Know about Just-In-Time and Lean manufacturing system. Find benefits and difference between JIT and Lean Manufacturing by Nilesh Arora, a founder of AddValue Consulting Inc.

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“JIT & Lean Manufacturing”
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2. Session Topics
• What is JIT?
• Benefits of JIT
• Value Added Management
• Push vs. Pull
• Buffered vs. Lean Manufacturing
• Performance Measures

3. • 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 is Just-in-Time?

4. • Attacks waste
– Anything not adding value to the product
• Customer’s perspective
• Exposes problems and bottlenecks
– Caused by variability
• Deviation from optimum
• Achieves streamlined production
– By reducing inventory
What Does Just-in-Time Do?

5. 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
What is Waste

6. 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

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

8. 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.

9. 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

10. Benefits of JIT
• Shorter Lead Times (Faster Response)
• Lower Defect Rates
• Reduced Inventories
• Enhanced Flexibility

11. Advantages Of Faster Response Times
– Increased Productivity
– Increased Quality
– Reduced Risk
– Increased Profitability
– Increased Market Share
– Increased Product Variety

12. Value Added Management
A Strategy for Time-Based Competition
s on:
educing Lead Times
ocess Flow Analysis
iminating or Reduce Non-Value Adding Activities
IP Storage
aterial Movement
spection
ework
nscheduled Maintenance
hangeovers

13. 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.

14. 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.

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

16. Value Added Management
Cycle Time Improvements
Improvements to cycle times are achieved
by reducing or eliminating non value-
adding activities

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

18. Value Added Management
Value-Added Time Analysis
Worksheet
Process
Activity
Total
Time
Value
Added Time
Non Value
Added Time

19. Non Value-Adding
Value
Adding
95% 5%
Total Mfg. Lead Time
Traditional Response
Non Value-Adding
Value
Adding
98%
2%
Value-Adding Response
Non
Value
Adding
Value
Adding
50% 50%
Lead Time Reduced
Non Value-Adding Time Reduced
VALUE ADDED MANAGEMENT

20. 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
Material Movement
Rework
Unscheduled Maintenance
Changeover Time
ANYTHING THAT DOES NOT ADD VALUE FOR
THE CUSTOMER
Increase V.A.R. by
Reducing Cycle Time
Forces Continuous Process
Flow Analysis
Drives Quality Improvement

21. 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

22. JIT & Inventory
• Why do companies hold inventories?
• What are some advantages to holding
inventories?
• What are some problems with holding
inventories?

23. • 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

24. 14
Inventory Hides Problems
Work in
process
queues
(banks)
Change
orders
Engineering design
redundancies
Vendor
delinquencies
Scrap
Design
backlogs
Machine
downtime
Decision
backlogs
Inspection
backlogs
Paperwork
backlog

25. Scrap
Work in process inventory level
(hides problems)
Unreliable
Vendors
Capacity
Imbalances
Lowering Inventory Reduces Waste

26. Scrap
Reducing inventory reveals
problems so they can be solved.
Unreliable
Vendors
Capacity
Imbalances
WIP
Lowering Inventory Reduces Waste

27. Scrap
Reducing inventory reveals
problems so they can be solved.
Unreliable
Vendors
Capacity
Imbalances
WIP
Lowering Inventory Reduces Waste

28. 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

29. 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

30. Lot Size
Cost
Holding Cost
Total Cost
Setup Cost
Optimal
Lot Size
…Which Increases
Inventory Costs
Smaller
Lot Size

31. Unless Setup Costs are Reduced
Lot Size
Cost
Holding CostTotal Cost
Setup Cost
Original
optimal
lot size
New
optimal lot
size

32. 20
Minimizing Waste:
Reducing Setup Times
• What are the consequences of long setup
times?
• What are the advantages of short setup
times?

33. Steps to Reduce Setup Time
Separate setup into preparation, and actual setup, doing as much as
possible while the machine/process is running
Move material closer and improve material
handling
Standardize and improve
tooling
Use one-touch system to eliminate
adjustments
Training operators and
standardizing work procedures
Step 1
Step 2
Step 3
Step 4
Step 5

34. 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

35. 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.

36. Traditional Push System
M
A
T
E
R
I
A
L
Inv.
Process Process
Work-In-Process
Staging Area
Process
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

37. 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

38. Push Scheduling Problems
• High WIP Levels
• Higher Quality Problems
• Hides Processing Problems
• Requires dispatching rules to sequence
orders

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

40. Alternative Pull System
M
A
T
E
R
I
A
L
Inv.
Signal
Supplier
Process Process Process
SignalSignal
Signal
C
U
S
T
O
M
E
R
D
E
M
A
N
D
FGI
Signal
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

41. Pull Scheduling Benefits
• Simplifies scheduling—each 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

42. 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.

43. • 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
Layout

44. Process Layout Work Cell
SawSaw
LatheLathe
GrinderGrinder
HeatHeat
TreatTreat
LatheLathe
Lathe
Lathe SawSaw
HeatHeat
TreatTreat
GrinderGrinder
GrinderGrinder
PressPress
PressPress 1
1
2
3
45
2
6
SawSaw
PressPress
Work Cell versus Process Layout

45. 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

46. Just-In-Time Manufacturing
• Management philosophy
• Pull system though the plant
WHAT IT IS
• Employee participation
• Industrial engineering/basics
• Continuing improvement
• Total quality control
• Small lot sizes
WHAT IT REQUIRES
• Attacks waste
• Exposes problems and bottlenecks
• Achieves streamlined production
WHAT IT DOES
• Stable environment
WHAT IT ASSUMES

47. Just-in-Time
JIT
Technology Management
Structured Flows
Set-Up Reduction
Small Lot Sizes
People Management
Housekeeping
Control Through Visibility
Total Quality
Problem Solving
Employee Involvement
Systems Management
Balanced Lines
TPM
Supplier Partnerships
Pull System

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

49. 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

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

51. • Getting employees involved in product &
process improvements
– Know job best
• JIT requires
– Empowerment
– Cross-training
– Training support
– Few job classifications
© 1995 Corel Corp.
Employee Empowerment

52. 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

53. 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

54. Time-Based Performance Measures
Time-Based Measures Track Process
Improvements
• Value-Added Ratio
• Setup Times & Number
• Throughput Times
• Quality
• Delivery Speed & Reliability

55. New Management Measures
Customer Focused
On-Time Delivery
Defects
Customer Satisfaction
Production Focused
Throughput
WIP
FGI
Lead Time
Process Focused
Value Added Ratio
Changeover Times
Drivers
of
Competitive
Mfg.
Drivers
of
Competitive
Mfg.
Measures
are
Stable
Capable
Improving
Measures
are
Stable
Capable
Improving

56. New Business Paradigm
Total Quality
Leadership - Culture- Customers- Suppliers - Process Improvement
People- Business Planning - Communication - Recognition
Competing Through Manufacturing
Just-In-Time - Pull Manufacturing Philosophies
Value-Added Management
Process Flow Analysis - Focus on Time
New Performance Measures
Time-Based - Quality Based - Customer Focused

57. 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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