Operations Management For Competitive Advantage 1

CHASE AQUILANO JACOBS

ninth edition

Operations Management
For Competitive Advantage
Chapter 10

Hassan Hussein
Abdi
Just-in-Time and
CHASE AQUILANO JACOBS ©
ninth edition
The McGraw-Hill Companies, Inc., 200
Operations Management For Competitive Advantage ninth edition 2

Chapter 10
Just-in-Time and Lean System
· JIT Defined
· The Japanese Approach to Productivity
· JIT Implementation Requirements
· JIT in Services

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Just-In-Time (JIT)
Defined
· JIT (Just-In-Time) is an integrated set of
activities designed to achieve high-volume
production using minimal inventories of raw
materials, work in process, and finished goods.
· JIT also involves the elimination of waste in
production effort.
· JIT also involves the timing of production
resources (e.g., parts arrive at the next
workstation “just in time” and are completed
and move through the operation quickly).
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Characteristics of JIT
· JIT is popularly known as stockless
production, nothing will be produced until is
needed.
· Produce just enough to meet demand
· Inventory is wasteful
– Labor and materials
– Equipment and time
– Storage and insurance
– Capital, etc.
· Quality must be at the source
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JIT and Lean Management

· JIT can be divided into two terms: “Big JIT”
and “Little JIT”
· 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

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Exhibit 10.1

JIT Demand-Pull Logic

Fab Vendor

Sub
Fab Vendor
Customers
Final
Assembly

Sub Fab Vendor

Fab Vendor
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The Japanese Approach to

Productivity
· Imported technologies
· Efforts concentrated on shop floor
· Quality improvement focus
· Central to this effort were two:
1. Elimination of waste
2. Respect for people

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The Japanese Approach to Productivity

· In inventing new technology, they avoided
major R&D expenditures and corresponding
risks by buying licensing agreements from
frequently from U.S companies.
· To make these new products they
concentrated their efforts on the factory floor
to achieve high productivity and lower unit
costs

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Operations Management For Competitive Advantage ninth edition 9

Waste in Operations
Seven prominent types of waste to be
eliminated
(1) Waste from overproduction
(2) Waste of waiting time
(3) Transportation waste
(4) Inventory waste
(5) Processing waste
(6) Waste of motion
(7) Waste from product defects
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Operations Management For Competitive Advantage ninth edition 10

Elimination of Waste
· The seven elements that address
elimination of waste are:
1. Focus factory networks
2. Group technology
3. Quality at the source
4. JIT production
5. Uniform plant loading
6. Kanban production control systems
7. Minimize setup times

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Minimizing Waste: Focused

Factory Networks
· The Japanese build small specialized
plants rather than large vertically
integrated manufacturing facilities.
· Plants designed for one purpose can be
constructed and operated more
economically.
· Some plants in Japan have as few as
30 and as many as 1000 employees

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Minimizing Waste:
Focused Factory Networks

Coordination
System Integration
Final Assembly

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Minimize Waste:
Focused Factory Networks
· Small specialized plants
· Thinner is better
– Better control
– Bolsters specialization and excellence
– More economical to manage
· Large vertically integrated operations are:
– Bureaucratic
– Difficult to manage

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Group Technology
· Group Technology: is a philosophy in which
similar parts are grouped into families, and
processes required to make parts are
arranged in a specialized work cell
· The group technology cells eliminate
movement and queue (waiting) time between
operations, reduce inventory, and reduce the
number of employees required.
– Workers, however, must be flexible to run
several machines and processes. Due to their
advanced skill level, these workers have
increased job security.
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Minimizing Waste:
Group Technology
· Identification of:
– Machine cells
– Part families
· Based on similarities in:
– Design
– Manufacture
· Saves time and effort

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Minimizing Waste:
Group Technology (Part 1)
· Using Departmental Specialization for plant layout can cause a lot of
unnecessary material movement.

Saw Saw Saw Grinder Grinder

Heat Treat

Lathe Lathe Lathe Press Press Press

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Minimizing Waste:
Group Technology (Part 2)
· Revising by using Group Technology Cells can reduce movement and
improve product flow.

Grinder
1 2
Saw Lathe Lathe Press

Heat Treat

Grinder
Saw Lathe A B Lathe Press

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Quality at the Source

· Quality at the Source means do it rights
time and, when something goes wrong, stop
the process or assembly line immediately.
· Factors workers become their own
inspectors, personally responsible for the
quality of their outputs.
· Workers concentrate on one part of the job
at a time so quality problems are uncovered.

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Minimizing Waste:
Quality at the Source

· Self-inspection
– Limited use of QC departments

· Automated inspection

· Line-stopping empowerment
– Quality before quantity

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Minimizing Waste:
JIT Production

Produce...

...what is needed...

...when it’s needed...

...NOTHING MORE!

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Exhibit 10.3
Minimizing Waste: Just-In-Time
Production
WHAT IT IS WHAT IT DOES

• Management philosophy • Attacks waste (time, inventory, scraps)

• Exposes problems and bottlenecks
• “Pull” system though the plant
• Achieves streamlined production

WHAT IT REQUIRES WHAT IT ASSUMES

• Employee participation
• Industrial engineering/basics • Stable environment
• Continuing improvement
• Total quality control
• Small lot sizes

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Exhibit 10.4
Minimizing Waste: Inventory
Hides Problems
Example: By identifying
defective items from a
Machine
downtime vendor early in the
production process the
Scrap Vendor downstream work is
Work in delinquencies Change saved.
orders
process
queues Engineering design Design
(banks) redundancies backlogs

Example: By identifying
Paperwork Inspection Decision defective work by
backlog Backlogs backlogs employees upstream,
the downstream work is
saved.

