Lesson 13:

JIT, Lean Operations and the Toyota

Production System

ADC/AGC604
Operations &
Service
Management

A S S O C . P R O F. D R . T A N C H E N G L I N G

G R A D U AT E S C H O O L O F B U S I N E S S
 The student is expected to
outline the basic principles of lean operating systems—elimination of

Learning
waste, increased speed and response, improved quality, and reduced
cost—and the benefits they provide to organizations.

Outcomes: select the basic tools and approaches that organizations use to
create a lean organization and to recognize how to apply these tools
appropriately.

relate how manufacturing firms apply lean tools and concepts.

relate how lean tools and concepts are applied to service

organizations.

explain the concepts and philosophy of just-in-time operating systems

and the challenges that managers face in managing JIT systems.

2
 Chapter 18:
Lean Operating
Systems

Collier, D.A. & Evans J.R. (2023). Operations and

Supply Chain Management (3rd ed.). Cengage.
Contents:

Toyota Production System

Just-in-Time (JIT)

Lean Operations
4
Operations in Practice: Toyota Motor
Corporation

 Largest vehicle manufacturer in

the world with annual sales of
over 9 million vehicles
 Success due to two techniques,
JIT and TPS
 Continual problem solving is
central to JIT
 Eliminating excess inventory
makes problems immediately
evident
Operations in Practice: Toyota
Motor Corporation
 Central to TPS is employee learning and a
continuing effort to produce products
under ideal conditions
 Respect for people is fundamental
 Small building but high levels of
production
 Subassemblies are transferred to the
assembly line on a JIT basis
 High quality and low assembly time per
vehicle
TPS
Elements
TPS Elements
Toyota Production System
 Continuous improvement
 Build an organizational culture and
value system that stresses the
improvement of all processes
 Part of everyone’s job
 Respect for people
 People are treated as
knowledge workers
 Engage mental and
physical capabilities
 Empower employees
Toyota Production System
 Standard work practice
 Work shall be completely specified as to content,
sequence, timing, and outcome
 Internal and external customer-supplier
connection are direct
 Product and service flows must be simple and
direct
 Any improvement must be made in accordance
with the scientific method at the lowest possible
level of the organization
 Lean
Any activity, material, or operation that does not add value to an organization is considered
waste.

Lean thinking refers to approaches that focus on

• the elimination of waste in all forms, and

• smooth, efficient flow of materials and information throughout the value chain

to obtain faster customer response, higher quality, and lower costs.

Lean operating systems are manufacturing and service operations that apply the principles
of lean enterprise.
Lean operations
Principles of Lean Operating Systems
Principle Description
1. Eliminate Waste Activities that do not add value and support
processes in an organization are eliminated.
2. Increased Speed and Response Transfer of all physical materials and
information in a value chain is coordinated to
achieve a high level of efficiency.
3. Improved Quality Methods of quality management are used to
eliminate sources of defects and errors in all
processes in a value chain.
4. Reduced Cost Results from reducing waste and improving
quality
 JUST-IN-TIME, TPS, AND
LEAN OPERATIONS
Just-In-Time TPS Lean Operations
 JIT is a philosophy  TPS emphasizes  Lean production
of continuous and continuous supplies the
forced problem improvement, customer with their
solving via a focus respect for people, exact wants when
on throughput and
reduced inventory and standard work the customer wants
practices it without waste
 JIT emphasizes  TPS emphasizes  Lean operations
forced problem employee learning emphasize
solving
and empowerment understanding the
in an assembly-line customer
environment
 Eliminate Waste

 Waste is anything that does not add value from the

customer point of view
 Storage, inspection, delay, waiting in queues, and
defective products are 100% waste
 Other resources, i.e. energy, water, and air are often
wasted
 Reduce waste - efficient, sustainable production
minimizes inputs
 Traditional “housekeeping” has been expanded to 5 Ss
 Common Examples of Waste
• Excess capacity • Excess inventory • Spoilage
• Inaccurate information • Long changeover and setup • Excessive energy use
• Clutter times • Unnecessary movement of
• Planned product obsolescence • Scrap materials, people, and
• Excessive material handling • Rework and repair information
• Overproduction • Long, unproductive meetings • Equipment breakdowns
• Producing too early • Poor communication • Knowledge bottlenecks
• Long distance traveled • Waiting time • Non-value-added process steps
• Retraining and relearning time • Accidents • Misrouting jobs
and expense • Too much space • Wrong transportation mode
Ohno’s
Eight
Types of
Wastes
 Eight Waste
Over-production

• Make more than is required by the customer, or to make it earlier

than required.
– Taking multiple copies of the document which are not required.

Waiting time
• Any delay between when one process step/activity ends and the
next step/activity begins.
– Waiting for a manager to approve an application.
Transport
• Movement of work between departments or offices that do not add to the
value of the product or service.
– Multiple approvals across different departments.
 Eight Waste (Continued)
(Over) Processing

• Adding more value to a service or product than customers want or will

pay for.
– Capturing extra information from the customer which is not used.

Inventory
• More materials or information on hand than is currently required.
– 100 applications waiting together for data entry.
Motion

• Needless movement of people.

• While ‘transportation’ refers to the movement of the work, ‘motion’
involves movement of workers.
– Running to a printer on a different floor for a printout.
 Seven Waste (Continued)
Defects/Inspection

• Any aspect of the service that does not

conform to customer needs.
– Incorrect customer details captured in
the system.

