Description
The documentation about Operations management covers topics like high level of inventory, requirements, implementation of JIT, purchasing, benefits, kanban system, toyota production system, canon production system, JIT manufacturing in DELL
JUST IN TIME
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? INDEX
1) INTRODUCTION 2) HISTORY 3) REASONS FOR HIGH LEVEL OF INVENTORY 4) OBJECTIVES 5) REQUIREMENTS FOR JIT 6) IMPLEMENTATION OF JIT 7) JIT PURCHASING 8) TRADITIONAL V/S JIT 9) JIT IN SERVICES 10) BENEFITS OF JIT 11) KANBAN SYSTEM 12) TOYOTA PRODUCTION SYSTEM 13) CANON PRODUCTION SYSTEM 14) JIT MANUFACTURING IN DELL 3 5 6 12 15 16 21 25 27 30 31 38 40 41
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JIT – JUST IN TIME PRODUCTION SYSTEM
In the modern world change is the only constant. Each and every organization is using more and more sophisticated technologies to continuously improve productivity and reduce the waste. JIT (Just In Time) is one of the most sophisticated practices all over the world. Just In Time is the term used to indicate that a process is capable of instant response to demand without the need for over stocking either in expectation of the demand being forthcoming or as a result of inefficiencies in the process. The goal of JIT is the total elimination of inventory at all stages in the process. The process commences with the initial production of raw materials and ends with the satisfaction of the end users’ needs. In JIT setup, problem is defined as a “process out of control”. Just-in-time systems attempt to increase flexibility and responsiveness between suppliers and customers in order to eliminate waste, improve customer satisfaction, and improve overall competitiveness.
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DEFINITIONS
As defined by Monden, JIT is “a production system to produce the kind of units needed, at the time needed, and in quantities needed.” As defined in the APICS dictionary, JIT is “a philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity”. Waste results from any activity that adds cost without adding value, such as the unnecessary moving of materials, the accumulation of excess inventory, or the use of faulty production methods that create products requiring subsequent rework. JIT (also known as lean production or stockless production) should improve profits and return on investment by reducing inventory levels (increasing the inventory turnover rate), reducing variability, improving product quality, reducing production and delivery lead times, and reducing other costs (such as those associated with machine setup and equipment breakdown). In a JIT system, underutilized (excess) capacity is used instead of buffer inventories to hedge against problems that may arise. JIT applies primarily to repetitive manufacturing processes in which the same products and components are produced over and over again. The general idea is to establish flow processes (even when the facility uses a jobbing or batch process layout) by linking work centers so that there is an even, balanced flow of materials throughout the entire production process, similar to that found in an assembly line. To accomplish this, an attempt is made to reach the goals of driving all inventory buffers toward zero and achieving the ideal lot size of one unit. Even in our day to day life, we unknowingly use the JIT system. For example? An egg carton is always filled with exactly one dozen eggs. As and when you see the carton empty, it is implied that we need to fill the vacancy. ? The petrol indicator in a car signifies the amount of petrol that is used up, so that we can plan to refill the petrol as and when the need arises.
5 ? The “low battery” indicator in mobile phones indicates to us that the battery is exhausting and that there is need for charging. This is the kind of principle used in JIT. It is an approach with the objective of producing the right part in the right place at the right time (in other words, “just in time”).
HISTORY
JIT is a Japanese manufacturing management method developed in 1970’s. It was first adopted by Toyota manufacturing plants by Taichi Ohno. The main concern at that time was to meet consumers’ demands. Because of the success of JIT management, Taichi Ohno was named the “Father of JIT”. After the first introduction of JIT by Toyota, many companies followed up and around mid 1970’s, it gained extended support and widely used by many companies. One motivated reason for developing JIT and some other better production techniques was that after World War 2, Japanese people had a very strong incentive to develop a good manufacturing technique to help them rebuild the economy. Because of the natural constraints and the economy constraints after World War 2, Japanese manufacturers looked for a way to gain the most efficient use of limited resources. They worked on “Optimal costs / Quality relationship”. Before the introduction of JIT, there were a lot of manufacturing defects for the existing system at that time. According to Hirano, this included? Inventory problem ? Product defects ? Risen cost ? Large lot production ? Delivery delays. The inventory problems included the unused accumulated inventory that was not only unproductive, but also required a lot of effort in storing and managing them. Other implied problems were? Parts storage ? Equipment break downs ? Uneven production levels.
6 For the product defects, manufacturers knew that only one single product defect can destroy the producer’s creditability. They must create a “defect-free” process. Instead of large lot production- producing one type of products, they realized that they should produce more diversified goods. There was also a problem of rising cost; the existing system could not reduce the cost any further. They realized that improvements might lead to cost reduction.
REASONS FOR HIGH LEVEL OF INVENTORIES
1) Unreliable or unpredictable deliveriesMany times it is observed that due to the unreliable supplies, there is a tendency to store. The unreliable deliveries can aggravate the problem of inventory. It can lead to 2 things• • Excessive Buffer Stocks. Consequential costs of “Stock Out” situations.
2) Poor quality from suppliersPoor quality supplies sometimes accompany the unreliable supplies. The poor quality or substandard supplies make inspection a must. It increases the time cost and money cost. Further it also adds to stock in the organization premises and storing the stocks become a problem at the worksite. 3) Defects / Scraps / ReworkIn many organizations, the problem of defects is a chronic one. The defectives are either scrapped out or sent to rework. The scrap leads to total loss of value and becomes a cost. Although the rework adds to the time and money costs, it does give some output at end. 4) Lead TimeHigh lead time associated with the production of goods is a problem of the companies. Especially, the companies manufacturing multiple products face the problem with lead time. And it makes a way to JIT.
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JUST - IN – TIME
START JOURNEY
NO INVENTORY >0? EVALUATE STATUS
END JOURNEY
YES
ELIMINATE CONSTRAINT
IS PROCESS
ECONOMICAL?
NO
CHANGE PROCESS
YES EXPOSE NEXT CONSTRAINT
IDENTIFY CONSTRAINT
SUBTRACT ONE
Let us understand this flow chart with the help of an example. Suppose we have an economic process at a lot size of 500 handsets. ? Walking through the JIT process flow chart, we first ask, “Is the order quantity greater than one?” The answer is “Yes. The order quantity is 500.”
8 ? Next, following the chart, we ask, “Is the process economical?” the answer is “Yes, over the years, we have determined that 500 makes good sense and is economical”. ? Does the next block of the flow chart say “Leave well enough alone?” No. This would be the approach of a status-quo mentality, which is fatal in a competitive environment. The JIT flow chart says, subtract one from the lot size. If the lot size is 500, we take one away and make it 499. ? Now, we must again ask, “Is the order quantity greater than one?” Yes, it’s 499. “Is it economical?” Yes. In fact, we cant tell the difference. Even so, our velocity is 1/500 th higher. We can now economically respond to change slightly faster than before. ? We continue this process down to 350. Is the process economical? It’s not grossly out of line, but it is getting difficult to get the work done because we are spending so much time doing setups. We’re starting to feel the constraint. The first rock has surfaced so we turn to the “no” branch of the chart. Does it say “Add inventory till the process goes back to where it is comfortable again?” No. It says, “Change the process”. The constraint being felt is coming from setups. We’re doing too many setups. They are starting to assume too much of the machine time. Now, we have to change the process. JIT is forcing us to see how we can have “more” setups in “less” time. As we continue through this flowchart, we will expose layer after layer of constraints. ? The first constraint to higher velocities exposed in this example, is setup. We make a change and reduce our setup times. Is the process economical? Yes, we have made a substantial improvement and things are a lot better. Does that mean we have completed the job? No. It means we answer “yes” to the economical question and drop down again and take one away. ? We get down to 300 and hit another snag. Given the same level of output, we have 40% more activity in the stockroom, and we’re driving costs up, not down. The answer is to change the material handling process. They have become a constraint just as setups were earlier. JIT is driving us to store and control material at the point of use. ? After solving that problem we get down to 250. Here, we find we have twice as many shop orders, purchase orders and related transactions. In essence, we have doubled
9 our paperwork for the same amount of output. The paperwork process itself has become a constraint. JIT wants smaller lots and less paperwork. If we do not change the process, we’ll have more paperwork, not less. This is exactly why JIT strives for the elimination of purchase orders and work orders as we know them today. ? As we continue through this process of “One les at a time”, we accelerate the velocity of flow through the pipeline, each step of the way. However, we also find constraints arising from transportation and distribution, preventive maintenance, the number of parts and suppliers, planning and forecast accuracy, and many other areas. Thus, once we become acquainted with the JIT process, we begin to perceive the many opportunities for improvement that we could not see before. We are expected to repeat our loops through the JIT process until there is no waste left. The process is continuous and relentless. There is no place for complacency, until we are so called “perfect”. This drives our action to function well in a competitive global environment.
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Another way of representing the philosophy and process of JIT is through the use of analogy depicting rocks in the water. As long as there is enough water to cover the rocks, you can sail along without any obstruction. The water represents inventory, while the rocks are problems and smooth sailing means the company is easily making shipments. And you will make shipments, or your replacement will do it for you. Just making shipments, however, is not enough for survival. We must make them better in terms of quality, delivery and cost in order to continue to compete.
11 JIT recognizes that extra inventory, in itself, is wasteful. Therefore, following the “One less at a time” process, it says, take a measure of water out, then take another measure out, then another. As the water level drops, a rock will eventually get exposed. Suddenly, the crew’s energies are focused on the problem that lies ahead. The crew must change course to avoid the rocks until obstacles can be permanently removed, but they are now always aware of an obstacle in the path of a quicker route. Ignorance of a problem may be bliss, but awareness is more competitive.
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OBJECTIVES
1.