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Minimizing Waste: Uniform Plant Loading

· Uniform Plant Loading: Smoothing the
production flow to dampen the reaction
waves that normally occur in response to
schedule variations is called uniform plant
loading.

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Minimizing Waste:
Uniform Plant Loading

This does not mean building a single product.

But maintaining a stable mix of products,

and firm monthly schedules.

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Minimizing Waste:
Uniform Plant Loading
Suppose we operate a production plant that produces a single
product. The schedule of production for this product could be
accomplished using either of the two plant loading schedules below.

Not uniform Jan. Units Feb. Units Mar. Units Total

1,200 3,500 4,300 9,000
or
Uniform Jan. Units Feb. Units Mar. Units Total
3,000 3,000 3,000 9,000
How does the uniform loading help save labor costs?

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Minimizing Waste:
Kanban Production Control System
· Uses signaling system to regulate JIT flows
· Kanban--sign or instruction card
· Kanban system is a pull system
– Card indicates standard quantity of production
– Authority to produce comes from downstream
– It is a form of information system
– Production kanban--can be single card if move
distance is short
– Move (withdrawal, conveyance) kanban

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Minimizing Waste:
Kanban Production Control Systems

Once the Production kanban is This puts the

received, the Machine Center Withdrawal system back
produces a unit to replace the kanban were it was
one taken by the Assembly Line before the item
people in the first place was pulled

Storag Storag
Machin e Part e Part Assembl
e A A y Line
Center

Production kanban
Material Flow
The process begins by the Assembly Line
people pulling Part A from Storage Card (signal) Flow
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Waste in Operations

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Kanban
1. User removes a standard
sized container
2. Signal is seen by the
producing department as
authorization to replenish

Signal marker on
boxes

Figure 16.8 Part numbers mark

location
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Determining the Number of Kanbans

Needed
· Setting up a kanban system requires
determining the number of kanbans (or
containers) needed.
· Each container represents the minimum
production lot size.
· An accurate estimate of the lead time
required to produce a container is key to
determining how many kanbans are
required.
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The Number of Kanban Card Sets

Expected demand during lead time  Safety stock
k
Size of the container

dL (1  S )

C

k = Number of kanban card sets (a set is a card)

d = Average number of units demanded over some time period
L = lead time to replenish an order (same units of time as demand)
S = Safety stock expressed as a percentage of demand during lead
time
C = Container size

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Example of Kanban Card

Determination: Problem Data
· A switch assembly is assembled in batches of 4 units
from an “upstream” assembly area and delivered in a
special container to a “downstream” control-panel
assembly operation.
· The control-panel assembly area requires 5 switch
assemblies per hour.
· The switch assembly area can produce a container
of switch assemblies in 2 hours.
· Safety stock has been set at 10% of needed
inventory.
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Example of Kanban Card

Determination: Calculations

Expected demand during lead time  Safety stock

k
Size of the container

dL (1  S ) 5(2)(1.1)
   2.75, or 3
C 4

Always round up!

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Number of Kanbans Example

Daily demand = 500 cakes
Production lead time = 2 days
(Wait time +
Material handling time +
Processing time)
Safety stock = 1/2 day
Container size = 250 cakes

Demand during lead time = 2 days x 500 cakes = 1,000

1,000 + 250
Number of kanbans = 250 = 5

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Minimizing Waste:
Minimized Setup Times
· What are the consequences of long setup
times?
– Long manufacturing lead times
– Increased cost
– Reduced capacity
· A requirement for small-lot-size, mixed-
model production?
– Practice more setups to reduce time/setup
– Fixed production quantity--improves setup

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Respect for People

· Lifetime employment for permanent
positions
· Strive to maintain level payrolls
· Workers as assets
· Cooperative employee unions
· Subcontractor networks
· Bottom-round management style
· Quality circles (Small group involvement activit.)

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JIT Requirements: Design See Exhibit 10.8

Flow Process
· Link operations
· Balance workstation capacities
· Relay out for flow
· Emphasize preventive maintenance
· Reduce lot sizes
· Reduce setup/changeover time

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JIT Requirements: Total Quality

Control
· Design for quality and quality at the source
· Worker responsibility/quality culture
· Measure SQC and use achievable goals
· Enforce compliance
· Fail-safe methods
· Automatic inspection

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JIT Requirements: Stabilize Schedule

· Level schedule
– Pull materials into final assembly in uniform pattern

· Underutilize capacity
– Realized by removing excess inventory
– Inventory less likely with quality and equipment
maintenance
· Establish freeze windows
– Fixed schedule with no further changes possible

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JIT Requirements: Kanban-Pull

· Demand pull

· Backflush
– Used to explode end item’s BOM to determine
how many of each product went into it

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JIT Requirements: Work with Vendors

· Limited number of suppliers for better control

· Reduce lead times
· Frequent deliveries
· Project usage requirements
· Quality expectations

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JIT Requirements: Reduce

Inventory More

· Look for other areas

· Stores
· Transit
· Carousels
· Conveyors

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JIT Requirements: Improve

Product Design

· Standard product configuration

· Standardize and reduce number of parts

· Process design with product design

· Quality expectations

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JIT in Services (Examples)

· Organize Problem-Solving Groups

· Upgrade Housekeeping
· Upgrade Quality
· Clarify Process Flows
· Revise Equipment and Process
Technologies
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JIT in Services (Examples)

· Level the Facility Load

· Eliminate Unnecessary Activities
· Reorganize Physical Configuration
· Introduce Demand-Pull Scheduling
· Develop Supplier Networks

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The End

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