Just-in-time

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Supply Networks

 organisations connected by server-client links -

upstream/downstream - that service processes &
activities (operations) bringing added value to
each client & ultimately the end customer.
Supply Chain Performance
 Delivery, Quality, Time, Cost

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 Flows of products, services & information
Supply side Demand side
second-tier first-tier first-tier second-tier
suppliers suppliers customers customers

Company B

Down stream
Up stream

Company C X

X
X X For Company A
Internal supply network
Immediate supply network
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Total supply network
Just in Time

 History - Japan
 1980s conclusion
 Japanese industry worked “smart” - JIT
 Western industry worked JUST IN CASE
 Think of JIT as minimum stock production
 Type of relationship: close & intimate? JIT
 internal JIT - in client-server stream
 external JIT

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 Japanese experience

Waste in operations from

 overproduction
 waiting time
 transportation
 inventory waste
 processing
 motion/movement
 product defects  concentrate effort on shop floor
 CQI focus
 staff ownership of problems
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Minimizing Waste: Inventory Hides Problems

identify defects from a

supplier early in the
Machine
downtime process saves the
downstream work
Scrap Vendor
Work in delinquencies Change
orders
process
queues Engineering design Design
(banks) redundancies backlogs

identify defective work

Paperwork Inspection Decision
from upstream stations,
backlog backlogs backlogs
saves the downstream
work

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From Aggregate to MPS to MRP1

Aggregate
MRP2
Plan (product groups)

Firm Forecast
orders random
Master orders
production
schedule
Design Time-phased plan
(MPS)
changes how many + when we will
build each end item.

Bill of
material MRP1
Inventory
record
JIT
Reports Stock
movements
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Material Requirements Planning & JIT

 backdrop to JIT
 dependent demand (depends on known orders)
 info. system to determine
 no. of parts, components, materials needed
 scheduling - when
orders for materials should be released,
based on lead times.
batches to be ordered/produced/delivered etc

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Operating an MRP System

 Should MRP carry “safety stock”?

 How much “safety stock” should be carried?
 Issue of “safety lead time”
 Danger of “informal” system driving out the “formal” system
 Expansion of MRP to other functions (finance, HRM, etc.)
of business
 JIT - and the supplier-client partnership
 shared information systems to "call" contractually agreed
stock/materials

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 Just-In-Time (JIT)

 a system for high-volume production with minimal inventory (raw

materials, WIP, finished goods).
 involves
 timed arrivals @ workstation JIT
 reduced ‘buffer’ stocks
 no waste in production system Requires
 a “Pull” system thru the plant
 a management philosophy • participation
 expose problems & bottlenecks • industrial engineering/basics
 Take away ‘security blanket” • continuing improvement
 streamlined production • TQM
 factory & warehouse networks • reducing set up times
• smaller lot/order sizes sizes
• stable environment
• supply partnership

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Suppliers & JIT

 Suppliers are crucial

 Supplier gets
 Long-term guaranteed contract
 Steady demand
 E-procurement involvement (minimal paperwork)
 Buyer gets
 Quality comp[onents
 Guaranteed delivery times
 Good prices
 Supplier selection
 Close to plant
 Quality product
 Good labour relations
 Fewer suppliers (keiretsu)
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 JIT and Demand-Pull

Call (Kanban) & Pull

Call (Kanban) & Pull

Supplier Call (Kanban) & Pull
Fabric
Supplier Subass
Fabric Final
Subass Assembly Customer
Supplier Fabric

Supplier Fabric

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 Client Server Streaming

Avoid too much material stocks & WIP

Increase materials coordination & movement

Bin
Saw Call Supplier's
Materials
for local
warehouse
Bin more warehouse

Call for
more Finished
Goods
Bin Warehouse
Bin
Lathe
Bin
Grinder JIT
Bin deliveries
Customer
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What is kanban?

 developed at Toyota 1950s to manage line material flows.

 Kanban ( Kan=card, Ban= signal )
 simple movement system
 “cards” to signal & communicate reorder information
 boxes/containers to take “lots” of parts from one work station
to another (client-server).
 Server only delivers components to client work station as & when
needed (called/pulled).
 minimise storage in the production area.
 Workstations only produce/deliver components when called (they
receive card + empty container).
 The work-station produces enough to fill the container
 Kanban = an authorization to produce more inventory
 We thus limit the amount of inventory in process.

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 Minimizing Waste: Kanban Control System

withdrawal kanban

Bin Bin
Machine Part A Part A Assembly
Center
Line

production Material Flow

kanban
Card (signal) Flow

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 What does a Kanban card look like?

