Just-in-Time and

Lean Operations
 Developments of JIT and
Lean Operations

 1960’s: Developed as Toyota Production

System by Taiichi Ohno and his colleagues
 1970’s: U.S. and European auto makers
began to apply JIT to improve quality and
productivity
 1990’s and beyond: Expanded the JIT
concept to streamline all types of operations
 Definition of JIT

 A set of techniques to increase productivity, improve

quality, and reduce cost of an operations
 A management philosophy to promote elimination of
waste and continuous improvement of productivity
 JIT/ Lean permits the production of only WHAT IS
NEEDED, ONLY WHEN IT IS NEEDED, and ONLY
IN THE QUANTITY NEEDED.
What Could Be the Expected
Benefits of JIT?
Expected Benefits of JIT

 Reduction in throughput times

 Reduction in WIP
 Improvement in quality
 Improvement in productivity
 Reduction in resource requirements
 Improvement in customer satisfaction
 improvements in return on assets
 Main Elements of JIT

 Elimination of waste
 Quality at the source
 Balanced and flexible work flow
 Respect for people
 Continuous improvement (Kaizen)
 Simplification and visual control
 Focus on customer needs
 Partnerships with key suppliers
What is A “Waste?”
 Wastes

 Anything that exceeds the minimum resources

needed for the appropriate value
 Toyota’s seven deadly wastes:
• Overproduction (excessive production resources)
• Inventory
• Waiting
• Transportation
• Processing
• Motion
• Defective parts
Why is Inventory Reduction
Important?
 Importance of Inventory
Reduction

 Inventory costs money - carrying costs,

obsolescence costs, and opportunity costs
 Inventory covers up problems and
bottlenecks.
 Inventory reduction forces organization
and employees to eliminate sources of
problems and work as a team.
 Quality at the Source

 Jidoka – autonomation (automatic

detection of defects, e.g., Poka-yoke)
 Employee empowerment
 Statistical process control
 Prevention orientation (elimination of root
causes through PDSA cycle)
 Balanced and Flexible
Work Flow
 Yo-i-don (ready, set, go) system
 Stable production schedule
 Set-up time reduction
 Flow-shop and cellular layouts
 Shojinka (flexible & multi-skilled workforce)
 Teamwork
 Total productive maintenance (TPM)
 Respect for People
 Productivity improvement needs employee support
 Demonstrate by
• providing cross-training opportunities
• creating a safe and equitable work environment
• encouraging people to achieve their potential by
giving them greater responsibility and authority
• promoting teamwork (formal and informal)
• developing partnerships with unions
Continuous Improvement
(Kaizen)
 Employee suggestion system
 Process improvement
 5S’s
• Seiri - organization
• Seiton - tidiness
• Seiso - purity
• Seiketsu - cleanliness
• Shitsuke - discipline
 Simplification and Visual
Control

 Standard and simple product designs

 Andon boards
 Kanban pull system
 Flag systems
 Music as signals
 Performance display systems
 Focus on Customer Needs

 Customer needs determine the “value” of

a product or service
 Be responsive to customers needs
(present and future)
 Strive to “delight,” not just “satisfy”
customers
 Partnerships with Suppliers

 Reduce number of suppliers

 Use long-term contracts
 Emphasize price, delivery, and services
 Improve communication
 Share information
 Develop local just-in-time delivery
 Provide technical support to suppliers
 JIT Implementation
 Top management commitment
 Steering committee
 Education program
 Pilot project planning
 Employee training
 Pilot implementation
 Pilot post mortem
 Feedback to steering committee
 Expansion to next project
 Advancements in JIT (JIT II)
 Backwards Integration of staff and line
functions to suppliers (e.g., purchasing)
 Requires EDI or web access to materials
and logistics systems
 On-site supplier representative(s) with
transaction processing authority
 Goal: link suppliers’ cycle to firm’s cycle to
mutually reduce wait and move times
How Can JIT Be Applied to Non-
Manufacturing Operations?
 JIT for Non-Manufacturing
Operations (Lean Operations)

 Implement demand-pull operations

 Eliminate unnecessary activities
 Standardize process flows
 Increase process flexibility
 Reorganize physical layouts
 Upgrade housekeeping and workplace
organization
 JIT for Non-Manufacturing
Operations (Lean Operations)
 Develop supplier partnership networks
 Level work load
 Organize problem-solving groups
 Improve quality
 Develop effective suggestion systems
 Cross-train employees
 Promote teamwork
What Are Toyota’s Secrets of
Success?
 Toyota’s Secrets of Success
(Steve Spear, HBR, May 2004)

 There is no substitute for direct

observation
 Proposed changes should always be
structured as experiments
 Workers and managers should experiment
as frequently as possible
 Managers should coach, not fix
PROBLEM
SOLUTION
 PROBLEM
PANASONIC REFRIGERATION INC IS TRYING TO REDUCE INVENTORY AND WANTS TO
KNOW THE LOADS/BATCHES FOR COMPRESSOR FOR ONE OF ITS ASSEMBLY LINES.
DETERMINE THE SIZE OF CONTAINERS AND NUMBER OF LOADS/BATCHES NEEDED,
GIVEN THE FOLLOWING DATA:
SET-UP COST = $10
ANNUAL HOLDING COST PER COMPRESSOR =$100
DAILY PRODUCTION 200 COMPRESSORS
ANNUAL USAGE = 25,000
( 50 WEEKS X 5 DAYS EACH X DAILY USAGE OF 100 COMPRESSOR)

LEAD TIME = 3 DAYS

SAFETY STOCK = 1/2 DAY’S PRODUCTION
OF COMPRESSOR
SOLUTION
For batches
 Suggested Readings

 Monden, Yasuhiro (1993). Toyota Production

System: An Integrated Approach to Just-In-Time,
3rd edition, Institute of Industrial Engineers.
 Womack, James P. and Jones, Daniel T. (2003).
Lean Thinking: Banish Waste and Create Wealth in
Your Corporation, The Free Press.
 Jeffrey K. Liker (2004). The Toyota Way: 14
Management Principles from the World’s Greatest
Manufacturer, McGraw-Hill.