JIT and Lean Operations

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. i.e. making only what is needed
and when it is needed.
 Eliminating excess inventory makes
problems immediately evident
 Toyota Motor Corporation
 Central to TPS is a continuing effort to
produce products under ideal
conditions, exist only when people,
facility and machines are brought
together.
 Respect for people is fundamental
 Small building but high levels of
production
 High quality and low assembly time
per vehicle
 Just-In-Time (JIT)

 An inventory strategy companies employ to

increase efficiency and decrease waste by
receiving goods only as they are needed in the
production process, thereby reducing inventory
costs.
 JIT is a philosophy of continuous and forced
problem solving via a focus on waste
elimination and speed throughput.
 Just-In-Time (JIT)
• 'just in time' manufacturing consists of allowing the
entire production process to be regulated by the natural
laws of supply and demand.
• Customer demand stimulates production of a vehicle. In
turn the production of the vehicle stimulates production
and delivery of the necessary parts and so on.
• The result is that the right parts and materials are
manufactured and provided in the exact amount needed
- and when and where they are needed
 Toyota Production System (TPS)
 Is an integrated socio-technical system, developed by
Toyota, that comprises its management philosophy and
practices.
 It is the practical expression of Toyota's people and
customer-oriented philosophy.
 TPS has three desired outcomes:
 To provide the customer with the highest quality vehicles, at
lowest possible cost, in a timely manner with the shortest possible
lead times.
 To provide members with work satisfaction, job security and fair
treatment.
 It gives the company flexibility to respond to the market, achieve
profit through cost reduction activities and long-term prosperity.
 Lean Manufacturing

Lean Manufacturing is an operational strategy

oriented toward achieving the shortest possible
cycle time by eliminating waste.

The technique often decreases the time between a

customer order and shipment, and it is designed to
radically improve profitability, customer
satisfaction, throughput time, and employee
morale.
The characteristics of lean processes
 Repetitive order characteristics
 Just-In-Time materials/pull scheduling
 Short cycle times
 Quick changeover
 Continuous flow work cells
 Collocated machines, equipment, tools and people
 Compressed space
 Multi-skilled employees
 Empowered employees
 High first-pass yields with major reductions in defects
Just-In-Time, TPS, and Lean Operations