Kanban No. 5678990

part No: 66789X
• accurate data: correct part nos,
description 16ga. Copper Wire
quantities & measure'ts
measure'ts
units Ft.
• visible - chart if material ordered
reorder/lot qty 20 & when
store location Row 12, Bin 6 • fool proof for no stockouts
supplier BICC • minimum inventory
supplier tel 0208-891-0121 • clear & complete info. to
supplier part RT45502 suppliers
routing process • link inventory directly to demand
Name/location of next proces • Tie in with POP: issuing orders,
orders,
Name/location of preceding process receiving & authorising accounts
container type & capacity payable
number of containers released

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 How many Kanbans?

 Each container = minimum replenishment lot size.

 Calculate lead time required to produce a "container"

Expected demand during lead time + safety stock

k=
capacity of container
+
= dL(1 S )
C

k = No. of kanbans in card set

d = Average No. of units demanded over the period
L = lead time to replenish order (same units of time as demand)
S = Safety stock as % of demand during lead time
C = Container size

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Example

 A switch is assembled in batches of 4 units at an “upstream”

work area.
 delivered in a bin to a “downstream” control-panel assembly
area that requires 5 switch assemblies/hour.
 The switch assembly area can produce a bin of switch
assemblies in 2 hours.
 Safety stock = 10% of needed inventory.

Expected demand during lead time + safety stock

k=
size of container

dL (1+ S) 5(2)(1.1)
= = = 2.75 or 3
C 4
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JIT Requirements 1

Kanban Pull
 Demand pull
 Back flush
 Reduce batch/lot sizes
Work with suppliers
 Reduce lead times
 Frequent deliveries
 Project usage requirements
 Quality expectations
Reduce inventory in
 Stores
 Transit
 Carousels
 Conveyors
 calculation from MRP & EOQs
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 JIT Requirements 2
Quality
 Worker responsibility
 SQC
 Enforce compliance
 Fail-safe methods
 Automatic inspection
Operations Design
 Link operations
 Balance workstation capacities
 Review layout for flow
 Stress preventive maintenance
 Reduce lot sizes
 Reduce setup/changeover time
Stabilise Schedule
 Level schedule
 Under utilize capacity
 Establish freeze windows
People Focus
 pay harmonisation
 supportive unions
 subcontractor networks
 hands-on manager style
 quality commitment &
group involvement
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 JIT Requirements 3

Problem-solving
Problem-solving
 Rootproblem
Root problem
 Long-termsolution
Long-term solution
 Teamcontribution
Team contribution
 Line-specialistcooperation
Line-specialist cooperation
 Learning
Learning
 Measureperformance
Measure performance
Product Design Improvement
 CQI
CQI
 DFM & process design
 Monitor&&report
Monitor report
 Modules & fewer parts
 Quality standards
 upgrade housekeeping
 clarify process flows
 revise equipment & process
technologies

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"Re-engineering" & Kanban

Modern production methods

 1. Modular/cell production 9 group technology).
 2. Reduce set up, lead and waiting times between procedures.
 3. Flow-of-products-oriented layout of processes & machines layout.
Products flow smoothly from start to finish, parts do not sit waiting to
be worked on, forklift trucks do not travel kilometres to move parts
from one area of the plant to another.
 4. Flexible manufacturing of mixed models
 5. Theory of Constraints - drum-rope-buffer (Goldratt). Building in
extra redundancy.
 6. Total Preventive Maintenance, prevent machines from breaking
down or malfunctioning during production time
 7. Team-Work & Autonomation (decision by worker to stop line)
 8. Kaizen: Continuous improvement
 9. Housekeeping

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Down-side of Kanban

 more complex in shared-resource situations e.g. upstream server

makes several parts. Each needs a separate signalling card - so
the up-stream station will receive random calls for different parts -
creating a scheduling & queuing situation.
 client request to make/send more must wait if other parts have to
be made so buffer stocks are needed.
 Kanban assumes stable repetitive production & is less suited to
industries where mix &volumes fluctuate.
 It doesn't eliminate variability, unpredictable & lengthy down times
present problems.
 Poor quality (scrap &rework) affect functioning even though these
are exposed. Excess inventory does not mask these effects.

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Further Information from

 ProModel.com
 http://www.dal.ca/~qhe/ie1352/KanbanPP.htm
 www.google.com search on Kanban
 Birmingham University PRISM - see Kanban Network
(Ciardo & Tilgner)
 MidWest Tool Com - Controlling Serial Production Lines
Using Kanbans - download file.
 Hugh Campbell - Kanban and MRP to Manage Purchased
Parts and Materials
 Kanban's - Simplicity at its best - Brian Willcox

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