Smooth flow of work (the ultimate goal)
The basic reason why a company implements JIT is for the smooth flow of work, so that production happens on time and finally the consumer also gets the delivery on time. There are minimum defects and stoppages, optimum utilization of resources; in short, a smooth flow of work. 2. Elimination of waste The ultimate aim of JIT is to eliminate wastes, which do not add value to the product itself, completely from the organization. However, JIT is a step by step process and hence a total elimination of waste immediately is not possible. However, it does reduce waste considerably, thus saving time, effort and cost too. 3. Continuous improvement JIT is a never ending process in operations management. This is because JIT believes that perfection can never be achieved. There is always room for improvement 4. Eliminating anything that does not add value This is applicable not only to inventory, but also to other parts of the production system, including reduction of floor space, etc. 5. Increase Efficiency JIT increases efficiency with the production process. Efficiency is obtained through he increase of productivity and decrease of cost. 6. Increase Competitiveness
13 Increasing the organization’s ability to compete with others and remain competitive over the long run. The competitiveness of the firms is increased by the use of JIT manufacturing process as they can develop a more optimal process for their firms.
7. Identify and Respond to Consumers’ Needs Customers’ needs and wants seem to be the major focus for business now. This objective helps the firm on what is demanded from customers and what is required of production. 8. Optimal Quality- Zero defects The organization should focus on zero defect production process although it seems to be unrealistic, in the long run it will eliminate a huge amount of resources and effort in inspecting, reworking and the production of defected goods. 9. Reduction of Inventory JIT reduces inventory at all levels of the organization. 10. Reduction of Lead time Production lead times can be reduced by moving work stations closer together, applying group technology and cellular manufacturing concepts, reducing queue length (reducing the number of jobs waiting to be processed at a given machine), and improving the coordination and cooperation between successive processes; delivery lead times can be reduced through close cooperation with suppliers, possibly by inducing suppliers to locate closer to the factory. 11. Reduction of set up time Aim for single digit setup times (less than 10 minutes) or "one-touch" setup -- this can be done through better planning, process redesign, and product redesign. A good example of the potential for improved setup times can be found in auto racing, where a NASCAR pit crew can change all four tires and put gas in the tank in under 20 seconds. (How long would it
14 take you to change just one tire on your car?) The pit crew’s efficiency is the result of a team effort using specialized equipment and a coordinated, well-rehearsed process.
12. Relationship with Suppliers A good and long term relationship between organization and its suppliers helps to manage a more efficient process in inventory management, material management and delivery system. It will also assure that the supply is stable and available when needed. 13. Reduction of lot size Reducing setup times allows economical production of smaller lots; close cooperation with suppliers is necessary to achieve reductions in order lot sizes for purchased items, since this will require more frequent deliveries.
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REQUIREMENTS FOR JIT IMPLEMENTATION
1. Production flexibility at every stage of supply • • • • • • • • Smaller and more frequent shipments of products Flexibility to produce quantities of intermediate products as needed Replace large batch sizes with continuous flow of smaller quantities Reduction of storage, movement from place to place or inspection Minimizes extra inventory extra with changes in demand Quick delivery of products to respond to changes in demand Defective-free, high quality products and processes avoids costs. Eliminates wastes of:
2. Stability and disciplines of schedules
3. Comprehensive quality assurance
- Time - Material - Product - Energy - Money - Information 4. Teams of empowered employees • • • • • • • • Supervisor becomes a teacher, facilitator and a leader rather than an enforcer Employees are empowered to take appropriate actions Every system has a signal that triggers production Kanban Push production system Pull production system Modifications in the signaling system Areas of Kanban applications
5. A signaling system to pull production
6. A logistics system to support JIT delivery
16 • • • • • JIT requires fast and regular supply Cost, reliability, quality, and flexibility are key factors in vendor selection Vendors preferred with small lot sizes, frequent deliveries Few to single suppliers Vendor Managed Inventory (VMI)
IMPLEMENTATION OF JUST-IN-TIME
PRODUCT DESIGN:
• Standard Parts:
"Just-in-time" production processes have been applied successfully with respect to relatively large components such as automobile engines and body parts, so that such parts do not have to be held or warehoused prior to assembly. Application of a similar concept to relatively smaller or "standard" parts, i.e., to regulate the flow of such parts into the production assembly according to the rate of production or real time demand, is more difficult due to the wide variety and number of such parts, and the rapid rate at which they are used. Some crossdocking operations have been developed which break bulk quantities of small or standard parts into smaller lots which are delivered to a plant at a rate which approximates production. The Standard Parts Metering System (also referred to herein as "SPMS") is a method and process for managing the flow of standard parts into an assembly facility, such as an automobile factory, which eliminates the need to stock standard parts within the facility, and reduces or eliminates loss of standard parts inventory, and reduces shipping costs associated with standard parts. Standard parts are received in a staging or metering warehouse where they are arranged according to a delivery route into a plant. Standard parts are delivered to the plant in the minimum boxed quantities according to the amount needed for the next production shift or cycle. • Modular Design: Modular design is the way to combine Standardization and Product Variety to get the best of both worlds. Mocular design is an approach aiming to subdivide a system into smaller parts (modules) that can be independently created and then used in different systems to drive multiple functionalities. Besides reduction in cost (due to lesser customization, and less learning time), and flexibility in design, modularity offers other benefits such as augmentation (adding new solution by merely plugging in a new module), and exclusion. Examples of modular systems are cars and computers. Computers, in fact, are the first
17 systems in which modularity in architecture was implemented to overcome changing customer demands and to make the manufacturing process more adaptive to change. Modular design is an attempt to combine the advantages of standardization (high volume normally equals low manufacturing costs) with those of customization.
•
Manufacturing System:
There is no best manufacturing system for any product but whatever is the system selected; it must meet two basic objectives. It must be able to meet the specifications of the final product and it must be cost effective. Since stricter specifications add to the cost of the product, there is always a trade off between the desired specifications and the cost to achieve such specifications. For example, sophisticated injection molding machines and high quality plastics can produce excellent dolls cheaply provided they are produced in large volumes. However, if their demand is limited, they may not be able to compete with “home made” dolls produced in small quantities and sold at a fraction of the price of the molded version. • Concurrent engineering: Concurrent Engineering (CE) is a management/operational approach which aims to improve product design, production, operation, and maintenance by developing environments in which personnel from all disciplines (design, marketing, production engineering, process planning, and support) work together and share data throughout all phases of the product life cycle. It helps in creating alternate designs which are free from unnecessary features and meet the intended functions at the lowest cost. The goal is to reduce engineering design/introduction lead time and reduce or eliminate later changes and quality problems by involving cross-functional teams at the outset.
PROCESS DESIGN:
• Set up time reduction:
Set up is the time required to change from one job to another. Set up activity begins from the moment the last good piece comes off the machine and keeps on continuing until that machine once again starts producing good parts of the next job.
18 Reduction in set up time is vital to the implementation of JIT. The time saved due to reduced set up time is reinvested in frequent set-ups so that the lot sizes can be reduced. The reduced lot sizes in turn help the company to produce the product frequently thereby take the company closer to smooth and repeatable production flow needed to eliminate wasteful activities.
•
Modular Cells:
JIT manufacturing is organized in small autonomous modules or cells, each cell being totally responsible for its own production and supply to adjacent cell. The cells are designed so that material flow within the cell and between the cells is minimized. If higher rate of production is required in the next period, more workmen are assigned to the work cell and total work content is divided among the workmen, each workmen moving over the lesser distance than before. And if in the next period lower rate of production is needed, less number of workmen is assigned to the work cell and each workman performs as many operations within the work cell as possible. This implies that the cellular manufacturing operates on flexibility of the crew size. • JIT Layout: Traditional manufacturing line is a straight line wherein the workmen carry out their tasks working side-by-side. An operator performing say four functions is required to trip back empty handed to start the next cycle which causes loss of efficiency. An alternative to the traditional system is the U-line layout wherein the operators work side-by-side and back-toback. All the work to be done in this line or work cell is available from a central area. The crew size for the work cell depends on the output required from the cell.
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1 Operator 1
2
3
Operator 2 Operator 3 6 5 4
Three operators in U-line each performing work at two machines
In the above example, six operations are to be performed in a work cell and 3 workmen have been assigned to achieve the required rate of production. The first operator can do operation 1 and then turn around to do operation 6; second one can perform operation 2 and 5 and third can perform operation 3 and 4. • The KANBAN system: An ideal JIT system is one-at-a-time production flow wherein each operation pulls the previous operation and makes it produce at the rate needed. Kanban is a simple but effective control that helps JIT production work. Kanban is a Japanese word for card and the use of cards is central to many Japanese control systems. Kanban will be explained in detail later. • Continuous Improvements: JIT is not a one-time effort. It embodies the concept of continuous improvement supported at all levels of staff. It is never good enough and it never stops. Suggestion schemes are therefore strongly encouraged and supported. • Buffer Stock Removal:
20 Buffer (inventories) in a conventional system is considered necessary for in smooth production. But in JIT concept, inventories are considered inefficiencies and mechanism to hide problems. Continuous elimination of buffer stock is recommended to highlight production/purchase problems previously shielded by high inventory levels. Low buffer however does not mean Zero inventory. Zero inventories are a goal which may or may not be attained. Also, it must be remembered that JIT is not possible for each and every item held as inventory. One has to appreciate the difference between planned and unplanned inventory. • Total Productive Maintenance: Effective productive maintenance requires removal of cause of uncertainty and a major uncertainty in production is breakdowns. Rigorous preventive maintenance based on regular preventive inspection schedules, lubrication schedules, cleaning, adjustments and replacements, planned procurement of spares, etc. is a must to remove this uncertainty.
•
Quality at Source:
JIT success depends on the high quality of incoming materials. If a supplier delivers a bad batch, the whole production line will stop. The traditional approach to leave the quality to inspectors is too expensive to practice in a competitive situation. JIT, on the contrary, underlines the concept of Quality at Source which eliminates wastes at all stages of procurement. Through its “Do it right the first time” concept, JIT helps to eliminate waste by: 1. Eliminating incoming inspection and 2. Avoiding the need to pack and return defectives back to supplier for replacement.
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JIT PURCHASING
JIT purchasing is wrongly perceived as the activity of pushing inventory on to the suppliers. In fact, it is the technique to eliminate waste in purchase function by developing long term, mutually beneficial relationships with fewer but better suppliers. It aims at: 1. Eliminating waste in the purchase process (e.g. order processing costs, follow up costs, stock out costs, packaging and packing costs, freight costs, costs of handling defects etc. 2. Eliminating waste at supplier’s end (transport costs, rejection costs, etc.) 3. Eliminating purchased inventory. FUNDAMENTAL PRINCIPLES OF JIT PURCHASING JIT purchasing is based on following fundamental principles: 1. Supplier’s facilities are the extension of the buyer’s own facilities.
