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Just-in Time Management Supplier Partnerships B7801 April 17, 1998

Just-in Time Management Supplier Partnerships B7801 April 17, 1998. Supplier management issues Supplier Development Outreach Program: Video: The case for Toyota JIT. Supplier Partnerships: Organizational Culture and Strategy Issues. Feeling of trust

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Just-in Time Management Supplier Partnerships B7801 April 17, 1998

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  1. Just-in Time ManagementSupplier Partnerships B7801 April 17, 1998 • Supplier management issues • Supplier Development Outreach Program: Video: The case for Toyota • JIT

  2. Supplier Partnerships: Organizational Culture and Strategy Issues • Feeling of trust • Management attitude/outlook for the future • Strategic fit • Top management compatibility • Compatibility across levels and functions of buyer and supplier firms • Supplier's organizational structure &personnel

  3. Supplier Partnerships: Technology Issues • Assessment of current manufacturing facilities/capabilities • Assessment of future manufacturing capabilities • Supplier's design capabilities • Supplier's speed in development

  4. Supplier Partnerships:Other Factors • Safety record of the supplier • Business references • Supplier's customer base

  5. Supplier Development Outreach Program: The case for Toyota

  6. Supply management statistics • Purchased inputs as percentage of total manufacturing costs (‘87) Japan 69% U.S. 58% • External sourcing percentages at the big three (Dyer 1993) GM 30% Ford 50% Chrysler 70% • Percentage of major corporations pursuing outsourcing initiatives (A.T. Kearney survey) 1992 58% 1996 86%

  7. Practical mechanisms for achieving cooperation • Reputation for “honest dealing” (e.g. past behavior of the buyer/supplier) • Proximity/personnel relationships • Preferred supplier programs • numerical performance ratings (“score cards”) • delivery performance • quality • cost • signals how suppliers will be viewed in upcoming negotiations • “Soft” penalties for poor performance (e.g. less business in subsequent rounds) • Equity ownership

  8. Changing role of purchasing • Competitive bidding • solicit large number of bids • “winner takes all” contracts • Cooperative supplier management • learn suppliers costs • monitor supplier performance • signal prospect of future business • disseminate best practices among supplier pool • develop new supplier capabilities as needed

  9. Just-In-Time Production Systems JIT Underlying philosophy is elimination of waste and variability through synchronized “pull” type production systems

  10. JIT Purchasing--Requirements • Reduced lot sizes • Frequent and reliable delivery schedules • Reduced and highly reliable lead times • Consistently high quality levels for purchased materials

  11. JIT Purchasing--Suppliers • Fewer, nearby suppliers • Repeat business • Support suppliers’ competitiveness • Clusters of remote suppliers • Limit competitive bidding to new parts • Resist vertical integration • Encourage suppliers to implement JIT purchasing

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

  13. JIT: Part Philosophy - Part Technique • “Big JIT” (Lean Production) • Focus on elimination of all sources of waste and variability through synchronized “pull” type operation systems. • “Little JIT” • Focuses more narrowly on scheduling goods inventories and providing service resources where and when needed

  14. Waste Reduction (“Big JIT”)

  15. Fab Sub Fab Sub Fab Fab Pull System (“Little JIT”) Vendor Vendor Final Assy Customers Vendor Vendor

  16. Waste--Operations (1) Waste from overproduction (2) Waste of waiting time (3) Transportation waste (4) Inventory waste (5) Processing waste (6) Waste of motion - setup reduction (7) Waste from product defects

  17. Minimizing Waste: Group Technology • Departmental Specialization Saw Saw Saw Grinder Grinder 3 1 2 Heat Treat 4 6 Lathe Lathe Lathe Press Press Press 5

  18. Grinder 2 1 Lathe Press Saw Lathe Heat Treat Grinder B A Press Lathe Saw Lathe Minimizing Waste: Group Technology • Group technology cells

  19. Minimizing Waste: Quality at the Source • Self-inspection • Automated inspection • Line-stopping empowerment

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

  21. Minimizing Waste: JIT Production Produce what is needed when it’s needed NOTHING MORE!

  22. Minimizing Waste: Uniform Plant Loading This does not mean building a single product. We need to maintain a stable mix of products, and firm monthly schedules

  23. Scheduling example • Four different forecast for four different products A 400 B 300 C 200 D 100

  24. Lumpy Master Production Schedule Week Product 1 2 3 4 A 250 150 B 100 200 C 50 150 D 100 Totals 250 250 250 250

  25. Smooth Master Production Schedule Week Product 1 2 3 4 A 100 100 100 100 B 75 75 75 75 C 50 50 50 50 D 25 25 25 25 Totals 250 250 250 250

  26. Setup Time Reduction • Shift internal elements to external • Learning and training • Better tools • Product standardization, product line simplification • Equipment automation • Common sense solutions

  27. Setup reduction: an industrial example

  28. HOW-TO: Design Flow Process • Link operations • Balance workstation capacities • Relayout for flow • Emphasize preventive maintenance • Reduce lot sizes • Reduce setup/changeover time

  29. HOW-TO: Total Quality Control • Worker responsibility • Measure Statistical Quality Control • Enforce compliance • Fail-safe methods • Automatic inspection

  30. HOW-TO: Stabilize Schedule • Level schedule • Underutilize capacity • Establish freeze windows

  31. HOW-TO: Work with Vendors • Vital Few • Evaluation & certification • Proximity • Reduce lead times • Frequent deliveries • JIT Technology transfer • Inter-firm teams

  32. HOW-TO: Improve Product Design • Standard product configuration • Standardize and reduce number of parts • Process design with product design

  33. Applying JIT Concepts • Organize Problem-Solving Groups • Upgrade Housekeeping • Upgrade Quality • Clarify Process Flows • Revise Equipment and Process Technologies

  34. Applying JIT Concepts • Level the Facility Load • Eliminate Unnecessary Activities • Reorganize Physical Configuration • Introduce Demand-Pull Scheduling • Develop Supplier Networks

  35. Benefits of JIT • Reduced inventories • Reduced lead times • Simplified production control • Better quality • Increased labor efficiency & effectiveness • Increased space utilization • Lower overall costs • Better working conditions • Improved flexibility • Increased responsiveness

  36. Common obstacles to JIT implementation • Management complacency • Short-term vision • Inability to recognize waste • Focus on surface rather than source • Inventory perceived as convenient • Unions • Suppliers • “Theory X” management

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