Just-in-Time and Lean Production...
Transcript of Just-in-Time and Lean Production...
Supply Chain Management
Just-in-Time and Lean Production Systems
Ultimate goal = minimize waste
Waste is ‘anything other than
the minimum amount of
equipment, materials, parts,
space, and worker’s time,
which are absolutely essential
to add value to the product.’
— Shoichiro Toyoda
President, Toyota © 1995 Corel Corp.
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.
• 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
Lean Production
• Lean Production supplies customers with exactly what the customer wants, when the customer wants, without waste, through continuous improvement.
What Does Just-in-Time Do? • Attacks waste
– Anything not adding value to the product • From the customer’s perspective
• Exposes problems and bottlenecks caused by variability – Deviation from optimum
• Achieves streamlined production – By reducing inventory
Types of Waste
• Overproduction
• Waiting
• Transportation
• Inefficient processing
• Inventory
• Unnecessary motion
• Product defects © 1995
Corel
Corp.
Waste Reduction (%)
82%
50%
50%
30%
30%
20%
40%
0% 20% 40% 60% 80% 100%
Work-in-Process
Inventory
Raw Material
Inventory
Lead Time
Space
Finished Goods
Inventory
Scrap
Setup Time
JIT Reduced Waste at Hewlett-Packard
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
Suppliers
Preventive
Maintenance
Layout
Inventory
Scheduling
Quality
Employee
Empowerment
JIT
Just-in-Time Success Factors
Streamlined Production
Flow with JIT
Traditional Flow
Customers Suppliers
Customers
Suppliers
Production Process (stream of water)
Inventory (stagnant ponds) Material
(water in
stream)
Inventory
• Traditional: inventory exists in case problems arise
• JIT objective: eliminate inventory
• JIT requires – Small lot sizes – Low setup time – Containers for fixed number of parts
• JIT inventory: Minimum inventory to keep system running
Scrap
Work in process inventory level
(hides problems)
Unreliable
Vendors
Capacity
Imbalances
Lowering Inventory Reduces Waste
Scrap
Reducing inventory reveals
problems so they can be solved.
Unreliable
Vendors
Capacity
Imbalances
WIP
Lowering Inventory Reduces Waste
Scrap
Reducing inventory reveals
problems so they can be solved.
Unreliable
Vendors
Capacity
Imbalances
WIP
Lowering Inventory Reduces Waste
Customer
orders 10
Lot size = 5
Lot 1 Lot 2
Lot size = 2
Lot 1 Lot 2 Lot 3 Lot 4 Lot 5
Reducing Lot Sizes Increases the Number of Lots
…Which Increases Inventory Costs
Lot Size
Cost
Setup Cost
Optimal
Lot Size
Smaller
Lot Size
Unless Setup Costs are Reduced
Lot Size
Cost
Setup Cost
Original optimal lot size
New optimal
lot size
Frequent Orders can Reduce Average Inventory
Time
Inve
ntor
y 10
0 20
0 Q1 When average order size = 200,
average inventory is 100
Q2 When average order size = 100,
average inventory is 50
Lower Total Cost Requires Small Lot Sizes and Lower Setup Costs
Lot size
Sum of ordering
and holding cost
T1
T2
S2
S1
Cos
t