markets
  • Category 4 what is important to the customer
    and the company how does company improve

77
Total Quality Management
  1. Customer defined quality
  2. Top management leadership
  3. Quality as a strategic issue
  4. All employees responsible for quality
  5. Continuous improvement
  6. Shared problem solving
  7. Statistical quality control
  8. Training education for all employees

78
Strategic Implications of TQM
  • Quality is key to effective strategy
  • Clear strategic goal, vision, mission
  • High quality goals
  • Operational plans policies
  • Feedback mechanism
  • Strong leadership

79
TQM in Service Companies
  • Inputs similar to manufacturing
  • Processes outputs are different
  • Services tend to be labor intensive
  • Quality measurement is harder
  • Timeliness is important measure
  • TQM principles apply to services

80
Cost of Quality
  • Cost of achieving good quality
  • Prevention
  • Planning, Product design, Process, Training,
    Information
  • Appraisal
  • Inspection and testing, Test equipment, Operator

81
Cost of Quality
  • Cost of poor quality
  • Internal failure costs
  • Scrap, Rework, Process failure, Process downtime,
    Price-downgrading
  • External failure costs
  • Customer complaints, Product return, Warranty,
    Product liability, Lost sales

82
Employees and Quality Improvement
  • Employee involvement
  • Quality circles
  • Process improvement teams
  • Employee suggestions

83
Cause-and-Effect Diagram
Also known as Ishikawa Diagram or Fish Bone
84
Hot House Quality
  • Lots of Hoopla and no follow through

85
ISO 90002000
  • Customer focus
  • Leadership
  • Involvement of the people
  • Process approach
  • Systems approach to management
  • Continual process improvement GAO
  • Factual approach to decision making
  • Mutually beneficial supplier relationships

86
Implications Of ISO 9000
  • Truly international in scope
  • Certification required by many foreign firms
  • U.S. firms export more than 150 billion
    annually to Europe
  • Adopted by U.S. Navy, DuPont, 3M, ATT, and
    others

87
ISO Accreditation
  • European registration
  • 3rd party registrar assesses quality program
  • European Conformity (CE) mark authorized
  • United States 3rd party registrars
  • American National Standards Institute (ANSI)
  • American Society for Quality (ASQ)
  • Registrar Accreditation Board (RAB)

88
Upcoming
  • Final Exam
  • Harley Paper
  • Presentations
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