JIT & Lean Manufacturing

by

Best Performing Consulting Organization

Adding Value In Totality !!

Session Topics

What is JIT?
Benefits of JIT
Value Added Management
Push vs. Pull
Buffered vs. Lean Manufacturing
Performance Measures

What is Just-in-Time?
Management philosophy of continuous and
forced problem solving
Supplies and components are pulled through
system to arrive where they are needed when
they are needed.

What Does Just-in-Time Do?

Attacks waste

Anything not adding value to the product

Customers perspective

Exposes problems and bottlenecks

Caused by variability
Deviation from optimum

Achieves streamlined production

By reducing inventory

What is Waste
Waste is anything other than the
minimum amount of equipment,
materials, parts, space, and
workers time, which are
absolutely essential to add value to
the product.
Shoichiro Toyoda
President, Toyota

Just-In-Time Manufacturing
JIT seeks to reduce waste. Waste is viewed as a
symptom of some unsolved problem. Types of waste
include:
Overproduction
Waiting Time
Movement
Inventory
Product Defects
Process Waste

Just-In-Time Manufacturing
JIT is used for many activities including:
Inventory Reduction
Quality Improvement
Lead Time Reduction
Continuous Improvement (Kaizen)
Preventive Maintenance

Major Objective of JIT

Identify the causes of system variance (waste) and
eliminate or control these causes. By attacking the
causes of variance, JIT can reduce the dependency
of the manufacturing process on wasteful buffers
like excessive inventory, long lead times, and idle
capacity.

Variability Occurs Because

Employees, machines, and suppliers produce units
that do not conform to standards, are late, or are
not the proper quantity
Engineering drawings or specifications are
inaccurate
Production personnel try to produce before
drawings or specifications are complete
Customer demands are unknown

Benefits of JIT

Shorter Lead Times (Faster Response)

Lower Defect Rates
Reduced Inventories
Enhanced Flexibility

Advantages Of Faster Response Times

Increased Productivity
Increased Quality
Reduced Risk
Increased Profitability
Increased Market Share
Increased Product Variety

Value Added Management

A Strategy for Time-Based Competition
Focus on:
Reducing Lead Times
Process Flow Analysis
Eliminating or Reduce Non-Value Adding Activities
WIP Storage
Material Movement
Inspection
Rework
Unscheduled Maintenance
Changeovers

Value Added Management

Value-Added Activity Time
The time required to perform those activities
essential to the production of a product, or the
delivery of a service.

Value Added Management

Non Value-Adding Activities
Any activity that does not add value to the
product being built, or the service being
offered. Non value-adding activities are waste.

Value Added Management

Examples of Non-Value Added Activities
Administrative Processes & Paperwork
Process Delays
Material Movement
Material Storage
Inspection
Rework
Unscheduled Maintenance
Machine Changeovers

Value Added Management

Cycle Time Improvements
Improvements to cycle times are achieved
by reducing or eliminating non valueadding activities

Value Added Management

Identifying Non Value-Adding Activities
The key to identifying non value-adding
activities is process flow analysis.

Value Added Management

Value-Added Time Analysis
Worksheet
Process
Activity

Total
Time

Value
Non Value
Added TimeAdded Time

Total Mfg. Lead Time

95%

5%

Non Value-Adding

Value
Adding

Traditional Response

2%

98%
Value
Adding

Non Value-Adding

VALUE ADDED MANAGEMENT

Value-Adding Response

50%

50%

Non
Value
Adding

Lead Time Reduced

Non Value-Adding Time Reduced

Value
Adding

Value Added Ratio

V.A.R. = Value Added Time
Total Cycle Time
Improved By:
Eliminating or Reducing Non Value-Adding Time
WIP Storage/FGI Storage
Increase V.A.R. by
Reducing Cycle Time
Material Movement
Forces Continuous Process
Rework
Flow Analysis
Unscheduled Maintenance
Drives Quality Improvement
Changeover Time
ANYTHING THAT DOES NOT ADD VALUE FOR
THE CUSTOMER

Value Added Management Results

Oregon Cutting Systems

Output Per Hour Up 55%

Lead Time from 21 to 1 day

Abbott Laboratories

Production Cost Down 40%

Lead Time Reduced > 80%

Lockheed

Defect Rate Reduced 80%

Rework Down 91%
Lead Time Down by 95%

Texas Instruments

Lead Time Down 15.8 to 3.7

days

JIT & Inventory

Why do companies hold inventories?
What are some advantages to holding
inventories?
What are some problems with holding
inventories?

