Topic-17

Just-In-Time Production

JIT production
What is JIT? JIT is a new production philosophy/concept/system that focused on a continuous improvement by attempting to eliminate all wastes including:  Inventory/Defective  Space/equipment/energy/time/worker activities . In the production process through providing right material with right quantity in right time at right place at all production stages.

JIT Production (II)

Three critical concerns in JIT:
 Zero inventory/Zero defective  Continuous improvement

Other names of JIT:

 Continuous-flow manufacturing (IBM)  Stockless and repetitive production (HP)  Toyota production system

Key differences between JIT and traditional production MGT:

 Traditional MGT: reduce inventory and defective.  JIT MGT: eliminate inventory and defectives.

Toward Eliminating Waste in Manufacturing

Overproduction: make only what is needed now Waiting: coordinate flows between operations, and balance load imbalance by flexible workers and equipment Transportation: design facility layouts that reduce or eliminate materials handling and shipping Unneeded production: eliminate all unneeded production steps Work-in-process (WIP) inventories: eliminate by reducing setup times, increasing production rates, and better coordination of production rates between work centers Motion and effort: improve productivity and quality by eliminating unnecessary human motions, make necessary motions more efficient, mechanize, then automate Defective products: eliminate defects and inspections make perfect products

Major Features of JIT

1. 2. 3. 4. 5. 6.
Primary features: Commitment in continuous improvement Coordination with TQC High worker/employee involvement JIT purchasing Pull production Preventive maintenance system

Major Features of JIT (II)

Secondary features:
7. Stable and level production scheduling 8. Reduced job setup times 9. Small lot size and short lead time 10.Very low WIP inventory level 11. High motivated and responsible workers 12. ..

By building up WIP you solve the problem of how to keep your production on-going. However, you hide the causes for needing WIP, if you can remove the causes for WIP, you can eliminate it, that is JIT .

Large Inventories Hide Operations Management Problems

Continuous Improvement with JIT Systems

Scrap

Unreliable suppliers

Capacity imbalance

Figure 11.1

Characteristics of JIT Purchasing

Supplier:
    

Few suppliers Nearby suppliers Repeat business with same suppliers Competitive bidding mostly limited to new part numbers Suppliers are encouraged to extend JIT buying to their suppliers Steady output rate (a desirable prerequisite) Frequent deliveries in small lot quantities Long-term contract agreements Minimal release paperwork Suppliers encourages to package in exact quantities Suppliers encouraged to reduce their production lot size Minimal product specifications imposed on supplier Help supplier to meet quality requirements Close relationship between buyer s and suppliers quality assurance people Suppliers encouraged to use process control charts

Quantities:
     

Quality
   

How to Accomplish Just-InTime Production

Major Components of JIT

1. Focused operations (facility dedication: GT/ Cellular Manufacturing) (Structured Production Flow) 2. Dependable supply and demand (JIT Procurement: Partnership) 3. Pull production (Linear and Stable Output: Kanban Systems) 4. TQC (defect-free) and TPM (Total Preventive Maintenance) 5. Worker commitment and participation (Quality Cycle)

Major Components of JIT (II)

Pull vs. push system:
  

Pull: production is driven from downstream Push: production is driven from advanced planning. Kanban is a pull production system a card system used in Toyota to control material flow to implement JIT production where the cards are only authority for producing and internal delivery of parts

Benefits from JIT production: You can t build a JIT system overnight and the full potential JIT benefits are only attainable when you build an entire and well integrated system which employs all major JIT components.

Operational Benefits y Reduce space requirements y Reduce inventory investment y Reduce lead times y Increase labor productivity y Increase equipment utilization y Reduce paperwork and simplify

y y y

planning systems Valid priorities for scheduling Workforce participation Increase service/product quality

JIT Benefit: A Example Auto Parts Producer

Before JIT July 1985 Work in process ($) Labor content (hr/unit) Floor space (sq..ft) Rework (%) Scrap(%) 4,645,700 0.173 July 1987 842,500 0.141 After JIT Improvement 82% 18 January 1988 347,700 0.130 Improvement 59% 8