22 2. Long term (since it takes long time to solve the problems) and mutually beneficial relationships (since only mutual beneficial relationships can be long term) with fewer (as no company has resources to solve long term problems with many suppliers) but better suppliers are necessary to eliminate the waste of incoming inspection. 3. Delivery lot size should be just enough to satisfy immediate higher level requirement. 4. Rejections interrupt supply chain and hence must be eliminated. 5. Buyer and seller should jointly identify problems and activities which do not add value and initiate the actions to achieve continuous improvements.
ELEMENTS OF JIT PURCHASING Major elements of JIT purchasing are as follows: 1) Locating, selecting and developing suppliers of high quality assurance so that line rejection does not take place. Entire JIT purchasing hinges on suppliers’ quality. 2) Problem solving: The key to the successful application of JIT lies in solving problems. For example, if the firm carries higher spare inventory to guard against machine breakdowns, then JIT recommends the organization to analyze/take steps to prevent occurrence of machine breakdowns. This will eliminate the need to carry inventories. Thus, inventory reduction results as a by product of JIT. 3) Early supplier involvement: The supplier should be involved as early in the decisions stage of the product as possible. Close co-ordination must take place between buyer’s design department and prospective supplier while finalizing specifications. Emphasis should be more on performance rather on design specification thereby permitting suppliers loose specifications without compromising quality. Loose specifications enable suppliers to be more cost effective since they get more flexibility in taking
23 decisions relating to manufacturing process selection, materials selection and inspection methods selection. In JIT purchasing, value analysis forms integral part of purchasing system and supplier gets the status of member of value analysis syndicate. 4) Long term contracts: One of the most important requirements of the JIT implementation is to enter into long contracts covering 18 to 36 months renegotiable every 6-12 months. This cuts down drastically the lead time, say to 2 weeks. System contracting is an important step towards successful JIT purchasing. Long-term relationships are necessary are necessary since it takes long time to solve the problems. The aim should be progressively move from Blanket orders, to System contracting, to Requirements contracts, to JIT Contracts, and to the extreme – handshake (the ultimate test of a bi-lateral contract). 5) Pricing JIT success hinges on mutual trust and confidence in each other. Both buyer and seller must open their books. Buyer should provide supplier information on market demand, trend of growth or decline of business, and share formation on product prices and company’s development plans. If buyer has price constraint, the supplier should be prepared to retook at his cost and reconsider it. The buyer on the other hand must protect the supplier from competition and guarantee worthwhile return on suppliers’ investment of time and capital. Both are, however, moral bound to protect the confidentiality of the information provided by the other. 6) Fewer supplier: The number of suppliers of any component or material should be restricted to one or two. Fewer suppliers are necessary because no company has the resources to develop mutually beneficially relationships with thousands of suppliers. 7) Self certification of quality. True JIT purchasing requires an effective supplier self certification programme which guarantees that quality specifications are met before components leave the suppliers’ works. Self certification by the supplier eliminates receiving inspection at buyer’s plant and last minute running to replace/rework/return defectives. 8) Delivery to the point of use: Since the suppliers are totally responsible for the delivered quality of the product, they usually deliver directly to the point of use on the production line (i.e. direct supply line – DSL basis). This eliminates the added handling, packaging and packing, transportation, counting, inspection and the like. The situation can be compared to the bakery truck delivering the baked goods to the local super market everyday to the point of use.
24 9) Process control to improve and maintain quality: Manufacturing operations both supplier’s and buyer’s plant should be under process control thereby improving the quality of products or components with time. Targets must be set for quality measured in parts-per-million and supplier himself having the ultimate responsibility of measuring quality. 10) Use of standardized containers to protect product and simplify counting of goods : Both buyer’s as well as supplier’s manufacturing operations should make use of standardized containers or packages. An ideal container will have standard number of spaces, similar to egg-carton, which addition to protecting the product makes it easy to count the quantity. Benefits to be realized from the use of standardized containers are: • • • • Elimination / minimization of transit damages. Ease in verification of the quantity of part / component. Automatic signal to supplier to replenish stock. Better co-ordination between the departments / firms.
11) Family of parts: Business relationship can grow only if parties involved have sufficient interest in each other. Occasional purchases from supplier can’t retain interest of the supplier for long. Each supplier should be developed for a family of parts so that there is enough business to each supplier, supplier is not adversely affected if the demands of one or two products drops significantly and decrease in demand of one product may be offset by increase in other. 12) Mutual dependence: Both buyer and seller must appreciate and subscribe to the concept of mutual dependence. Buyer must look upon suppliers as partners in the buyer’s company performance. Buyer’s company needs them as much as they need buyer’s company. The buyers’ company at times may require providing anything from techniques and quality inputs to machines, buildings, funds, workers’ training and other support including quality management of their processes which will enable suppliers to reach a stage where they can self certify their products. If the buyer treats vendors at their extension, the vendors too in the same spirit should reciprocate in the form of quality improvements, cost improvements and transparency in their input costs.
25 13) Practice of JIT: The buyer must practice JIT in his own plant before talking to supplier. The buyer should be in a position to demonstrate to his suppliers the benefits of JIT. JIT will not succeed in the long term if suppliers are asked to do something which is not valued within buyer’s own plant. The buyer should start practicing JIT beginning with areas which are sure success. Packaging material is one such area since such materials are bulky and consume storage space.
TRANSITIONING TO A JIT SYSTEM
• Get top management commitment: The top management support is the 1 st and the fore most requirements for JIT to work or even start because if they reject the plan than it cannot be implemented and without this there will be no point working out a plan. • Decide which parts need most effort: The decision of the requirement has to be done well in advance so that the suppliers can be notified as to what is to be delivered and when will the demand come and till what time they have to be ready.
26 • • • Obtain support of workers: The support of the workers has to be taken because they are the one who are going to implement than plan and work accordingly. Start by trying to reduce setup times: For a start the setup time has to be reducing slowly and kept under continuous check to improve it. Gradually convert operations: the operation methods and technique also have to be converted to match the system being used and this also have to be done gradually, because a sudden change can disrupt the entire flow of the working and the entire motive of the operation. • Convert suppliers to JIT: The suppliers also have to be convinced that this is the best solution for their business as well and also they have to be treated as partner and not just as a supplier to get their involvement in the project. • Prepare for obstacles: The change is system will bring about a lot of obstacles such as the suppliers not wanting to co-operate and the management not agreeing to decision or the workers would not like to change their styles of working and this all will have to be dealt with in order for a processes to run smoothly.
TRADITIONAL V/S JIT NETWORK
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Tra d itio n a l Su p p lie r N e tw o rk
Buyer Buyer
S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier
Tiered Supplier Network
Buyer Buyer
First Tier Supplier Second Tier Supplier Supplier Supplier Supplier Supplier Supplier Supplier
Third Tier Supplier Supplier Supplier
Supplier Supplier
Supplier Supplier
Supplier Supplier
The method suggest that instead of bring all the suppliers at one location i.e. to the plant there should be a system where the suppliers can contact with each other and through the tiered system only one transport carrying all the required materials reaches the plant and so there is not much of a trouble to be handle which will reduce time waiting for 7 different suppliers. While comparing we also have to see the factors like INVENTORY, DELIVERY, LOT SIZE, SETUP RUN, VENDORS, and WORKERS. We have to see how much inventory is required and in what quantity and in what time it will be used and new inventory will have to be ordered and how many time in a month do we have to call for fresh inventories. The management also has to keep good relations with the vendors because they
28 are the ones who will help in making the project work and fulfill the requirements from time to time and therefore they will have to be treated like partners and not jus suppliers. Same goes for the workers, they also have to be treated like an asset to the company and not jus a tool required finishing the job. This will make them feel better and help them in adapting to the new system and work accordingly. This all things will improve the efficiency and effectiveness of the plant and also improve the productivity of the workers thus helping them reach their goals.
JIT IN SERVICES
• • • The disruption should be minimizing in the service sector so as to utilize the time effectively and get the maximum out of it. The system should be easy to understand and adopt and also change sometime if require so the user can feel comfortable with it. Lead time is the period between a customer's order and delivery of the final product. A small order of a pre-existing item may only have a few hours lead time, but a larger order of custom-made parts may have a lead time of weeks, months or even longer. So if the system can rescue this time than lot of valuable hours and money could be saved and invested in other activities to utilize the resources better. • • Waste have to be eliminated at every set of the way so as to make the system fool proof and to achieve the highest accreditation i.e. SIX SIGMA The transfer time of raw materials or semi finished good should be minimized so as the reduce the time and also to reduce the damage that occurs during the transfer time.
JIT II
The best way to implement JIT in any organization is to have a representative of the supplier working in the plant for the organization. By this way he can come to know the requirements of the company and the time for that requirement and can place the order at his office thus saving time and energy of the organization.
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Traditional Production Line… 6 people
First pass work cell design… 3 people
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Second try – work cell design – 1 person
This can only be done but cutting the smallest UN required part of the operation and this will help the organization to reach the goal and infact do better than they have thought about it.
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BENEFITS OF JIT SYSTEMS
• • • • • Reducing inventory levels will save a lot of space and also reduce the transportation cost and time that was spent for bringing it to the shop floor from the warehouse. High quality of raw materials will also be available as all that is used a fresh stock. Flexibility is also possible because than the organization is only ordering what it requires and at the time it requires it and nothing additional than that. Lead time will be reduce because the supplier can than see the trend in the organizations buying pattern and be ready for that. As one person is looking after the whole cycle of the good it will make him feel more responsible and also will motivate him to perform better and increase productivity and also reduce waste as he will know what exactly he is doing. • • No equipments will b kept ideal so there will be no time lost on it and thus no money is also wasted. As seen above the space in the shop floor can be reduce to almost half and the rest can be used for some other activities or can be used to double the production if there is demand for it. • To perform better the company will have to keep a good relationship with the vendors and this will help them in their goal of achieving minimum cost with maximum output. • Indirect labor are the people who sweep and clean the floor and machines etc. but if the whole processes is looked after by one person than the indirect work can also be done by one person. This will reduce the cost to the company and will also improve the efficiency of the workers and get the best out of them.
