Lean Operations & JIT

Chapter 14

Learning Objectives
You should be able to:
1. Explain what is meant by the term lean operations
system
2. List each of the goals of a lean system and explain its
importance
3. List and briefly describe the building blocks of lean
4. List the benefits and risks of a lean system

Instructor Slides

Lean Operations
Lean operations
A philosophy that encompasses every aspect of
the process, from design to after the sale of a
product.
Pursues a system that functions with minimal
levels of inventory, waste, space and transactions.
A flexible system of operation that uses
considerably less resources (activities, people,
inventory, space) than a traditional system
Tends to achieve

Greater productivity
Lower costs
Shorter cycle times
Higher quality

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Lean: Ultimate Goal

The ultimate goal:
Achieve a system that matches supply to
customer demand; supply is synchronized to
meet customer demand in a smooth
uninterrupted flow
A balanced system
One that achieves a smooth, rapid flow of materials
and/or work through the system

History of Lean Operation & Just In Time

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Goals and building blocks

of lean systems

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Lean:
Supporting Goals
The degree to which leans ultimate goal is achieved
depends upon how well its supporting goals are
achieved:
1. Eliminate disruptions

Poor quality (lean systems do not carry extra

inventory), equipment breakdowns, schedule changes,
late deliveries.

2. Make the system flexible

Mix of products, levels of output.

Require reducing setup-times & lead-times.

3. Eliminate waste, especially excess inventory

Minimize inventory
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Waste
Represents unproductive resources
Seven sources of waste in lean systems:
1. Inventory

Idle resource, requires space, cost

2. Overproduction

Overuse of manufacturing resources

3. Waiting time

Require space, WIP

4. Unnecessary transporting

Handling cost, WIP inventory

5. Processing waste

Unnecessary production steps, scrap

6. Inefficient work methods

Reduced productivity, increased scrap, increased WIP

7. Product defects

Rework costs, customer dissatisfaction

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Lean: Building Blocks

1. Product design
2. Process design
3. Personnel/
organizational
elements
4. Manufacturing
planning and control

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Building Blocks
1. Product Design
Four elements of product design important for
lean systems:
1. Standard parts

Fewer parts, less training, lower costs, routine purchasing,

handling and quality inspection. Can use standard processing.

2. Modular design

Fewer parts, simpler assembly, purchasing, handling, training.

3. Highly capable systems with quality built in

small lot sizes and absence of buffer stock.

Quality designed into the product and production process.
Standardized products, methods and equipment, workers
familiar with their jobs.

4. Concurrent engineering

Bringing together design and manufacturing personnel together

early in the design phase to prevent engineering changes. 14-9

Building Blocks
2. Process Design
Seven aspects of process design that are
important for lean systems:
A.
B.
C.
D.
E.
F.
G.
H.

Small lot sizes

Setup time reduction
Manufacturing cells
Quality improvement
Production flexibility
A balanced system
Little inventory storage
Fail-safe methods
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2. Process Design
A. Small Lot Sizes
In the lean philosophy, the ideal lot size is 1.
Goal: reduce lot size as much as possible (given
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practical considerations)
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Benefits of small lot size
2 DS

2(annual demand)(se tup cost)

Reduced in-process inventory QO

H
annual per unit holding cost
Lower total carrying costs
Inspection and rework costs are lower when quality problems
do occur
Permits greater flexibility in scheduling = better response to
customer demands.
Less inventory to work off before implementing product
improvements
Increased visibility of problems
Increased ease of balancing operations
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2. Process Design
B. Setup Time Reduction
Small lot sizes and changing product mixes
require frequent setups
Unless these are quick and relatively inexpensive, they can
be prohibitive

Setup time reduction requires deliberate

improvement efforts
Workers are trained to do their own setups
Single-minute exchange of die (SMED)
A system for reducing changeover time (e.g. 1982 Toyota
from 100 to 3 minutes).
Convert activities form internal to external.
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What is die?

Instructor Slides

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2. Process Design
D. Quality Improvement
Quality defects during the process can disrupt the
orderly flow of work
Focus on finding and eliminating the causes of
problems.
Autonomation (jidoka)
Automatic detection of defects during production
Two mechanisms are employed
1. One for detecting defects when they occur
2. Another for stopping production to correct the cause of the
defects (force immediate attention to the problem)

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2. Process Design
F. Balanced System
Line balancing helps to achieve a rapid work flow.
Work assigned to each workstation must not exceed
cycle time (Takt time).
Takt time
The cycle time needed to match customer demand for final
product.
Sometimes referred to as the heartbeat of a lean system
Procedure:
1. Determine the net time available per shift
2. If there is more than one shift per day, multiply the net
time by the number of shifts
3. Compute the takt time by dividing the net available time
by demand

Using takt time minimizes WIP inventory.

