F O U R T H E D I T I O N

Just-in-Time Systems

© The McGraw-Hill Companies, Inc., 2003

chapter 14

DAVIS

AQUILANO

CHASE

PowerPointPresentation

byCharlieCook

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–2

Chapter ObjectivesChapter ObjectivesChapter ObjectivesChapter Objectives

• Introduce the underlying concepts of JIT and there Japanese approach to improving productivity.

• Identify the differences between Japanese and U.S. companies with respect to implementing JIT, and explore why these differences exist.

• Identify the various elements that need to be included to successfully implement JIT within an organization.

• Illustrate how many JIT concepts have been implemented in services.

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–3

Managerial IssuesManagerial IssuesManagerial IssuesManagerial Issues

• Using JIT as a tool for controlling the flow of materials, identifying sources of error, and minimizing inventories.

• Developing the strong supplier relationships on which successful implementation of JIT depends.

• Achieving production linearity in manufacturing and service operations.

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–4

JIT LogicJIT LogicJIT LogicJIT Logic

• JIT (just-in-time)–A coordinated approach that continuously

reduces inventory while also improving quality.–Seeks to achieve high volume production using

minimal inventories of raw material, work in process, and finished goods.

–“Big” JIT (lean production)• Seeks to eliminate all forms of waste in production

activities.

–“Little” JIT• Focuses on scheduling goods inventories and

providing service resources.

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–5

Pull SystemPull SystemPull SystemPull System

Exhibit 14.1Exhibit 14.1

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–6

The Japanese Approach To The Japanese Approach To ProductivityProductivity

The Japanese Approach To The Japanese Approach To ProductivityProductivity

• Fundamental National Goal–Full employment through industrialization

• Target Industries for Market Dominance–Electronics, vehicles, shipbuilding–Competitive tactics:

• Imported technology rather than take R&D risks.• Focused engineering on the shop floor to achieve high

productivity and low cost.• Improved quality beyond that of competitors.• Eliminated waste in all forms.• Have great respect for people.

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–7

Quasar Plant ProductivityQuasar Plant ProductivityQuasar Plant ProductivityQuasar Plant Productivity

Exhibit 14.2Exhibit 14.2

*2 years later.†Same people

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–8

The Japanese Approach to The Japanese Approach to ProductivityProductivity

The Japanese Approach to The Japanese Approach to ProductivityProductivity

• Elimination of Waste• Focused Factory Networks• Group Technology• Jidoka (quality at the source)• Just-in-Time Production• Uniform Plant Loading• Kanban• Minimized Setup Times

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–9

Group Group Technology Technology

versus versus Departmental Departmental

SpecialtySpecialty

Group Group Technology Technology

versus versus Departmental Departmental

SpecialtySpecialty

Exhibit 14.3Exhibit 14.3

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–10

Just-In-TimeJust-In-TimeJust-In-TimeJust-In-Time

Exhibit 14.4Exhibit 14.4Source: Adapted from Chris Gopal (of Price Waterhouse), “Notes on JIT.”

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–11

Inventory Hides ProblemsInventory Hides ProblemsInventory Hides ProblemsInventory Hides Problems

Exhibit 14.5Exhibit 14.5

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–12

Toyota Example of Mixed-Model Toyota Example of Mixed-Model Production Cycle in a Japanese Assembly Production Cycle in a Japanese Assembly

PlantPlant

Toyota Example of Mixed-Model Toyota Example of Mixed-Model Production Cycle in a Japanese Assembly Production Cycle in a Japanese Assembly

PlantPlant

Exhibit 14.6Exhibit 14.6

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–13

Flow of Two KanbansFlow of Two KanbansFlow of Two KanbansFlow of Two Kanbans

• Kanban Pull System–A manual, self-regulating system for controlling

the flow of material. Workers produce only when the Kanban ahead of them is empty, thereby creating a “pull” system through the factory.