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KANBAN
Kanban is a system of continuous supply of components, parts and supplies, such that workers have what they need, where they need it, when they need it. The word Kan means "card" in Japanese and the word "ban" means "signal". So Kanban refers to "signal cards". Kanban is a signal generally in the form of a card. It’s a Japanese concept to control inventory quantities at minimum level derived from the working of departmental stores in the US & started by Toyota for the first time in their assembly plant. Kanban is an inventory control tool in JIT. According to Taichi Ohno, the man credited with developing JIT, Kanban is a means through which JIT is achieved. There are two types of production systems: • • Pull system: System for moving work where a workstation pulls output from the preceding station as needed. (e.g. Kanban) Push system: System for moving work where output is pushed to the next station as it is completed
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In the above diagrams of the ‘pull’ system it says, withdrawals trigger production. This means that whenever the information is conveyed back to a workstation through a Kanban card, it triggers the production. Here, the demand is what starts the production. In the ‘push’ system, the production schedule is fixed and the workstation pushes its part along the supply chain, whether the next workstation can accommodate it or not. Traditional manufacturing uses ‘push’ systems, where the goal is to ensure all people and equipment are optimally used. A result of this is that where there is a chain of operations, then if an earlier operation is faster than a later operation, then a pile of inventory will build up in front of the downstream machine. Inventory is, effectively, waste. It takes up space, uses up working capital and is liable to damage and devaluation. The principle of ‘pull’ is that control is transferred from the beginning of the line to the end. There are mainly two types of Kanban: • • Single card Kanban Dual card Kanban
The single card is used only for the withdrawal Kanban or the conveyance Kanban as it is also called. Toyota was the first company to implement JIT & Kanban correctly. In Toyota’s dual-card Kanban system, there are two main types of Kanban: 1. Production Kanban: signals the need to produce more parts. 2. Withdrawal Kanban (also called as "transportation" or a "conveyance” Kanban): signals the need to withdraw parts from one work center and deliver them to the next work center.
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Dual-card Kanban Rules
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1. No parts are made unless there is a production Kanban to authorize production. If no production Kanban is in the “in box” at a work center, the process remains idle, and workers perform other assigned activities. This rule enforces the “pull” nature of the process control. 2. There is exactly one Kanban per container. 3. Containers for each specific part are standardized, and they are always filled with the same quantity. Decisions regarding the number of Kanban (and containers) at each stage of the process are carefully considered, because this number sets an upper bound on the workin-process inventory at that stage. For example, if 10 containers holding 12 units each are used to move materials between two work centers, the maximum inventory possible is 120 units, occurring only when all 10 containers are full. At this point, all Kanban will be attached to full containers, so no additional units will be produced (because there is no unattached production Kanban to authorize production). This feature of a dual-card Kanban system enables systematic productivity improvement to take place. By deliberately removing one or more Kanban (and containers) from the system, a manager will also reduce the maximum level of work-inprocess (buffer) inventory. This reduction can be done until a shortage of materials occurs. This shortage is an indication of problems (accidents, machine breakdowns, production delays, defective products) that were previously hidden by excessive inventory. Once the problem is observed and a solution is identified, corrective action is taken so that the system can function at the lower level of buffer inventory. This simple, systematic method of inventory reduction is a key benefit of a dual card Kanban system.
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INTRODUCING KANBAN INTO A COMPANY
Kanban is usually introduced gradually and typically may involve some trial and error mechanism. 1. The first step is to become familiar with Kanban and the options it offers. Some parts of Kanban may be suitable for your company, others may not. Becoming familiar with Kanban will requiring in-depth reading, possibly attending a seminar or hiring a consultant. 2. Select the components of Kanban that will work in your facility. Not all parts of Kanban may be appropriate for the types of products you produce. Kanban may be appropriate for one product, and not for another. In some cases a simple manual Kanban will work well. In other cases computer automation of Kanbans may be the best option. 3. Plan your Kanban system: Kanban involves more than just manufacturing. Other functions such as purchasing, warehousing, shipping/receiving, quality control, transportation, accounts payable and engineering will be involved. Include all of those who will be affected in your Kanban planning and design process. In planning, keep in kind that your object to have what is needed (supplies, parts, manpower, information, energy, equipment, etc.), where it is needed when it is needed. 4. Set goals for Kanban: Based on your plan, set a schedule with measurable goals. What do you want Kanban to accomplish and when should that goal be reached? Determine what will be measured, and how it will be measured. 5. Begin implementation of Kanban: A common approach to implementing Kanban is to start with a generous number of Kanbans - containers, pallets, boxes, etc. Then systematically reduce the number of containers until the point at which the supply of materials is just in balance with the rate of use is reached. As containers are removed from the process, it will eventually reach the point at which production is delayed because the next container has not yet arrived. At this point add one container to the system to bring it back into balance. In using this trial and error approach, be sure a safety stock is available so that production is not interrupted. Identify the point at which there is one too few containers as the point at which material from the safety stock is used. This trial and error approach should be spread over a significant period of time to allow for normal fluctuations in production
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Giving you flexibility in color coding Kanban containers. • Reduce inventory and product obsolescence: Since component parts are not delivered until just before they are needed, there is a reduced need for storage space. Should a product or component design be upgraded, that upgrade can be included in the final product ASAP. There is no inventory of products or components that become obsolete. This fits well with the Kaizen system on continual improvement. Product designs can be upgraded in small increments on a continual basis, and those upgrades are immediately incorporated into the product with no waste from obsolete components or parts. • Reduces waste and scrap: With Kanban, products and components are only manufactured when they are needed. This eliminates overproduction. Raw materials are not delivered until they are needed, reducing waste and cutting storage costs. • Provides flexibility in production: If there is a sudden drop in demand for a product, Kanban ensures you are not stuck with excess inventory. This gives you the flexibility to rapidly respond to a changing demand. Kanban also provides flexibility in how your production lines are used. Production areas are not locked in by their supply chain. • Increases Output: The flow of Kanban (cards, bins, pallets, etc.) will stop if there is a production problem. This makes problems visible quickly, allowing them to be corrected ASAP. Kanban reduces wait times by making supplies more accessible and breaking down administrative barriers. This results in an increase in production using the same resources. • • • • • • • • Reduces Total Cost: Preventing Over Production Developing Flexible Work Stations Reducing Waste and Scrap Minimizing Wait Times and Logistics Costs Reducing Stock Levels and Overhead Costs Saving Resources by Streamlining Production Reducing Inventory Costs The Kanban system reduces your total costs by:
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Applications of Kanban
• • • • • Re-engineering Modular production technology Kaizen 5S housekeeping Preventive maintenance
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TOYOTA PRODUCTION SYSTEM
Within Toyota Taichi Ohno is most commonly credited as the father/originator of this way of working. The beginnings of this production system are rooted in the historical situation that Toyota faced. After the Second World War the president of Toyota said "Catch up with America in three years, otherwise the automobile industry of Japan will not survive". At that time one American worker produced approximately nine times as much as a Japanese worker. Taichi Ohno examined the American industry and found that American manufacturers made great use of economic order quantities - the traditional idea that it is best to make a "lot" or "batch" of an item (such as a particular model of car or a particular component) before switching to a new item. They also made use of economic order quantities in terms of ordering and stocking the many parts needed to assemble a car. Ohno felt that such methods would not work in Japan - total domestic demand was low and the domestic marketplace demanded production of small quantities of many different models. Accordingly Ohno devised a new system of production based on the elimination of waste. In his system waste was eliminated by: • • Just-in-time - items only move through the production system as and when they are needed Autonomation - (spelt correctly in case you have never met the word before) automating the production system so as to include inspection - human attention only being needed when a defect is automatically detected whereupon the system will stop and not proceed until the problem has been solved
In this system inventory (stock) is regarded as an unnecessary waste as too has to deal with defects. Ohno regarded waste as a general term including time and resources as well as materials. He identified a number of sources of waste that he felt should be eliminated: • • Overproduction - waste from producing more than is needed Time spent waiting - waste such as that associated with a worker being idle whilst waiting for another worker to pass him an item he needs (e.g. such as may occur in a sequential line production process) Transportation/movement - waste such as that associated with transporting/moving items around a factory Processing time - waste such as that associated with spending more time than is necessary processing an item on a machine Inventory - waste associated with keeping stocks Defects - waste associated with defective items
• • • •
At the time car prices in the USA where typically set using selling price = cost plus profit mark-up. However in Japan low demand meant that manufacturers faced price resistance, so if the selling price is fixed how one can increase the profit mark-up? Obviously by reducing costs and hence a large focus of the system that Toyota implemented was to do with cost reduction. To aid in cost reduction Toyota instituted production leveling - eliminating unevenness in the flow if a of items. So component which required assembly had an associated requirement of 100 during a 25 day working month then 4 were assembled per day, one every two hours
40 in an eight hour working day. Leveling was also applied to the flow of finished goods out of the factory and to the flow of raw materials into the factory. Toyota changed their factory layout. Previously all machines of the same type, e.g. presses, were together in the same area of the factory. This meant that items had to be transported back and forth as they needed processing on different machines. To eliminate these transportation different machines were clustered together so items could move smoothly from one machine to another as they were processed. This meant that workers had to become skilled on more than one machine - previously workers were skilled at operating just one type of machine. Although this initially met resistance from the workforce it was eventually overcome. In order to help the workforce to adapt to what was a very different production environment Ohno introduced the analogy of teamwork in a baton relay race. As you are probably aware typically in such races four runners pass a baton between themselves and the winning team is the one that crosses the finishing line first carrying the baton and having made valid baton exchanges between runners. Within the newly rearranged factory floor workers were encouraged to think of themselves as members of a team - passing the baton (processed items) between themselves with the goal of reaching the finishing line appropriately. If one worker flagged (e.g. had an off day) then the other workers could help him, perhaps setting a machine up for him so that the team output was unaffected. In order to have a method of controlling production (the flow of items) in this new environment Toyota introduced the Kanban. The Kanban is essentially information as to what has to be done. Within Toyota the most common form of Kanban was a rectangular piece of paper within a transparent vinyl envelope. The information listed on the paper basically tells a worker what to do - which items to collect or which items to produce. In Toyota two types of Kanban are distinguished for controlling the flow of items: • • A withdrawal Kanban - which details the items which should be withdrawn from the preceding step in the process A production ordering Kanban - which details the items to be produced
All movement throughout the factory is controlled by these kanbans - in addition since the kanbans specify item quantities precisely no defects can be tolerated - e.g. if a defective component is found when processing a production ordering Kanban then obviously the quantity specified on the Kanban cannot be produced. Hence the importance of autonomation (as referred to above) - the system must detect and highlight defective items so that the problem that caused the defect to occur can be resolved. Another aspect of the Toyota Production System is the reduction of setup time. Machines and processes must be re-engineered so as to reduce the setup time required before processing of a new item can start. In the Toyota system the Andon, (Japanese term meaning trouble lights which immediately signal to the production line that there is a problem to be resolved) indicating a stoppage of the line, is hung from the factory ceiling so that it can be clearly seen by everyone. This coupled with line stoppage clearly raises the profile of the problem and encourages attention/effort to its solution so that it does not reoccur. As an indication though of the difficulty of implementing JIT in a Western environment when General Motors instituted an Andon for line stoppage workers were simply not prepared to take responsibility for stopping the line. Hence defective items were passed though the system, rather than the Andon functioning as planned and highlighting problems and hence leading to their resolution. General Motors resolved the problem by allowing workers to indicate that they had a problem whilst the line continued to operate.
