Lean Systems and jit lean Production

Lean Systems and JIT

Lean Production

• Lean Production can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods)

• Lean Production also involves the elimination of waste in production effort
• Lean Production also involves the timing of production resources (i.e., parts arrive at the next workstation “just in time”)

Overview of JIT

• Toyota Production System (post-WWII)
• reducing costs, eliminating waste, and improving productivity
• Just-in-Time (1980s)
• way of planning operations
• reduces variability of demand
• enhances responsiveness
• conducts value-adding operations as close to consumption as possible

JIT and Lean Management

• Big JIT (also called Lean Management)

• is a philosophy of operations management that seeks to eliminate waste in all aspects of a firm’s production activities:
• human relations, vendor relations, technology, and the management of materials and inventory

• Little JIT

• focuses more narrowly on scheduling goods inventory and providing service resources where and when needed

The Toyota Production System

• Based on two philosophies:

• 1. Elimination of waste
• 2. Respect for people

Toyota Production System’s Four Rules

• All work shall be highly specified as to content, sequence, timing, and outcome

• Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses

• The pathway for every product and service must be simple and direct

• Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization

Waste in Operations

• Waste from overproduction

• Waste of waiting time

• Transportation waste

• Inventory waste

• Processing waste

• Waste of motion

• Waste from product defects

• Underutilization of people

Exercise

• Take an activity from a job or personal life (e.g. a sport, study, Muhlenberg processes, a class)

• Identify areas of waste

• Identify opportunities for eliminating waste and improving the performance

• Write down and share with the class

Minimizing Waste: Inventory Hides Problems

JIT Demand-Pull Logic

SUPPLY CHAIN AND E-COMMERCE CONSIDERATIONS IN JIT

• Supplier structural improvements
• reduced inventory at suppliers results in lower fixed costs
• suppliers provide small quantities with frequent deliveries

• Supplier infrastructural improvements

• emphasis on win-win relationship

SCHEDULING AND CAPACITY MANAGEMENT IN JIT SYSTEMS

• JIT planning and control:
• relies on a level master schedule
• prefers excess capacity to excess inventory
• works with suppliers and customers to reduce complexity & uncertainty
• improves system’s responsiveness to customer requirements

JIT in Services (Examples)

• Organize Problem-Solving Groups

• Upgrade Housekeeping

• Upgrade Quality

• Clarify Process Flows

• Revise Equipment and Process Technologies

• Level the Facility Load

Supplier Networks: Trends In Supplier Policies

• 1. Locate near to the customer

• 2. Consider establishing small warehouses near to the customer or consolidating warehouses with other suppliers

• 3. Use standardized containers and make deliveries according to a precise delivery schedule

• 4. Become a certified supplier and accept payment at regular intervals rather than upon delivery

Potential Supplier Concerns with JIT Purchasing

• Desire for diversification

• -- concerned about all business stemming from single customer.

• Poor customer scheduling

• -- concerned that customer will be unable to develop smooth, consistent schedule.

• Engineering changes

• -- concerned that customer will promulgate frequent engineering changes with inadequate lead time.

Critique of JIT

• Contrast pragmatic JIT vs. romantic JIT

• Pragmatic JIT

• focuses on concrete details of production process
• use practical tools to address problems
• continuous improvement

• Romantic JIT

• appeals to “revolutionary rhetoric”
• cutting inventories is a prompt to reform
• against tradeoffs

Critique of JIT

• Problems

• System of beliefs and collection of methods

• Successes due to genius of Ohno and Shingo (of Toyota) – they did make tradeoffs

• Moves inventories to suppliers but does not reduce overall

• Workers in JIT environments under high levels of pressure -- burn out!