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2. Process Design
G. Inventory Storage
Lean systems are designed to minimize inventory (waste)
Inventories are buffers that tend to cover up recurring problems that are
never resolved
partly because they are not obvious
partly because the presence of inventory makes them seem less
serious

The lean approach is to gradually reduce inventories in order to

uncover problems and then resolve them.
Advantages:

Lower carrying cost

Less space
Less dependence on buffers
Less rework
Less need use current inventory before implementing design
improvements.

Risks:
No safety stock
Opportunity loss when problems arise

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Building Blocks
3. Personnel/Organizational
Five personnel/
organizational elements
that are important for lean
systems:
A. Workers as assets
B. Cross-trained workers
C. Continuous
improvement
D. Cost accounting
E. Leadership/project
management
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3. Personnel/Organizational:
A. Workers as Assets
Workers as assets
Well-trained and motivated workers are the
heart of the lean system
They are given greater authority to make decisions
but more is expected of them

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3. Personnel/Organizational
B. Cross-Trained Workers
Cross-trained workers
Workers are trained to perform several parts of a
process and operate a variety of machines
Facilitates flexibility
Helps in line balancing

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3. Personnel/Organizational
C. Continuous Improvement
Continuous improvement (Kaizen, )
Workers in lean systems have greater responsibility
for quality, and they are expected to be involved in
problem solving and continuous improvement
Teams of workers and managers who routinely
work on problems.
Problem solving culture: workers are encouraged
to report problems and potential problems.
Andon: System of lights used at each workstation
to signal problems or slowdowns (green, amber,
red lights)
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Building Blocks
4. MPC
Seven elements of
Manufacturing Planning and
Control (MPC) are
particularly important for
lean system:
A.
B.
C.
D.
E.
F.

Level loading
Pull systems
Visual systems
Limited work-in-process (WIP)
Close vendor relationships
Reduced transaction
processing
G. Preventive maintenance and
housekeeping
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4. MPC
B. Pull Systems
Push system
Work is pushed to the next station as it is completed (without
regard to the next stations readiness).
Work may pile up at workstations that fall behind schedule.

Pull system
Work moves on in response to demand from the next stage in the
process.
A workstation pulls output from the preceding workstation as it is
needed
Output of the final operation is pulled by customer demand or the
master schedule

Pull systems are not appropriate for all operations

Require fairly steady flow of reparative work.
Large variations in volume, product mix, or product design will undermine
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the system

4. MPC
B. Pull Systems:
Communication
Communication moves backward through the
system from station to station
Each workstation (customer) communicates its
need for more work to the preceding workstation
(supplier)
Assures that supply equals demand

Work moves just in time for the next operation

Flow of work is coordinated
Accumulation of excessive inventories is avoided

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4. MPC
C. Visual Systems
Kanban (
Card or other device that communicates demand
for work or materials from the preceding station
Kanban is the Japanese word meaning signal or visible
record

Paperless production control system

Authority to pull, or produce, comes from a
downstream process.

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4. MPC
C. Visual Systems - kanban
Kanban
A kanban card is affixed to each container
When a workstation needs to replenish its supply of
parts, a worker withdraws on container
Each container holds a predetermined quantity
The worker removes the kanban card from the
container, posts it, and take the container to the
workstation.
The posted card is picked up by a stock person who
replenishes the stock with another container
and so on down the line.
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4. MPC
E. Close Vendor Relationships
Relatively small number of suppliers.
Close relationships with (certified) vendors
They are expected to provide frequent, small deliveries of
high-quality goods
The burden of ensuring component quality is shifted to the
vendor.

Local supplier are preferred in order to reduce lead

time (of small frequent deliveries)
Ideally the suppliers themselves will be operating
under JIT.
The suppliers become part of an extended
integrated JIT system.

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Lean Services
In service the focus is often on the time needed to perform
the service - speed is often the order winner
Provide services when they are needed
Lean benefits can be achieved in the following ways:
Eliminate disruptions
e.g., avoid having service providers also answer phones.

Make system flexible

Train workers to handle more variety.

Reduce setup and lead times

Estimate what parts and tools are frequently needed and have them on hand

Eliminate waste
Eliminate errors and duplicate work.

Minimize WIP
e.g., orders waiting to be processed, calls waiting to be answered, packages
waiting for delivery, truck waiting to be loaded/unloaded etc.

Simplify the process

e.g., self-service systems such as in retail, ATMs, vending machines, service
systems

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Lean vs. Traditional Philosophies

Factor

Traditional

Lean

Inventory

Much to offset
forecast errors, late
deliveries

Minimal necessary to operate

Deliveries

Few, large

Many, small

Lot sizes

Large

Small

Setup; runs

Few, long runs

Many, short runs

Vendors

Long-term
relationships are
unusual

Partners

Workers

Necessary to do the
work

Assets
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Lean Systems
Key benefits:
Key Risks:
Reduced waste
Absence of buffers
inventory levels
(personnel,
inventory) to fall
scrap and rework
back on if something
space requirements
goes wrong.
High quality
Possible loss off sale
Flexibility
and lost customers.
Reduced lead times
Increased productivity
and equipment
utilization

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