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CANON PRODUCTION SYSTEM (CPS)
The Objectives of CPS The objectives of Canon Production System (CPS) are to manufacture better quality products at lower cost and deliver them faster. The Three Basic Structures of CPS 1. Quality Assurance (QA) System- Canon tries to ensure the best quality in all stages of development, production, and delivery to gain worldwide respect for their products. 2. Production Assurance (PA) System- PA is aimed to achieve just-in-time manufacturing, fast delivery, low cost, and also adopt the "visual control" philosophy. Canon has devised two subsystems to attain these PA goals: Canon's HIT System (equivalent to just-in-time) and Signal System. The HIT System means making parts and products only when needed and only in the quantity needed. Canon uses either HIT cards or signals for this purpose. 3. Personnel Training (PS) System- Under this system, Cannon's employees are continually educated through a life-long education program. The other critical instruments for realizing CPS objectives are the "four investments" (technologies, human resources, facilities, and welfare) and "elimination of 9 wastes." WASTE CATEGORIES AND 9 WASTES TO BE ELIMINATED 1. Work-in-process. Stocking items not immediately needed 2. Quality. Producing defective products. 3. Facilities. Having idle machinery and breakdowns, taking too long for setup. 4. Expenses. Over investing for required output. 5. Indirect labor. Excess personnel due to bad indirect labor system. 6. Talent. Employing people for jobs that can be mechanized or assigned to less skilled people. 7. Motion. Not working according to the best work standards. 8. Product Design. Producing products with more functions than necessary. 9. New-product run-up. Making a slow start in stabilizing the production of a new product.
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JIT MANUFACTURING IN DELL
Just in time manufacturing is designed to minimize costs and reduce waste. Everything is carefully planned to ensure that stock is only ordered as required. No stock is held in warehouses. JIT requires a very good relationship with suppliers. Supplies must be available as needed; therefore suppliers must be able to send components every day or every hour as required. This requires close cooperation. Customers get the freshest and most up to date technology.
BENEFITS OF JIT FOR DELL • Less capital is tied up in stock, freeing up money for alternative uses • Lower insurance is required • No warehouse required - more space is available for other uses • Fewer personnel required to control and manage the stock • No risk of stock becoming obsolete because computer systems are built to order • Cost savings and greater efficiencies for both Dell and its customers • Any reduction in component prices can be passed on almost immediately to the customer. BENEFITS OF JIT FOR SUPPLIERS • Lower inventory - by supplying components to meet demand the risk of having unwanted inventory is reduced when technology changes • Better awareness of customer needs - the close relationship with Dell ensures suppliers can make informed decisions to meet changing customer demands.
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BIBLIOGRAPHY
www.wikipedia.com www.google.co.in http://www.1000ventures.com/business_guide/cs_efficiency_canon_ps.html Book on “Just In Time- Making It Happen”
doc_508653665.doc
The documentation about Operations management covers topics like high level of inventory, requirements, implementation of JIT, purchasing, benefits, kanban system, toyota production system, canon production system, JIT manufacturing in DELL
JUST IN TIME
2
? INDEX
1) INTRODUCTION 2) HISTORY 3) REASONS FOR HIGH LEVEL OF INVENTORY 4) OBJECTIVES 5) REQUIREMENTS FOR JIT 6) IMPLEMENTATION OF JIT 7) JIT PURCHASING 8) TRADITIONAL V/S JIT 9) JIT IN SERVICES 10) BENEFITS OF JIT 11) KANBAN SYSTEM 12) TOYOTA PRODUCTION SYSTEM 13) CANON PRODUCTION SYSTEM 14) JIT MANUFACTURING IN DELL 3 5 6 12 15 16 21 25 27 30 31 38 40 41
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JIT – JUST IN TIME PRODUCTION SYSTEM
In the modern world change is the only constant. Each and every organization is using more and more sophisticated technologies to continuously improve productivity and reduce the waste. JIT (Just In Time) is one of the most sophisticated practices all over the world. Just In Time is the term used to indicate that a process is capable of instant response to demand without the need for over stocking either in expectation of the demand being forthcoming or as a result of inefficiencies in the process. The goal of JIT is the total elimination of inventory at all stages in the process. The process commences with the initial production of raw materials and ends with the satisfaction of the end users’ needs. In JIT setup, problem is defined as a “process out of control”. Just-in-time systems attempt to increase flexibility and responsiveness between suppliers and customers in order to eliminate waste, improve customer satisfaction, and improve overall competitiveness.
4
DEFINITIONS
As defined by Monden, JIT is “a production system to produce the kind of units needed, at the time needed, and in quantities needed.” As defined in the APICS dictionary, JIT is “a philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity”. Waste results from any activity that adds cost without adding value, such as the unnecessary moving of materials, the accumulation of excess inventory, or the use of faulty production methods that create products requiring subsequent rework. JIT (also known as lean production or stockless production) should improve profits and return on investment by reducing inventory levels (increasing the inventory turnover rate), reducing variability, improving product quality, reducing production and delivery lead times, and reducing other costs (such as those associated with machine setup and equipment breakdown). In a JIT system, underutilized (excess) capacity is used instead of buffer inventories to hedge against problems that may arise. JIT applies primarily to repetitive manufacturing processes in which the same products and components are produced over and over again. The general idea is to establish flow processes (even when the facility uses a jobbing or batch process layout) by linking work centers so that there is an even, balanced flow of materials throughout the entire production process, similar to that found in an assembly line. To accomplish this, an attempt is made to reach the goals of driving all inventory buffers toward zero and achieving the ideal lot size of one unit. Even in our day to day life, we unknowingly use the JIT system. For example? An egg carton is always filled with exactly one dozen eggs. As and when you see the carton empty, it is implied that we need to fill the vacancy. ? The petrol indicator in a car signifies the amount of petrol that is used up, so that we can plan to refill the petrol as and when the need arises.
5 ? The “low battery” indicator in mobile phones indicates to us that the battery is exhausting and that there is need for charging. This is the kind of principle used in JIT. It is an approach with the objective of producing the right part in the right place at the right time (in other words, “just in time”).
HISTORY
JIT is a Japanese manufacturing management method developed in 1970’s. It was first adopted by Toyota manufacturing plants by Taichi Ohno. The main concern at that time was to meet consumers’ demands. Because of the success of JIT management, Taichi Ohno was named the “Father of JIT”. After the first introduction of JIT by Toyota, many companies followed up and around mid 1970’s, it gained extended support and widely used by many companies. One motivated reason for developing JIT and some other better production techniques was that after World War 2, Japanese people had a very strong incentive to develop a good manufacturing technique to help them rebuild the economy. Because of the natural constraints and the economy constraints after World War 2, Japanese manufacturers looked for a way to gain the most efficient use of limited resources. They worked on “Optimal costs / Quality relationship”. Before the introduction of JIT, there were a lot of manufacturing defects for the existing system at that time. According to Hirano, this included? Inventory problem ? Product defects ? Risen cost ? Large lot production ? Delivery delays. The inventory problems included the unused accumulated inventory that was not only unproductive, but also required a lot of effort in storing and managing them. Other implied problems were? Parts storage ? Equipment break downs ? Uneven production levels.
6 For the product defects, manufacturers knew that only one single product defect can destroy the producer’s creditability. They must create a “defect-free” process. Instead of large lot production- producing one type of products, they realized that they should produce more diversified goods. There was also a problem of rising cost; the existing system could not reduce the cost any further. They realized that improvements might lead to cost reduction.
REASONS FOR HIGH LEVEL OF INVENTORIES
1) Unreliable or unpredictable deliveriesMany times it is observed that due to the unreliable supplies, there is a tendency to store. The unreliable deliveries can aggravate the problem of inventory. It can lead to 2 things• • Excessive Buffer Stocks. Consequential costs of “Stock Out” situations.
2) Poor quality from suppliersPoor quality supplies sometimes accompany the unreliable supplies. The poor quality or substandard supplies make inspection a must. It increases the time cost and money cost. Further it also adds to stock in the organization premises and storing the stocks become a problem at the worksite. 3) Defects / Scraps / ReworkIn many organizations, the problem of defects is a chronic one. The defectives are either scrapped out or sent to rework. The scrap leads to total loss of value and becomes a cost. Although the rework adds to the time and money costs, it does give some output at end. 4) Lead TimeHigh lead time associated with the production of goods is a problem of the companies. Especially, the companies manufacturing multiple products face the problem with lead time. And it makes a way to JIT.
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JUST - IN – TIME
START JOURNEY
NO INVENTORY >0? EVALUATE STATUS
END JOURNEY
YES
ELIMINATE CONSTRAINT
IS PROCESS
ECONOMICAL?