Unutilised Talent
• Underutilising people’s talents, skills, and knowledge.
– Limited employee authority and responsibility for basic tasks.
 Exercise: Some daily examples
Activity Waste Category
• Making extra copies, just in case • Over-production
• Document movement between departments • Transport
• Supervisory approval delays • Waiting
• Files waiting to be worked on • Inventory
• Multiple calls to the customer for same issue • Over-production
• Incorrect customer address • Defect
• Cupboard full of office supplies • Inventory
• Capturing additional fields in the system • Over-processing
• Running for photocopier to other floor on building • Motion
• Incorrect processing of salary • Defect
• Customer on hold • Waiting
• Forms moving different locations • Transport.
 - When in doubt, throw it
Seiri, Sort (整理)
out

5S Principles Seiton, Simplify/straighten

- arrange items in order
(整頓)

Seisō, Shine/sweep (清掃) - clean daily

Seiketsu, Standardize - set standards for a

Two additional Ss
(清潔) consistent workplace
 Safety – build in good
practices
 Support/maintenance – Shitsuke, Sustain/self- - review work and
reduce variability and recognize progress
discipline (躾)
unplanned downtime
Remove Variability
JIT systems require managers to reduce variability caused by both internal and
external factors

Variability is any deviation from the optimum process

Inventory hides variability

Less variability results in less waste

Sources of Variability
Incomplete or inaccurate drawings or specifications

Poor production processes resulting in incorrect quantities, late,

or non-conforming units

Unknown customer demands

Sources of
Variability
1. Incomplete or inaccurate drawings or specifications
2. Poor production processes resulting in incorrect
quantities, late, or non-conforming units
3. Unknown customer demands
Reduce Variability
  The time it takes to move an order from
receipt to delivery
 The time between the arrival of raw
materials and the shipping of the finished
Improve order is called manufacturing cycle time

Throughput  A pull system increases throughput

 By pulling material in small lots, inventory
cushions are removed, exposing problems
and emphasizing continual improvement
 Manufacturing cycle time is reduced
JUST-IN-TIME (JIT)
• A highly coordinated processing system
in which goods move through the
system, and services are performed,
just as they are needed.
• Identifying problems and
driving out waste
• reduces costs and variability and
improves throughput
• Requires a meaningful
buyer-supplier relationship
JIT material flow
Traditional approach

Buffer Buffer
inventory inventory
Stage A Stage B Stage C

JIT approach
Orders Orders

Stage A Stage B Stage C

Deliveries Deliveries
 JIT partnerships exist when a supplier
and purchaser work together to remove
waste and drive down costs
 Four goals of JIT partnerships are:
 Removal of unnecessary activities
 Removal of in-plant inventory
 Removal of in-transit inventory
 Improved quality and reliability

JIT Partnerships
Concerns of
Suppliers
 Diversification – ties to only one customer increases
risk
 Scheduling – don’t believe customers can create a
smooth schedule
 Changes – short lead times mean engineering or
specification changes can create problems
 Quality – limited by capital budgets, processes, or
technology
 Lot sizes – small lot sizes may transfer costs to
suppliers
Scheduling Small Lots
JIT Level Material-Use Approach

A A B B B C A A B B B C

Large-Lot Approach

A A A A A A B B B B B B B B B C C C

Time
 Kanban is the Japanese word for card
 The card is an authorization for the next
container of material to be produced
 A sequence of kanbans pulls material through
the process
 Many different sorts of signals are used, but the
system is still called a kanban

Kanban
 Kanban Cards
Kanban cards (from Japanese for “visual record” or “card”) are slips that are
circulated within the system to initiate the withdrawal and production of items
through the production process.
A Kanban contains all relevant information for an order:
• part number • quantity available
• description • quantity delivered
• process area used • production quantity
• time of delivery • and so on.

Because of this, a JIT system is sometimes called a Kanban system.

Kanban Cards
Step 1: the withdraw Kanban authorizes the
material handler to transfer empty
containers to the storage area.

Step 2: a material handler for the supply

process places a production Kanban on the
empty container.

Step 3: the supply process returns a full

container of parts to the storage area, with
the production Kanban attached.

Step 4: the material handler picks up a full

container and retrieves the production
Kanban card.
Kanban
 Allow only limited amount of faulty or delayed
material
 Problems are immediately evident
 Puts downward pressure on bad aspects of
inventory
 Standardized containers reduce weight,
disposal costs, wasted space, and labor

Advantages of Kanban
 The JIT techniques used in
manufacturing are used in
services
 Suppliers
 Layouts
 Inventory
 Scheduling

JIT IN SERVICES
Best
Practices
for Lean
& JIT
Lean Services
SPEEDY DELIVERY – AVAILABLE WHEN
REQUESTED.
 Lean Operations
for Luxury Bags
Louis Vuitton – one of the world’s most
recognized luxury brands and has grown
significantly in recently years.

Luxury bags are produced in low volume.

To increase production in existing factory
due to growing demands.

Implementing lean thinking - Re-organizing

teams of about 10 workers in U-shaped clusters.
Vuitton was able to free up 10% more floor
space in its factories, and was able to hire 300 new people without
increasing facility size.
JIT in Supply Chain
JIT for The Bookless Bookshelf
Traditional supply chain for books has been a “push”
system. Physical book produced and delivered to book
stores for sale to consumers. Despite the promulgation
of e-books, many people still like to turn pages.
As many bookstores become leaner, many books are not
available HarperCollins Publishers estimate that 25%-80%
of its paperback title are not available in bookstores
because of space considerations. However, the publisher is
leveraging with JIT concept using Expresso Book Machine,
distributed by On Demand Books LLC. This is a desk-sized
machine that can custom print a book in only a few
minutes. Using this technology, HarperCollins is using it to
make about 5,000 paperback books available to
bookstores.
Thank
you.