Inventory
Traditional: inventory exists in case problems arise
JIT objective: Reduce inventory
JIT requires
Small lot sizes
Low setup time
Containers for fixed number of parts

JIT inventory: Minimum inventory to keep system

running

Inventory Hides Problems

Machine
downtime
Scrap
Work in
process
queues
(banks)

Paperwork
backlog

Vendor
delinquencies Change
orders

Engineering design
redundancies

Inspection
backlogs

Design
backlogs
Decision
backlogs

14

Lowering Inventory Reduces Waste

Work in process inventory level

(hides problems)
Unreliable
Vendors

Scrap

Capacity
Imbalances

Lowering Inventory Reduces Waste

Reducing inventory reveals
problems so they can be solved.

Unreliable
Vendors

WIP
Scrap

Capacity
Imbalances

Lowering Inventory Reduces Waste

Reducing inventory reveals
problems so they can be solved.

Unreliable
Vendors

Scrap

WIP

Capacity
Imbalances

JIT Inventory Tactics

Use a pull system to move inventory

Reduce lot size
Reduce setup time
Develop Just-in-Time delivery systems with
suppliers
Deliver directly to point of use
Perform-to-schedule
Use group technology

Reducing Lot Sizes Increases the

Number of Lots
Customer
orders 10

Lot size = 5
Lot 2
Lot 1

Lot size = 2
Lot 1 Lot 2 Lot 3 Lot 4 Lot 5

Cost

Which Increases
Inventory Costs
st
o
C
l
a
t
o
T

t
s
o
C

g
n
i
d
Hol
Setup Cost
Smaller Optimal
Lot Size Lot Size

Lot Size

Unless Setup Costs are Reduced

Cost
st
o
C
l
a
t
t
s
o
o
T
C
g
n
di
l
o
H

Setup Cost
New
optimal lot
size

Original
optimal
lot size

Lot Size

Minimizing Waste:
Reducing Setup Times
What are the consequences of long setup
times?
What are the advantages of short setup
times?

20

Steps to Reduce Setup Time

Step 1

Separate setup into preparation, and actual setup, doing as much as

possible while the machine/process is running

Step 2

Move material closer and improve material

handling

Step 3

Standardize and improve

tooling

Step 4
Step 5

Use one-touch system to eliminate

adjustments
Training operators and
standardizing work procedures

Push versus Pull

Push system: material is pushed into
downstream workstations regardless of
whether resources are available
Pull system: material is pulled to a
workstation just as it is needed

Push Scheduling
Moves an order to the next operation or work
center in its route immediately on
completion of the current activity whether
or not that work center can begin processing
it.

Traditional Push System

M
A
T
E
R
I
A
L

Process

Process

Process

Inv.
Work-In-Process
Staging Area

Work-In-Process
Staging Area

F
I
N
I
S
H
E
D
G
O
O
D
S
Inv.

Material Is Moved Down Stream After Processing at Each Stage

Work-In-Process Inventories Develop
Traditional Efficiency Measures Encourage Overproduction

Push Scheduling Benefits

Implementation is relatively simple
Eliminates the need to coordinate between
work centers
Keeps a work center busy as long as work
remains in its queue

Push Scheduling Problems

High WIP Levels

Higher Quality Problems
Hides Processing Problems
Requires dispatching rules to sequence
orders

Pull Scheduling
Orders are processed and transferred in
response to signals from downstream work
centers

Alternative Pull System

Signal
Supplier

Signal

M
A
T
E
R
I
A
L

Process

Process

Process

Inv.