NO
CHANGE PROCESS
YES EXPOSE NEXT CONSTRAINT
IDENTIFY CONSTRAINT
SUBTRACT ONE
Let us understand this flow chart with the help of an example. Suppose we have an economic process at a lot size of 500 handsets. ? Walking through the JIT process flow chart, we first ask, “Is the order quantity greater than one?” The answer is “Yes. The order quantity is 500.”
8 ? Next, following the chart, we ask, “Is the process economical?” the answer is “Yes, over the years, we have determined that 500 makes good sense and is economical”. ? Does the next block of the flow chart say “Leave well enough alone?” No. This would be the approach of a status-quo mentality, which is fatal in a competitive environment. The JIT flow chart says, subtract one from the lot size. If the lot size is 500, we take one away and make it 499. ? Now, we must again ask, “Is the order quantity greater than one?” Yes, it’s 499. “Is it economical?” Yes. In fact, we cant tell the difference. Even so, our velocity is 1/500 th higher. We can now economically respond to change slightly faster than before. ? We continue this process down to 350. Is the process economical? It’s not grossly out of line, but it is getting difficult to get the work done because we are spending so much time doing setups. We’re starting to feel the constraint. The first rock has surfaced so we turn to the “no” branch of the chart. Does it say “Add inventory till the process goes back to where it is comfortable again?” No. It says, “Change the process”. The constraint being felt is coming from setups. We’re doing too many setups. They are starting to assume too much of the machine time. Now, we have to change the process. JIT is forcing us to see how we can have “more” setups in “less” time. As we continue through this flowchart, we will expose layer after layer of constraints. ? The first constraint to higher velocities exposed in this example, is setup. We make a change and reduce our setup times. Is the process economical? Yes, we have made a substantial improvement and things are a lot better. Does that mean we have completed the job? No. It means we answer “yes” to the economical question and drop down again and take one away. ? We get down to 300 and hit another snag. Given the same level of output, we have 40% more activity in the stockroom, and we’re driving costs up, not down. The answer is to change the material handling process. They have become a constraint just as setups were earlier. JIT is driving us to store and control material at the point of use. ? After solving that problem we get down to 250. Here, we find we have twice as many shop orders, purchase orders and related transactions. In essence, we have doubled
9 our paperwork for the same amount of output. The paperwork process itself has become a constraint. JIT wants smaller lots and less paperwork. If we do not change the process, we’ll have more paperwork, not less. This is exactly why JIT strives for the elimination of purchase orders and work orders as we know them today. ? As we continue through this process of “One les at a time”, we accelerate the velocity of flow through the pipeline, each step of the way. However, we also find constraints arising from transportation and distribution, preventive maintenance, the number of parts and suppliers, planning and forecast accuracy, and many other areas. Thus, once we become acquainted with the JIT process, we begin to perceive the many opportunities for improvement that we could not see before. We are expected to repeat our loops through the JIT process until there is no waste left. The process is continuous and relentless. There is no place for complacency, until we are so called “perfect”. This drives our action to function well in a competitive global environment.
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Another way of representing the philosophy and process of JIT is through the use of analogy depicting rocks in the water. As long as there is enough water to cover the rocks, you can sail along without any obstruction. The water represents inventory, while the rocks are problems and smooth sailing means the company is easily making shipments. And you will make shipments, or your replacement will do it for you. Just making shipments, however, is not enough for survival. We must make them better in terms of quality, delivery and cost in order to continue to compete.
11 JIT recognizes that extra inventory, in itself, is wasteful. Therefore, following the “One less at a time” process, it says, take a measure of water out, then take another measure out, then another. As the water level drops, a rock will eventually get exposed. Suddenly, the crew’s energies are focused on the problem that lies ahead. The crew must change course to avoid the rocks until obstacles can be permanently removed, but they are now always aware of an obstacle in the path of a quicker route. Ignorance of a problem may be bliss, but awareness is more competitive.
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OBJECTIVES
1.
Smooth flow of work (the ultimate goal)
The basic reason why a company implements JIT is for the smooth flow of work, so that production happens on time and finally the consumer also gets the delivery on time. There are minimum defects and stoppages, optimum utilization of resources; in short, a smooth flow of work. 2. Elimination of waste The ultimate aim of JIT is to eliminate wastes, which do not add value to the product itself, completely from the organization. However, JIT is a step by step process and hence a total elimination of waste immediately is not possible. However, it does reduce waste considerably, thus saving time, effort and cost too. 3. Continuous improvement JIT is a never ending process in operations management. This is because JIT believes that perfection can never be achieved. There is always room for improvement 4. Eliminating anything that does not add value This is applicable not only to inventory, but also to other parts of the production system, including reduction of floor space, etc. 5. Increase Efficiency JIT increases efficiency with the production process. Efficiency is obtained through he increase of productivity and decrease of cost. 6. Increase Competitiveness
13 Increasing the organization’s ability to compete with others and remain competitive over the long run. The competitiveness of the firms is increased by the use of JIT manufacturing process as they can develop a more optimal process for their firms.
7. Identify and Respond to Consumers’ Needs Customers’ needs and wants seem to be the major focus for business now. This objective helps the firm on what is demanded from customers and what is required of production. 8. Optimal Quality- Zero defects The organization should focus on zero defect production process although it seems to be unrealistic, in the long run it will eliminate a huge amount of resources and effort in inspecting, reworking and the production of defected goods. 9. Reduction of Inventory JIT reduces inventory at all levels of the organization. 10. Reduction of Lead time Production lead times can be reduced by moving work stations closer together, applying group technology and cellular manufacturing concepts, reducing queue length (reducing the number of jobs waiting to be processed at a given machine), and improving the coordination and cooperation between successive processes; delivery lead times can be reduced through close cooperation with suppliers, possibly by inducing suppliers to locate closer to the factory. 11. Reduction of set up time Aim for single digit setup times (less than 10 minutes) or "one-touch" setup -- this can be done through better planning, process redesign, and product redesign. A good example of the potential for improved setup times can be found in auto racing, where a NASCAR pit crew can change all four tires and put gas in the tank in under 20 seconds. (How long would it
14 take you to change just one tire on your car?) The pit crew’s efficiency is the result of a team effort using specialized equipment and a coordinated, well-rehearsed process.
12. Relationship with Suppliers A good and long term relationship between organization and its suppliers helps to manage a more efficient process in inventory management, material management and delivery system. It will also assure that the supply is stable and available when needed. 13. Reduction of lot size Reducing setup times allows economical production of smaller lots; close cooperation with suppliers is necessary to achieve reductions in order lot sizes for purchased items, since this will require more frequent deliveries.
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REQUIREMENTS FOR JIT IMPLEMENTATION
1. Production flexibility at every stage of supply • • • • • • • • Smaller and more frequent shipments of products Flexibility to produce quantities of intermediate products as needed Replace large batch sizes with continuous flow of smaller quantities Reduction of storage, movement from place to place or inspection Minimizes extra inventory extra with changes in demand Quick delivery of products to respond to changes in demand Defective-free, high quality products and processes avoids costs. Eliminates wastes of:
2. Stability and disciplines of schedules
3. Comprehensive quality assurance
- Time - Material - Product - Energy - Money - Information 4. Teams of empowered employees • • • • • • • • Supervisor becomes a teacher, facilitator and a leader rather than an enforcer Employees are empowered to take appropriate actions Every system has a signal that triggers production Kanban Push production system Pull production system Modifications in the signaling system Areas of Kanban applications
5. A signaling system to pull production
6. A logistics system to support JIT delivery
16 • • • • • JIT requires fast and regular supply Cost, reliability, quality, and flexibility are key factors in vendor selection Vendors preferred with small lot sizes, frequent deliveries Few to single suppliers Vendor Managed Inventory (VMI)
IMPLEMENTATION OF JUST-IN-TIME
PRODUCT DESIGN:
• Standard Parts:
"Just-in-time" production processes have been applied successfully with respect to relatively large components such as automobile engines and body parts, so that such parts do not have to be held or warehoused prior to assembly. Application of a similar concept to relatively smaller or "standard" parts, i.e., to regulate the flow of such parts into the production assembly according to the rate of production or real time demand, is more difficult due to the wide variety and number of such parts, and the rapid rate at which they are used. Some crossdocking operations have been developed which break bulk quantities of small or standard parts into smaller lots which are delivered to a plant at a rate which approximates production. The Standard Parts Metering System (also referred to herein as "SPMS") is a method and process for managing the flow of standard parts into an assembly facility, such as an automobile factory, which eliminates the need to stock standard parts within the facility, and reduces or eliminates loss of standard parts inventory, and reduces shipping costs associated with standard parts. Standard parts are received in a staging or metering warehouse where they are arranged according to a delivery route into a plant. Standard parts are delivered to the plant in the minimum boxed quantities according to the amount needed for the next production shift or cycle. • Modular Design: Modular design is the way to combine Standardization and Product Variety to get the best of both worlds. Mocular design is an approach aiming to subdivide a system into smaller parts (modules) that can be independently created and then used in different systems to drive multiple functionalities. Besides reduction in cost (due to lesser customization, and less learning time), and flexibility in design, modularity offers other benefits such as augmentation (adding new solution by merely plugging in a new module), and exclusion. Examples of modular systems are cars and computers. Computers, in fact, are the first
17 systems in which modularity in architecture was implemented to overcome changing customer demands and to make the manufacturing process more adaptive to change. Modular design is an attempt to combine the advantages of standardization (high volume normally equals low manufacturing costs) with those of customization.
•
Manufacturing System:
There is no best manufacturing system for any product but whatever is the system selected; it must meet two basic objectives. It must be able to meet the specifications of the final product and it must be cost effective. Since stricter specifications add to the cost of the product, there is always a trade off between the desired specifications and the cost to achieve such specifications. For example, sophisticated injection molding machines and high quality plastics can produce excellent dolls cheaply provided they are produced in large volumes. However, if their demand is limited, they may not be able to compete with “home made” dolls produced in small quantities and sold at a fraction of the price of the molded version. • Concurrent engineering: Concurrent Engineering (CE) is a management/operational approach which aims to improve product design, production, operation, and maintenance by developing environments in which personnel from all disciplines (design, marketing, production engineering, process planning, and support) work together and share data throughout all phases of the product life cycle. It helps in creating alternate designs which are free from unnecessary features and meet the intended functions at the lowest cost. The goal is to reduce engineering design/introduction lead time and reduce or eliminate later changes and quality problems by involving cross-functional teams at the outset.