474,100 11.2 2.5

328,300 6.7 1.5

31 41 38

309,400 6.0 1.2

6 10 20

Push and Pull Production Systems

There are several ways to characterize the difference between push and pull production systems. Key difference are noted in the outline below:
Push The order release process Authorize production in advance of demand Pull Order is released when inventory is physically removed from finished parts or finished goods Uses local information Decentralized decision

Information used in the decision process Centralization/ decentralization of decision making Authority resides

Uses global information Centralized decision

Authority is upstream

Authority is downstream

Flow of Kanban Cards and Containers between Two Work Centers

Kanban Card System

Japanese word: CARD or VISIBLE RECORD Information included:
  

ITEM QUANTITY to be withdrawn or produced STOCKING LOCATION

Operation Rules for KANBAN Systems

One card for each CONTAINER Using process must go to producing process to get parts (PULL SYSTEM) Containers can be moved only with a card EXACT quantity of GOOD parts in each container Never pass defective parts Do not exceed production or withdrawal quantities specified on the cards

JIT Production/Operations Systems

Characteristics of JIT (Lean Systems) Operations
         

Pull Production system (material flow) Consistently high quality Small lot sizes Uniform workstation loads Standardization of components/ work methods Close supplier ties Flexible workforce Line flows Automated production Preventive maintenance

JIT Production/Operations Systems (II)

JIT is a system of enforced problem solving With no buffer inventories to reply on in times of production interruptions problems are highly visible and cannot be ignored The job of eliminating production problem is never finished Continuous improvement is a practice and central to the philosophy of JIT People make JIT work: JIT has a strong element of training and involvement of workers A culture of mutual trust and team work An attitude of loyalty and self-discipline Empowerment of workers giving them the authority to solve production problems

Converting Traditional Shops Towards JIT

What types of production more fit to JIT? JIT is ideal for repetitive manufacturing. However many efforts have been made to convert traditional job shops towards JIT shops by making no-repetitive production to repetitive production. How to measure JIT practice? In general, in converting traditional shops towards JIT, a 100% JIT shop is not attainable. Instead a measurement of how far toward JIT is desirable for MGT measuring JIT practice is a new topic in the POM field

Converting Traditional Shops Towards JIT (II)

Macro-measurement Reduction in average job flow time /inventory turnover/WIP Reduction in defective rate/scrap cost /product failure. Micro-measurement LP/PT ratio WP/WS ratio

JIT Measures
JIT is a manufacturing philosophy- not a technique. Ideally, JIT requires that materials/ sub-assemblies/ components be procured or produced in the necessary amounts. Just in time to be consumed by the subsequent stage in the process/ value chain. There are two important micro measures that can be used to determine whether a facility practices JIT.  A: Lead Time divided by work content (or actual processing time). The ideal LT/PT ratio is of course 1.0- one hour of elapsed time to complete a job that requires one hour of machine processing. A more practical ideal ratio is 2.0, while a good ration is 2.5. A more typical ratio is 10, 20, or 100.  B: Work Pieces in Process divided by Number of Workstations. An ideal ratio is once again 1.0. These ratio don t tell the manager how to improve the process but do provide a target.

Other considerations in evaluating Just In Time operations: Distance between machine operations Transfer lot (batch) sizes between machines Set up Times

Machine Processing Time Variation Product Quality Vendor Reliability Material handling equipment


Working Towards Repetitive Manufacturing

Reduce setup times and production lot sizes Change the layout of the factory to allow streamlines product flows through the plant Convert clusters of machines within process-focused layouts to cellular manufacturing (CM) centers or cells. In CM, groups of machines function as product-focused islands within the larger layout. Install flexible manufacturing systems (FMS). These groups of machines can accommodate product variety without the necessity of worker-performed machine changeovers. Standardize parts designs to reduce the number of parts and the number of changeovers. Train workers for several jobs. Theses flexible workers can move from work center to work center as necessary to balance the workload in the factory. Install effective preventive maintenance programs so that machine breakdowns do not interrupt product flows. Install effective quality control programs so that defective products do not interrupt product flows. Develop an effective subcontractor network so that materials flow into factory smoothly to support the in-house production schedule, thereby allowing uninterrupted production.