Signal
Signal

Signal
FGI

C
U
S
T
O
M
E
R
D
E
M
A
N
D

Pull Systems Move Material In Response To A Signal From a Downstream Process

Minimal WIP Buildup/Reduced Space Requirements
Reduced Material Inventory/ More Frequent Supplier Deliveries
Minimal Finished Goods Inventory
Emphasis on Throughput Not Efficiencies

Pull Scheduling Benefits

Simplifies schedulingeach center builds
only what is required when needed
Orders are driven by real demand thus
minimizing inventory accumulation
Makes problems immediately apparent
Prevents additional load from piling up
extra work at the bottleneck in the event of
some problem

Pull Scheduling Problems

Challenging to implement
Success requires coordination among
related work centers
Requires good planning
Must limit interventions requesting changes
in product mix, quantity, or due dates.

Layout
JIT objective: Reduce movement of people and
material

Movement is waste!

JIT requires

Work cells for product families

Moveable or changeable machines
Short distances
Little space for inventory
Delivery directly to work areas

Work Cell versus Process Layout

Process Layout
Lathe
Lathe
5

Press

Saw
Saw

2
Heat
Treat
3

Press
6

Work Cell
2
Saw

Press

Lathe

Lathe

Grinder
Grinder
Grinder

Heat
Treat

Layout Tactics
Distance reduction

Build work cells for families of products

Increased flexibility

Flexible or movable equipment

Impact on employees

Cross-training; immediate feedback

Poka-yoke self-testing functions

Reduced space and inventory

Design little space for inventory

Just-In-Time Manufacturing
WHAT IT IS
Management philosophy
Pull system though the plant

WHAT IT REQUIRES

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

WHAT IT DOES
Attacks waste
Exposes problems and bottlenecks
Achieves streamlined production

WHAT IT ASSUMES
Stable environment

Just-in-Time
People Management
Housekeeping
Control Through Visibility
Total Quality
Problem Solving
Employee Involvement

Technology Management
Structured Flows
Set-Up Reduction
Small Lot Sizes

JIT

Systems Management
Balanced Lines
TPM
Supplier Partnerships
Pull System

Buffered Manufacturing
Buffered Manufacturing Has Limited
Goals:
Acceptable Number Of Defects
Acceptable Inventory Levels
Limited Product Variety
Acceptable Levels Of Waste

Lean Manufacturing
Lean Manufacturing Seeks Perfection

Strives To Reduce Costs

Strives For Zero Defects
Strives To Reduce Inventory
Strives For Greater Product Variety
Strives To Reduce Cycle Times
Seeks To Eliminate Waste
Seeks Continuous Process Improvement

Lean Manufacturing
Key Features Of Lean Manufacturing
Transfers Tasks To Workers Adding Value
Quickly Uncovers & Solves Problems

Employee Empowerment
Getting employees involved in product &
process improvements

Know job best

JIT requires
Empowerment
Cross-training
Training support
Few job classifications

1995 Corel Corp.

Lean Manufacturing
Basic Tenets of Lean Manufacturing

Produce Only What Is Demanded

Produce At The Market Rate Of Demand
Produce With Perfect Quality
Produce With No Waste
Develop Employees Productive Potential

Traditional Performance Measures

Traditional Measures Focus On Outputs. This
Leads To
Long Production Runs
Large Inventories
Large Buffers
Long Lead Times
Poorer Quality
Lack Of Responsiveness

Time-Based Performance Measures

Time-Based Measures Track Process
Improvements

Value-Added Ratio
Setup Times & Number
Throughput Times
Quality
Delivery Speed & Reliability

New Management Measures

Customer Focused

Drivers
Drivers
of
of
Competitive
Competitive
Mfg.
Mfg.

Production Focused

Process Focused

On-Time Delivery
Defects
Customer Satisfaction

Throughput
WIP
FGI
Lead Time

Value Added Ratio

Changeover Times

Measures
Measures
are
are
Stable
Stable
Capable
Capable
Improving
Improving

New Business Paradigm

New Performance Measures
Time-Based - Quality Based - Customer Focused

Value-Added Management
Process Flow Analysis - Focus on Time

Competing Through Manufacturing

Just-In-Time - Pull Manufacturing Philosophies

Total Quality
Leadership - Culture- Customers- Suppliers - Process Improvement
People- Business Planning - Communication - Recognition

Homework Assignment
Estimate the value added ratio for some process in
your organization.
Identify 3 sources of waste in your operation? Is
it possible to eliminate the waste?
What performance measures do you use? Do the
measures help or hinder your continuous
improvement efforts? Can you suggest better
performance measures?

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