PROCESS DESIGN:
• Set up time reduction:
Set up is the time required to change from one job to another. Set up activity begins from the moment the last good piece comes off the machine and keeps on continuing until that machine once again starts producing good parts of the next job.
18 Reduction in set up time is vital to the implementation of JIT. The time saved due to reduced set up time is reinvested in frequent set-ups so that the lot sizes can be reduced. The reduced lot sizes in turn help the company to produce the product frequently thereby take the company closer to smooth and repeatable production flow needed to eliminate wasteful activities.
•
Modular Cells:
JIT manufacturing is organized in small autonomous modules or cells, each cell being totally responsible for its own production and supply to adjacent cell. The cells are designed so that material flow within the cell and between the cells is minimized. If higher rate of production is required in the next period, more workmen are assigned to the work cell and total work content is divided among the workmen, each workmen moving over the lesser distance than before. And if in the next period lower rate of production is needed, less number of workmen is assigned to the work cell and each workman performs as many operations within the work cell as possible. This implies that the cellular manufacturing operates on flexibility of the crew size. • JIT Layout: Traditional manufacturing line is a straight line wherein the workmen carry out their tasks working side-by-side. An operator performing say four functions is required to trip back empty handed to start the next cycle which causes loss of efficiency. An alternative to the traditional system is the U-line layout wherein the operators work side-by-side and back-toback. All the work to be done in this line or work cell is available from a central area. The crew size for the work cell depends on the output required from the cell.
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1 Operator 1
2
3
Operator 2 Operator 3 6 5 4
Three operators in U-line each performing work at two machines
In the above example, six operations are to be performed in a work cell and 3 workmen have been assigned to achieve the required rate of production. The first operator can do operation 1 and then turn around to do operation 6; second one can perform operation 2 and 5 and third can perform operation 3 and 4. • The KANBAN system: An ideal JIT system is one-at-a-time production flow wherein each operation pulls the previous operation and makes it produce at the rate needed. Kanban is a simple but effective control that helps JIT production work. Kanban is a Japanese word for card and the use of cards is central to many Japanese control systems. Kanban will be explained in detail later. • Continuous Improvements: JIT is not a one-time effort. It embodies the concept of continuous improvement supported at all levels of staff. It is never good enough and it never stops. Suggestion schemes are therefore strongly encouraged and supported. • Buffer Stock Removal:
20 Buffer (inventories) in a conventional system is considered necessary for in smooth production. But in JIT concept, inventories are considered inefficiencies and mechanism to hide problems. Continuous elimination of buffer stock is recommended to highlight production/purchase problems previously shielded by high inventory levels. Low buffer however does not mean Zero inventory. Zero inventories are a goal which may or may not be attained. Also, it must be remembered that JIT is not possible for each and every item held as inventory. One has to appreciate the difference between planned and unplanned inventory. • Total Productive Maintenance: Effective productive maintenance requires removal of cause of uncertainty and a major uncertainty in production is breakdowns. Rigorous preventive maintenance based on regular preventive inspection schedules, lubrication schedules, cleaning, adjustments and replacements, planned procurement of spares, etc. is a must to remove this uncertainty.
•
Quality at Source:
JIT success depends on the high quality of incoming materials. If a supplier delivers a bad batch, the whole production line will stop. The traditional approach to leave the quality to inspectors is too expensive to practice in a competitive situation. JIT, on the contrary, underlines the concept of Quality at Source which eliminates wastes at all stages of procurement. Through its “Do it right the first time” concept, JIT helps to eliminate waste by: 1. Eliminating incoming inspection and 2. Avoiding the need to pack and return defectives back to supplier for replacement.
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JIT PURCHASING
JIT purchasing is wrongly perceived as the activity of pushing inventory on to the suppliers. In fact, it is the technique to eliminate waste in purchase function by developing long term, mutually beneficial relationships with fewer but better suppliers. It aims at: 1. Eliminating waste in the purchase process (e.g. order processing costs, follow up costs, stock out costs, packaging and packing costs, freight costs, costs of handling defects etc. 2. Eliminating waste at supplier’s end (transport costs, rejection costs, etc.) 3. Eliminating purchased inventory. FUNDAMENTAL PRINCIPLES OF JIT PURCHASING JIT purchasing is based on following fundamental principles: 1. Supplier’s facilities are the extension of the buyer’s own facilities.
22 2. Long term (since it takes long time to solve the problems) and mutually beneficial relationships (since only mutual beneficial relationships can be long term) with fewer (as no company has resources to solve long term problems with many suppliers) but better suppliers are necessary to eliminate the waste of incoming inspection. 3. Delivery lot size should be just enough to satisfy immediate higher level requirement. 4. Rejections interrupt supply chain and hence must be eliminated. 5. Buyer and seller should jointly identify problems and activities which do not add value and initiate the actions to achieve continuous improvements.
ELEMENTS OF JIT PURCHASING Major elements of JIT purchasing are as follows: 1) Locating, selecting and developing suppliers of high quality assurance so that line rejection does not take place. Entire JIT purchasing hinges on suppliers’ quality. 2) Problem solving: The key to the successful application of JIT lies in solving problems. For example, if the firm carries higher spare inventory to guard against machine breakdowns, then JIT recommends the organization to analyze/take steps to prevent occurrence of machine breakdowns. This will eliminate the need to carry inventories. Thus, inventory reduction results as a by product of JIT. 3) Early supplier involvement: The supplier should be involved as early in the decisions stage of the product as possible. Close co-ordination must take place between buyer’s design department and prospective supplier while finalizing specifications. Emphasis should be more on performance rather on design specification thereby permitting suppliers loose specifications without compromising quality. Loose specifications enable suppliers to be more cost effective since they get more flexibility in taking
23 decisions relating to manufacturing process selection, materials selection and inspection methods selection. In JIT purchasing, value analysis forms integral part of purchasing system and supplier gets the status of member of value analysis syndicate. 4) Long term contracts: One of the most important requirements of the JIT implementation is to enter into long contracts covering 18 to 36 months renegotiable every 6-12 months. This cuts down drastically the lead time, say to 2 weeks. System contracting is an important step towards successful JIT purchasing. Long-term relationships are necessary are necessary since it takes long time to solve the problems. The aim should be progressively move from Blanket orders, to System contracting, to Requirements contracts, to JIT Contracts, and to the extreme – handshake (the ultimate test of a bi-lateral contract). 5) Pricing JIT success hinges on mutual trust and confidence in each other. Both buyer and seller must open their books. Buyer should provide supplier information on market demand, trend of growth or decline of business, and share formation on product prices and company’s development plans. If buyer has price constraint, the supplier should be prepared to retook at his cost and reconsider it. The buyer on the other hand must protect the supplier from competition and guarantee worthwhile return on suppliers’ investment of time and capital. Both are, however, moral bound to protect the confidentiality of the information provided by the other. 6) Fewer supplier: The number of suppliers of any component or material should be restricted to one or two. Fewer suppliers are necessary because no company has the resources to develop mutually beneficially relationships with thousands of suppliers. 7) Self certification of quality. True JIT purchasing requires an effective supplier self certification programme which guarantees that quality specifications are met before components leave the suppliers’ works. Self certification by the supplier eliminates receiving inspection at buyer’s plant and last minute running to replace/rework/return defectives. 8) Delivery to the point of use: Since the suppliers are totally responsible for the delivered quality of the product, they usually deliver directly to the point of use on the production line (i.e. direct supply line – DSL basis). This eliminates the added handling, packaging and packing, transportation, counting, inspection and the like. The situation can be compared to the bakery truck delivering the baked goods to the local super market everyday to the point of use.
24 9) Process control to improve and maintain quality: Manufacturing operations both supplier’s and buyer’s plant should be under process control thereby improving the quality of products or components with time. Targets must be set for quality measured in parts-per-million and supplier himself having the ultimate responsibility of measuring quality. 10) Use of standardized containers to protect product and simplify counting of goods : Both buyer’s as well as supplier’s manufacturing operations should make use of standardized containers or packages. An ideal container will have standard number of spaces, similar to egg-carton, which addition to protecting the product makes it easy to count the quantity. Benefits to be realized from the use of standardized containers are: • • • • Elimination / minimization of transit damages. Ease in verification of the quantity of part / component. Automatic signal to supplier to replenish stock. Better co-ordination between the departments / firms.
11) Family of parts: Business relationship can grow only if parties involved have sufficient interest in each other. Occasional purchases from supplier can’t retain interest of the supplier for long. Each supplier should be developed for a family of parts so that there is enough business to each supplier, supplier is not adversely affected if the demands of one or two products drops significantly and decrease in demand of one product may be offset by increase in other. 12) Mutual dependence: Both buyer and seller must appreciate and subscribe to the concept of mutual dependence. Buyer must look upon suppliers as partners in the buyer’s company performance. Buyer’s company needs them as much as they need buyer’s company. The buyers’ company at times may require providing anything from techniques and quality inputs to machines, buildings, funds, workers’ training and other support including quality management of their processes which will enable suppliers to reach a stage where they can self certify their products. If the buyer treats vendors at their extension, the vendors too in the same spirit should reciprocate in the form of quality improvements, cost improvements and transparency in their input costs.
25 13) Practice of JIT: The buyer must practice JIT in his own plant before talking to supplier. The buyer should be in a position to demonstrate to his suppliers the benefits of JIT. JIT will not succeed in the long term if suppliers are asked to do something which is not valued within buyer’s own plant. The buyer should start practicing JIT beginning with areas which are sure success. Packaging material is one such area since such materials are bulky and consume storage space.
TRANSITIONING TO A JIT SYSTEM
• Get top management commitment: The top management support is the 1 st and the fore most requirements for JIT to work or even start because if they reject the plan than it cannot be implemented and without this there will be no point working out a plan. • Decide which parts need most effort: The decision of the requirement has to be done well in advance so that the suppliers can be notified as to what is to be delivered and when will the demand come and till what time they have to be ready.