Example: Timely Production

Timely production (TP) runs a production shop with 5 machines that produce 2 different products. A and B. the market can absorb all the products generated by this system. This facility is shown in Figure a below. Product A requires machines I, III, and IV. Product B requires machines II, III, and V. Processing times on machines I, II, Iv and V are two hours per product, while the processing time on machine III is one hour per unit of A and one hour per unit of B. Which machine (or machines) represent a production constrain at TP? Is it possible to have a LT/PT ratio of 1.0 for this system? Explain by drawing a complete production cycle on the Grant Chart in Figure 2. If there is a set up of 1 hour on machine III to change between products, do your answers to questions 1 and 2 change? Explain. If TP decides, given this set up time, to produce in batch sizes of 5 for both products A and B, what will be the resulting LT/PT? What will be the resulting LP/TP for a batch size of 50 for each product? Does the batch size make a difference in terms of how many total products can be produced in a 40 hour week? Identify practical reason why TP would routinely maintain buffers in front of each machine.

1. 2. 3.

4.

2 hours/unit

2 hours/unit

I RMA

IV 1 hours/unit A

III

II RMB

B V Figure 1

2 hours/unit

2 hours/unit

Question (2): Assume: Setup Time = 0 (machine 3) Lotsize = 1

Machine

10

11

12

13

14

15

16

22

23

A1

A 1 B 1

A 2 B 1 A 1

A 2 B 2 B 1 A 1 B 2 A 2 A 1 B 1

A 5 . . B 2 A 2 B 1 A 2 B 2 B 2

A 5 B 5 B 5 A 5 A 5 A 5 B 5 B 5 B 5 ...... ........ ..

II

III

IV V

For both A and B: Total Processing Time = 5 Total Lead time= 5

So, LT/PT Ratio = 1 Production rate = 40 units/ hour

Question (3)
Machine -3: For A and B: If: Setup Time = 1 Hour Total Processing Time = 5 Total Lead Time = 5 Lotsize = 1 LT/PT= 1

1 I II III IV V A 1

2 A1

5 A2

6 A2

9 A3

10 A3

11

12

13 A4

14 A4

15

16

17

18

19

20

21

22

B1 S A1

B1 S A1 B1 A1 B1 S

B2 A2

B2 S A2 B2 A2 B2 S

B3 A3

B3 S A3 B3 A3 B3 S

B4 A4

B4 s A4 B4 A4 B4 B4

B1

B2

B3

Production Rate = 20/40

Productivity = 50%

Question (3) - continued

Given: Setup Time = 1 hour Let: Lot-size = 5

1 I A 1

2 A 1

3 A 2

4 A 2

5 A 3

6 A 3

9 A 5 B 2

10 A5

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

A A 4 4 B B 1 1

II III IV V

B2 S

B3 A1

B3 A2

B4 A3

B4 A4

B5 A5

B5 S A1 B1 A1 B2 A2 B3 A2 B4 A3 B5 A3 S A4 B1 A4 B1 A5 B2 A5 B2

Total Processing Time = 5 Total Lead-time = 25

LT/PT = 5

Production Rate = 5/6 = 0.83 = 33.3/40 hours

Question (3) - continued

Now, assume if: Lot-size = 50

1 I

10

11

12

13

14

15

16

17

18

19

20

21

22

I I I I I I V V

Total Processing Time = 5 Total Lead-time = 250

LT/PT = 50

Production Rate = 50/51 = 0.98 = 39.2/40 hours

A Special Case Setup Time Reduction in A Service Environment

1. Assume five of your classmates (or friends including yourself) need to go though a specific medical examination to participate a special contest for college students. All of you are currently living in campus at City A. 2. Currently the only doctor known to be able to perform this special medical examination is in City B 120 miles away from City A. It takes about 2-hour to drive from City A to City B. 3. In addition, it was told that this medical test procedure will take exactly one-hour for each person and cost $100 for each person. Considering the current gas price, it is estimated that it will cost about $100 for a car driving a round-trip from City A to City B. (Figure 1 below)

