Operations Management Just-in-Time Systems

1. Operations ManagementJust-in-Time Systems

2. JIT/Lean Production Just-in-time: Repetitive production system in which processing and movement of materials and goods occur just as they are needed, usually in small batches • Is characteristic of lean production systems • Operates with very little “fat” • Is very responsive to customers

3. Types of Resource Planning Systems • Material Requirements Planning (MRP) - • A set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate time-phased requirements for materials. Recommends release of replenishment orders and rescheduling of open orders as conditions (priorities) change. • APICS Dictionary - 9th Ed.

4. Exception reports Planning reports Performance- control reports MRP Overview MRP Inputs MRP Processing MRP Outputs Changes Order releases Master schedule Planned-order schedules Primary reports Bill of materials file MRP computer programs Secondary reports Inventory records file Inventory transaction

5. Types of Resource Planning Systems • Enterprise Resource Planning (ERP) • A method for the effective planning and control of all resources needed to take, make, ship, and account for customer orders. Differs from typical MRP II in technical requirements such as graphical user interface, relational database, 4GL languages, client-server architecture and open-system portability (Example SAP R/3) • Modified from APICS Dictionary - 9th Ed.

6. JIT vs. MRP/ERP • Similar goals • Right products, right place, right time • MRP/ERP • Computer-based, manages complexity • JIT • Manual systems, simplicity/execution • The Super Bowl of Planning & Control • Choice? - play to strengths

7. Just-In-Time Concepts • jit - Inventory/production control system • Supplies and components are ‘pulled’ through system to arrive where they are needed when they are needed. • JIT - Management philosophy of continuous improvement and forced problem solving

8. What Does Just-in-Time Do? • Multi-pronged approach • High quality, quick response, flexibility • Attacks waste • Anything not adding value to product (customer view) • Exposes problems and bottlenecks caused by variability • Deviation from optimum • Achieves streamlined production (pull system) • Reduced inventory • Simplified Execution

9. 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.

10. Variability • 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

11. 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

12. JIT Characteristics • A Fixed, Steady Rate of Production • Uniform flow/communicated to vendors • Mixed model, linear production • Low Inventories • Less space, investment • Uncover defects • Small Lot Sizes • Less WIP • Flexibility/Velocity • Fast feedback

13. JIT Characteristics • Quick, Low Cost Setups • Flexibility/Velocity • Small lot sizes • Layout • U-shaped • Cellular/flexible • Preventive Maintenance & Repair • Worker pride/ownership

14. JIT Characteristics • Empowered Workers • Multifunctional/Cooperative (Guerilla squad) • Flexible capacity • High Quality Levels • On-going production • Small/frequent deliveries • Product simplification • Standardization • Fewer part numbers/drawings

15. JIT Characteristics • Reliable Suppliers • Dock-to-stock • Much fewer in number • Long-term relationships • A Pull System of Moving Goods • Request-based • Kanban signal • Commitment to Problem Solving/ Continuous Improvement

16. Ultimate Goal A balanced rapid flow Supporting Goals Reduce setup and lead times Eliminate waste Minimize inventories Eliminate disruptions Make the system flexible Product Design Process Design Personnel Elements Manufactur-ing Planning JIT Building Blocks Building Blocks

17. JIT in Services All the techniques used in manufacturing are used in services Suppliers Layouts Inventory Scheduling

18. Converting to a JIT System • Top management commitment • Prioritize efforts • Worker support • Start by reducing setup times • Gradually convert operations • Convert suppliers to JIT • Prepare for obstacles

19. Obstacles to Conversion • Management not committed • Workers not cooperative • Suppliers may resist

20. JIT & Operations Planning and Control • MRP as planning tool • Level loading/linear production • Pull systems/visual control • Closer relationships w/ fewer vendors • Reduced transaction processing

21. Attributes of Lean Producers • use JIT to eliminate virtually all inventory • build systems to help employees produce a perfect part every time • reduce space requirements • develop close relationships with suppliers • educate suppliers • eliminate all but value-added activities • develop the workforce • make jobs more challenging • reduce the number of job classes and build worker flexibility