JIT vs. Lean Manufacturing System - ADDVALUE - Nilesh Arora

1. “JIT & Lean Manufacturing” by Best Performing Consulting Organization AddingValueInTotality!!

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

3. What is Just-in-Time? • 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.

4. What Does Just-in-Time Do? • 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

5. What is 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

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 • Focus on: • Reducing Lead Times • Process Flow Analysis • Eliminating or Reduce Non-Value Adding Activities • WIP Storage • Material Movement • Inspection • Rework • Unscheduled Maintenance • Changeovers

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. Total Mfg. Lead Time 95% 5% Non Value-Adding Value Adding Traditional Response 2% 98% Non Value-Adding Value Adding 50% 50% Value Added Management Value-Adding Response Non Value Adding Value Adding Lead Time Reduced Non Value-Adding Time Reduced

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. Inventory • 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

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

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

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

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

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. Reducing Lot Sizes Increases the Number of Lots Customer orders 10 Lot size = 5 Lot 2 Lot 1 Lot size = 2 Lot 1 Lot 2 Lot 3 Lot 4 Lot 5

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

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

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

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

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 F I N I S H E D G O O D S Inv. M A T E R I A L Inv. Process Process Process Work-In-Process Staging Area Work-In-Process Staging Area 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 Signal Supplier C U S T O M E R D E M A N D Signal M A T E R I A L Inv. Process Process Process Signal Signal Signal FGI 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. Layout • 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

44. Work Cell versus Process Layout Process Layout Work Cell 1 Lathe Saw 2 Saw Press Lathe Saw 2 4 Lathe Lathe 5 Heat Treat Grinder 3 1 Press Grinder Heat Treat 6 Press Grinder

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 • 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

47. Just-in-Time • People Management • Housekeeping • Control Through Visibility • Total Quality • Problem Solving • Employee Involvement • Technology Management • Structured Flows • Set-Up Reduction • Small Lot Sizes JIT • 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