City A

2 Hours Driving

City B

Town C 120 Miles

Town D

Now, consider the options that the five of you can travel from City A to City B to get it done. Option-A: All five of you will set up an appointment with this Doctor and drive your car from City A to City B for a round-trip on your own. For example: Student-1: set up an appointment at 10:00 a.m., leaving home (City A) at 8:00 a.m., arriving the Doctors office at 10:00 a.m., completed the procedure at 11:00 a.m., then driving back to home at 1:00 p.m. Student-2: set up an appointment at 11:00 a.m., leaving home (City A) at 9:00 a.m., arriving the Doctors office at 11:00 a.m., completed the procedure at 12:00 p.m., then driving back to home at 2:00 p.m.

Student-3: set up an appointment at 12:00 p.m., leaving home (City A) at 10:00 a.m., arriving the Doctor s office at 12:00 p.m., completed the procedure at 1:00 p.m., then driving back to home at 3:00 p.m. Student-4: set up an appointment at 1:00 p.m., leaving home (City A) at 11:00 a.m., arriving the Doctor s office at 1:00 p.m., completed the procedure at 2:00 p.m., then driving back to home at 4:00 p.m. Student-5: set up an appointment at 2:00 p.m., leaving home (City A) at 12:00 p.m., arriving the Doctor s office at 2:00 p.m., completed the procedure at 3:00 p.m., then driving back to home at 5:00 p.m.
In summary, for each student, using the term of LT/PT ratio in JIT, you have a LT/PT ratio = 5/1, or 5:1, and a cost of $200. For five of you, a total cost of 5 x $200 = $1,000.

Option-B: With the same appointments in Option-A with this Doctor, all of five students will drive a single car from City A to City B for a round-trip. By doing so, all of five have to leave home (City A) at 8:00 a.m. and arriving the Doctors office together at 10:00 a.m. Then, Student-1 will go first (while others will have to in waiting) to complete the procedure at 11:00 a.m., and then it is Student-2s turn (now Student-1 will join other three in waiting) to go through the procedure. As such, Student-5 will complete the procedure at 3:00 p.m., and then all five will drive back to home together at 5:00 p.m. Now, for each student, like in Option-A, using the term of LT/PT ratio in JIT, each student will have a LT/PT ratio = 9/1, or 9:1, but at a lower cost of $120. For five of you, a total cost of 5 x $120 = $600.

Comparison: Comparing Option-A and Option B now, clearly, by using Option-B, there will be a saving of ($1000 - $600)/5 = $80 for each student, but a larger LT/PT ratio (9:1 vs. 5:1), that is, a 4-hour waiting time for each student. Which option you would prefer? A tough trade-off? -- More economic (low-cost) trip with Option-B? Or -- Small LT/PT ratio with less waiting time of Option A? Questions: If you dont like such a trade-off, what will you do? How can achieve both low cost and low LT/PT ratio?

Hint: Here the setup time is the travel time between City A and City B. Instead of making an unwanted trade-off, why not consider the options that can reduce the setup time here in this case? Like: * Searching a doctor in City A - who can perform this procedure? If not available, then, * Searching a doctor in a town closer to City A, like 100 miles away? 80 miles away? Or, * Maybe paying for the doctor in City B to travel to City A (assuming the same traveling cost plus fees for lunch and hotel, etc.? ) This is JIT in service operations.

Reducing Inventories Through Setup Time Reduction

Central to JIT is the reduction of production lot sizes so that inventory levels are reduced Smaller lot sizes result in more machine setups More machine setups if they are lengthy result in: --Increased production costs --Lost capacity (idle machines during setup) The answer is reduced machine setup times.

JIT and MRP

Primary Concern MRP Construct a net material plan, no improvement made on fixed plan push sophisticated Given, fixed Relatively large Not included in system Less involvement MGT responsibility Non-repetitive JIT Eliminate any waste by ZI/ZD, continuous improvements are made

Work flow Info. Sys. Setup time Lot size Vender Worker/ MGT

Pull Simple, stable, easy Continually reduced Towards to 1 A part of system High involvement/ coop. share responsibility Repetitive, stable demand

Suited

Why has JIT Outperformed MRP in General?