 JIT emphasizes forced problem solving

 TPS emphasizes employee learning and
empowerment in an assembly-line
environment
 Lean operations emphasize
understanding the customer
 .
• These are the approaches to continuous
improvement that drive out waste and lead
to world class organisation.
• Good production system requires that
manager address three issues that are
pervasive and fundamental to operation
management
– Eliminate Waste
– Remove variability
– Speed throughput.
 Eliminate Waste
Taiichi Ohno’s identifies Seven categories of Wastes
 Overproduction – producing more than the
customer order or producing early is a waste.
 Queues- idle time, storage and waiting are wastes.
 Transportation – handling of material more than
once in a plant or work cell is a waste.
 Inventory – unnecessary raw material, WIP excess
operating supplies.
 Motion – movement of equipment or people that
adds no value is a waste.
 Over processing – work performed on the product
that adds no value is a waste.
 Defective products – returns, warranty claims,
A Lean Production Checklist - The 5 Ss
 Sort/segregate – when in doubt, throw it
out
 Simplify/straighten – methods analysis
tools
 Shine/sweep – clean daily
 Standardize – remove variations from
processes
 Sustain/self-discipline – review work and
recognize progress
The Ss provide a vehicle for continuous improvement
 The 5 Ss
 Sort/segregate – when in doubt, throw it
out
 Simplify/straighten – methods analysis
tools
 U.S. Manager adds two additional Ss
 Shine/sweep – clean daily
 Safety– –remove
 Standardize build invariations
good safety
from
practices into the last five
processes
activities
 Sustain/self-discipline – review work and
recognize progress
 Support/maintenance – reduce
variability and unplanned
downtime
 Remove Variability
 Variability is any deviation from the operation
process that delivers perfect product on time,
every time. A polite word for problems.
 Most variability are caused by tolerating waste or
by poor management. Sources of variability are
 Incomplete or inaccurate drawings or
specifications.
 Poor production process
 Unknown customer demands
 JIT is an effective tool for identifying causes of
variability.
 Improve Throughput
 The time required to move orders through
production process, from receipt to delivery.
 Manufacturing Cycle Time
 The time between the arrival of raw materials
and the shipping of the finished products
 Pull system
 A concept that result in material being produced
only when requested and moved to where it is
needed just as it is needed.
 It is a technique for increasing throughput.
 Just-In-Time (JIT)
• Powerful strategy for improving operations
• Materials arrive where they
are needed when they are
needed
• Identifying problems and
driving out waste reduces
costs and variability and
improves throughput
• Requires a meaningful
buyer-supplier relationship
JIT and Competitive Advantage
JIT and Competitive Advantage
 JIT Partnerships
 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
 JIT Layout
Reduce waste due to movement
JIT Layout Tactics
Build work cells for families of products
Include a large number operations in a small area
Minimize distance
Design little space for inventory
Improve employee communication
Build flexible or movable equipment
Cross-train workers to add flexibility
 Distance Reduction
 Large lots and long production lines with
single-purpose machinery are being
replaced by smaller flexible cells
 Often U-shaped for shorter paths and
improved communication
 Often using group technology concepts
 Increased Flexibility
 Cells designed to be rearranged as
volume or designs change
 Applicable in office environments as
well as production settings
 Facilitates both product and process
improvement
 Impact on Employees
 Employees are cross trained for
flexibility and efficiency
 Improved communications facilitate
the passing on of important
information about the process
 With little or no inventory buffer,
getting it right the first time is critical
 Inventory
Inventory is at the minimum level necessary
to keep operations running.
JIT Inventory Tactics
Use a pull system to move inventory
Reduce lot sizes
Develop just-in-time delivery systems with suppliers
Deliver directly to point of use
Perform to schedule
Reduce setup time
 JIT Scheduling

 Schedules must be
communicated inside and
outside the organization
 Level schedules
 Process frequent small batches
 Freezing the schedule helps stability

 Kanban
 Signals used in a pull system
 JIT Scheduling
Better scheduling improves performance
JIT Scheduling Tactics
Communicate schedules to suppliers
Make level schedules
Freeze part of the schedule
Perform to schedule
Seek one-piece-make and one-piece move
Eliminate waste
Produce in small lots
Use kanbans
Make each operation produce a perfect part
 Level Schedules

 Process frequent small batches rather than

a few large batches
 Make and move small lots so the level
schedule is economical
 “Jelly bean” scheduling
 Freezing the schedule closest to the due
dates can improve performance
 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
 Kanban is the Japanese word for card.
 A card containing a set of manufacturing specifications and
requirements used to regulate the supply of material.
 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
1. User removes a standard
sized container
2. Signal is seen by the
producing department as
authorization to
replenish

Signal marker on
boxes

Part numbers
mark location
 Kanban

Kanban Finished Customer

goods order
Work
cell
Ship

Raw Kanban Final Kanban

Material assembly
Supplier
Kanban Kanban
Sub-
Purchased assembly
Parts Kanban
Supplier
 The Number of Kanban Cards
or Containers
 Need to know the lead time needed to produce a container of parts
 Need to know the amount of safety stock needed

Demand during Safety

Number of kanbans lead time + stock
(containers) =
Size of container
 Number of Kanbans Example
Daily demand = 500 cakes
Production lead time = 2 days
(Wait time +
Material handling time +
Processing time)
Safety stock = 1/2 day
Container size = 250 cakes

Demand during lead time = 2 days x 500 cakes = 1,000

1,000 + 250
Number of kanbans = =5
250
 Advantages of 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