Exhibit 14.7Exhibit 14.7

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–14

Minimizing Setup TimeMinimizing Setup Time—Hood and—Hood andFender Press Comparison (800 ton press)Fender Press Comparison (800 ton press)

Minimizing Setup TimeMinimizing Setup Time—Hood and—Hood andFender Press Comparison (800 ton press)Fender Press Comparison (800 ton press)

Exhibit 14.8Exhibit 14.8

*For low-demand items (less that 1,000 per month), as large as seven days.

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–15

Setup Reduction Results at JKCSetup Reduction Results at JKCSetup Reduction Results at JKCSetup Reduction Results at JKC

Exhibit 14.9Exhibit 14.9

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–16

Respect for PeopleRespect for PeopleRespect for PeopleRespect for People

• Lifetime Employment• Company Unions• Attitude toward Workers• Automation/Robotics• Bottom-Round Management• Subcontractor Networks• Quality Circles

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–17

JIT in the United StatesJIT in the United StatesJIT in the United StatesJIT in the United States

• Problems with Implementing JIT–Geographic distances–Supplier-customer relationships–“Jumbo-Inventory-Transfer”–MRP systems

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–18

Implementing JIT ProductionImplementing JIT ProductionImplementing JIT ProductionImplementing JIT Production

• JIT Layouts/Design Flow Process–Design must ensure balanced continuous

workflow with minimum of work in process and delays.

–Internal and external logistics must be considered.

–Preventive maintenance is emphasized.–Process orientation encourages the use of

simple machines.–Goal is a economic production lot size of one.

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–19

How to Accomplish How to Accomplish Just-in-Time Just-in-Time ProductionProduction

How to Accomplish How to Accomplish Just-in-Time Just-in-Time ProductionProduction

Exhibit 14.10Exhibit 14.10Source: This diagram is modeled after the one used by Hewlett-Packard’s Boise plant to accomplish its JIT program.

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–20

The Impact of JIT on Lot SizeThe Impact of JIT on Lot SizeThe Impact of JIT on Lot SizeThe Impact of JIT on Lot Size

Exhibit 14.11Exhibit 14.11

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–21

Implementing JIT ProductionImplementing JIT ProductionImplementing JIT ProductionImplementing JIT Production

• JIT in a Line Flow or Product Layout–No work done until product has been pulled

from the end of the line.–Completed work stays at the workstation until

remove by a downstream station.

Exhibit 14.12Exhibit 14.12

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–22

Relationship between JIT and QualityRelationship between JIT and QualityRelationship between JIT and QualityRelationship between JIT and Quality

Exhibit 14.13Exhibit 14.13Source: Richard J. Schonberger, “Some Observations on the Advantages and Implementation Issues of Just-in-Time Productions Systems,” Journal of Operations Management 3, no. 1 (November 1982), p. 5.

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–23

Total Quality ControlTotal Quality ControlTotal Quality ControlTotal Quality Control

• Stabilize Schedule• Kanban Pull• Work with Vendors• Continuous Inventory Reduction• Improve Product Design• Concurrently Solve Problems and Measure

Performance

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–24

Diagram of Outbound StockpointDiagram of Outbound Stockpointwith Warning Signal Markerwith Warning Signal Marker

Diagram of Outbound StockpointDiagram of Outbound Stockpointwith Warning Signal Markerwith Warning Signal Marker

Exhibit 14.14Exhibit 14.14Source: Robert Hall, Zero Inventories (Homewood, IL: Dow Jones-Irwin, 1983), p. 51.

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–25

Company Experiences with JITCompany Experiences with JITCompany Experiences with JITCompany Experiences with JIT

• JIT/TQC benefits–Average inventory reduction of about 50 percent–Reduction of throughput time of 50 to 70 percent–Reduction in setup times of as much as 50

percent without major investment in plant or equipment

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–26

JIT in ServicesJIT in ServicesJIT in ServicesJIT in Services

• Application of JIT to Services–Synchronization and balance of information and

workflow–Total visibility of all components and processes–Continuous improvement of the process–Holistic approach to the elimination of waste–Flexibility in the use of resources–Respect for people

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 14–27

Gizmo Gizmo Production Production

FlowFlow

Gizmo Gizmo Production Production

FlowFlow

Case Exhibit 14.1Case Exhibit 14.1