Complex and global information requirement in MRP makes it very sensitive and difficult to respond to dynamic production environment in practice. JIT production system is supported by all other integrated JIT components while MRP is not.

Why has JIT Outperformed MRP in General? (II)

JIT and MRP can co-exist be combined and incorporated as: ---JIT purchasing and MRP ---JIT/TQC/TPM with MRP ---JIT for stable demand items and MRP for unstable items --For a firm that produces a large variety of items with unstable demand MRP will still dominate JIT by using global information and well-planning in advance.

JIT Benefits
Harley-Davidson 40% inventory reduction Increased productivity 129% Reduced supplier base 30% Westinghouse 45% inventory reduction 30% productivity improvement Product warranty costs down 35% Manufacturing space down 40% Apple computer 65% inventory reduction High quality levels Highly motivated work force

Operational Benefits of Just-In-Time Systems

Reduce space requirements Reduce inventory investment in purchased parts, raw materials, work in process, and finished goods Reduce manufacturing lead times Increase the productivity of direct labor employees, indirect support employees, and clerical staff Increase equipment utilization Reduce paperwork and require only simple planning systems

Set valid priorities for production scheduling Encourage participation by the work force

Increase product quality

Implementation of JIT in US
JIT has been implemented in many US firms 1. Many changes are requirement before implementing JIT:
New GT layout design;/Partnership supplier build up; /TQC/TPM development; Worker training & education; Organizational structure/authority/responsibility change

2. Major problems in implementing JIT:

Full understanding JIT;/Commitment from top MGT/Good cooperation among all functional areas Managing changes overcome all possible resistances

Implementation of JIT in US (II)

3. implementation procedures: comprehensive education on all employees /managers. Justify JIT based on potential competitive advantages. Develop a step-by-step JIT implementing plan. Carefully managing changes with a decentralized structure. Continuous JIT progression and reinforcement throughout organization.

Typical Decision in JIT Systems

Decision Area Inventory Competitive priorities Positioning strategy Process design Choice Minimize lot size and safety stock Emphasize low cost and consistent quality Have a product focus Minimize setup times; reduce the frequency of setups through product layouts, group technology, and one worker, multiple machines. Automate as much as possible Seek a flexible, cooperative work force through job enlargement, consensus management, and training Minimize the frequency and duration of breakdowns Have a cooperative orientation with suppliers Maintain the same daily output rate for a whole month

Work-force management Maintenance Materials management Master production scheduling Quality

Put quality control at the source

New Trends for JIT Operations

Application of JIT II In-plant representative Benefits to the customer Benefits to the supplier JIT in Services Likely environments JIT concepts useful for service providers Consistently high quality Uniform facility loads
Standardized work methods Close supplier ties Flexible workforce Automation Preventive maintenance Pull method Line flow strategy

Strategic Implications of Lean Systems Competitive priorities Flows Operational Benefits Space Inventory

Lead Times Productivity Equipment utilization Paperwork Valid priorities Workforce participation Quality

Operational Benefits of JIT Systems

Reduce space requirements Reduce inventory investment in purchased parts, raw materials, work in process, and finished goods Reduce manufacturing lead times Increase the productivity of direct labor employees, indirect support employees, and clerical staff Increase equipment utilization Reduce paperwork and require only simple planning systems Set valid priorities for production scheduling Encourage participation by the work force

Increase product quality

JIT Systems in Services

Consistently high quality Uniform facility loads Standardized work methods Close supplier ties Flexible workforce Automation Preventive maintenance Pull method of materials flow Line flows

Typical Decision Linkage in JIT Systems

Decision Area Inventory Competitive priorities Positioning strategy Process design Choice Minimize lot size and safety stock Emphasize low cost and consistent quality Have a product focus Minimize setup times; reduce the frequency of setups through product layouts, group technology, and one worker, multiple machines. Automate as much as possible Seek a flexible, cooperative work force through job enlargement, consensus management, and training Minimize the frequency and duration of breakdowns Have a cooperative orientation with suppliers Maintain the same daily output rate for a whole month Put quality control at the source

Work-force management Maintenance Materials management Master production scheduling Quality