26 • • • Obtain support of workers: The support of the workers has to be taken because they are the one who are going to implement than plan and work accordingly. Start by trying to reduce setup times: For a start the setup time has to be reducing slowly and kept under continuous check to improve it. Gradually convert operations: the operation methods and technique also have to be converted to match the system being used and this also have to be done gradually, because a sudden change can disrupt the entire flow of the working and the entire motive of the operation. • Convert suppliers to JIT: The suppliers also have to be convinced that this is the best solution for their business as well and also they have to be treated as partner and not just as a supplier to get their involvement in the project. • Prepare for obstacles: The change is system will bring about a lot of obstacles such as the suppliers not wanting to co-operate and the management not agreeing to decision or the workers would not like to change their styles of working and this all will have to be dealt with in order for a processes to run smoothly.
TRADITIONAL V/S JIT NETWORK
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Tra d itio n a l Su p p lie r N e tw o rk
Buyer Buyer
S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier S upplier
Tiered Supplier Network
Buyer Buyer
First Tier Supplier Second Tier Supplier Supplier Supplier Supplier Supplier Supplier Supplier
Third Tier Supplier Supplier Supplier
Supplier Supplier
Supplier Supplier
Supplier Supplier
The method suggest that instead of bring all the suppliers at one location i.e. to the plant there should be a system where the suppliers can contact with each other and through the tiered system only one transport carrying all the required materials reaches the plant and so there is not much of a trouble to be handle which will reduce time waiting for 7 different suppliers. While comparing we also have to see the factors like INVENTORY, DELIVERY, LOT SIZE, SETUP RUN, VENDORS, and WORKERS. We have to see how much inventory is required and in what quantity and in what time it will be used and new inventory will have to be ordered and how many time in a month do we have to call for fresh inventories. The management also has to keep good relations with the vendors because they
28 are the ones who will help in making the project work and fulfill the requirements from time to time and therefore they will have to be treated like partners and not jus suppliers. Same goes for the workers, they also have to be treated like an asset to the company and not jus a tool required finishing the job. This will make them feel better and help them in adapting to the new system and work accordingly. This all things will improve the efficiency and effectiveness of the plant and also improve the productivity of the workers thus helping them reach their goals.
JIT IN SERVICES
• • • The disruption should be minimizing in the service sector so as to utilize the time effectively and get the maximum out of it. The system should be easy to understand and adopt and also change sometime if require so the user can feel comfortable with it. Lead time is the period between a customer's order and delivery of the final product. A small order of a pre-existing item may only have a few hours lead time, but a larger order of custom-made parts may have a lead time of weeks, months or even longer. So if the system can rescue this time than lot of valuable hours and money could be saved and invested in other activities to utilize the resources better. • • Waste have to be eliminated at every set of the way so as to make the system fool proof and to achieve the highest accreditation i.e. SIX SIGMA The transfer time of raw materials or semi finished good should be minimized so as the reduce the time and also to reduce the damage that occurs during the transfer time.
JIT II
The best way to implement JIT in any organization is to have a representative of the supplier working in the plant for the organization. By this way he can come to know the requirements of the company and the time for that requirement and can place the order at his office thus saving time and energy of the organization.
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Traditional Production Line… 6 people
First pass work cell design… 3 people
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Second try – work cell design – 1 person
This can only be done but cutting the smallest UN required part of the operation and this will help the organization to reach the goal and infact do better than they have thought about it.
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BENEFITS OF JIT SYSTEMS
• • • • • Reducing inventory levels will save a lot of space and also reduce the transportation cost and time that was spent for bringing it to the shop floor from the warehouse. High quality of raw materials will also be available as all that is used a fresh stock. Flexibility is also possible because than the organization is only ordering what it requires and at the time it requires it and nothing additional than that. Lead time will be reduce because the supplier can than see the trend in the organizations buying pattern and be ready for that. As one person is looking after the whole cycle of the good it will make him feel more responsible and also will motivate him to perform better and increase productivity and also reduce waste as he will know what exactly he is doing. • • No equipments will b kept ideal so there will be no time lost on it and thus no money is also wasted. As seen above the space in the shop floor can be reduce to almost half and the rest can be used for some other activities or can be used to double the production if there is demand for it. • To perform better the company will have to keep a good relationship with the vendors and this will help them in their goal of achieving minimum cost with maximum output. • Indirect labor are the people who sweep and clean the floor and machines etc. but if the whole processes is looked after by one person than the indirect work can also be done by one person. This will reduce the cost to the company and will also improve the efficiency of the workers and get the best out of them.
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KANBAN
Kanban is a system of continuous supply of components, parts and supplies, such that workers have what they need, where they need it, when they need it. The word Kan means "card" in Japanese and the word "ban" means "signal". So Kanban refers to "signal cards". Kanban is a signal generally in the form of a card. It’s a Japanese concept to control inventory quantities at minimum level derived from the working of departmental stores in the US & started by Toyota for the first time in their assembly plant. Kanban is an inventory control tool in JIT. According to Taichi Ohno, the man credited with developing JIT, Kanban is a means through which JIT is achieved. There are two types of production systems: • • Pull system: System for moving work where a workstation pulls output from the preceding station as needed. (e.g. Kanban) Push system: System for moving work where output is pushed to the next station as it is completed
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In the above diagrams of the ‘pull’ system it says, withdrawals trigger production. This means that whenever the information is conveyed back to a workstation through a Kanban card, it triggers the production. Here, the demand is what starts the production. In the ‘push’ system, the production schedule is fixed and the workstation pushes its part along the supply chain, whether the next workstation can accommodate it or not. Traditional manufacturing uses ‘push’ systems, where the goal is to ensure all people and equipment are optimally used. A result of this is that where there is a chain of operations, then if an earlier operation is faster than a later operation, then a pile of inventory will build up in front of the downstream machine. Inventory is, effectively, waste. It takes up space, uses up working capital and is liable to damage and devaluation. The principle of ‘pull’ is that control is transferred from the beginning of the line to the end. There are mainly two types of Kanban: • • Single card Kanban Dual card Kanban
The single card is used only for the withdrawal Kanban or the conveyance Kanban as it is also called. Toyota was the first company to implement JIT & Kanban correctly. In Toyota’s dual-card Kanban system, there are two main types of Kanban: 1. Production Kanban: signals the need to produce more parts. 2. Withdrawal Kanban (also called as "transportation" or a "conveyance” Kanban): signals the need to withdraw parts from one work center and deliver them to the next work center.
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Dual-card Kanban Rules
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1. No parts are made unless there is a production Kanban to authorize production. If no production Kanban is in the “in box” at a work center, the process remains idle, and workers perform other assigned activities. This rule enforces the “pull” nature of the process control. 2. There is exactly one Kanban per container. 3. Containers for each specific part are standardized, and they are always filled with the same quantity. Decisions regarding the number of Kanban (and containers) at each stage of the process are carefully considered, because this number sets an upper bound on the workin-process inventory at that stage. For example, if 10 containers holding 12 units each are used to move materials between two work centers, the maximum inventory possible is 120 units, occurring only when all 10 containers are full. At this point, all Kanban will be attached to full containers, so no additional units will be produced (because there is no unattached production Kanban to authorize production). This feature of a dual-card Kanban system enables systematic productivity improvement to take place. By deliberately removing one or more Kanban (and containers) from the system, a manager will also reduce the maximum level of work-inprocess (buffer) inventory. This reduction can be done until a shortage of materials occurs. This shortage is an indication of problems (accidents, machine breakdowns, production delays, defective products) that were previously hidden by excessive inventory. Once the problem is observed and a solution is identified, corrective action is taken so that the system can function at the lower level of buffer inventory. This simple, systematic method of inventory reduction is a key benefit of a dual card Kanban system.
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INTRODUCING KANBAN INTO A COMPANY
Kanban is usually introduced gradually and typically may involve some trial and error mechanism. 1. The first step is to become familiar with Kanban and the options it offers. Some parts of Kanban may be suitable for your company, others may not. Becoming familiar with Kanban will requiring in-depth reading, possibly attending a seminar or hiring a consultant. 2. Select the components of Kanban that will work in your facility. Not all parts of Kanban may be appropriate for the types of products you produce. Kanban may be appropriate for one product, and not for another. In some cases a simple manual Kanban will work well. In other cases computer automation of Kanbans may be the best option. 3. Plan your Kanban system: Kanban involves more than just manufacturing. Other functions such as purchasing, warehousing, shipping/receiving, quality control, transportation, accounts payable and engineering will be involved. Include all of those who will be affected in your Kanban planning and design process. In planning, keep in kind that your object to have what is needed (supplies, parts, manpower, information, energy, equipment, etc.), where it is needed when it is needed. 4. Set goals for Kanban: Based on your plan, set a schedule with measurable goals. What do you want Kanban to accomplish and when should that goal be reached? Determine what will be measured, and how it will be measured. 5. Begin implementation of Kanban: A common approach to implementing Kanban is to start with a generous number of Kanbans - containers, pallets, boxes, etc. Then systematically reduce the number of containers until the point at which the supply of materials is just in balance with the rate of use is reached. As containers are removed from the process, it will eventually reach the point at which production is delayed because the next container has not yet arrived. At this point add one container to the system to bring it back into balance. In using this trial and error approach, be sure a safety stock is available so that production is not interrupted. Identify the point at which there is one too few containers as the point at which material from the safety stock is used. This trial and error approach should be spread over a significant period of time to allow for normal fluctuations in production
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Giving you flexibility in color coding Kanban containers. • Reduce inventory and product obsolescence: Since component parts are not delivered until just before they are needed, there is a reduced need for storage space. Should a product or component design be upgraded, that upgrade can be included in the final product ASAP. There is no inventory of products or components that become obsolete. This fits well with the Kaizen system on continual improvement. Product designs can be upgraded in small increments on a continual basis, and those upgrades are immediately incorporated into the product with no waste from obsolete components or parts. • Reduces waste and scrap: With Kanban, products and components are only manufactured when they are needed. This eliminates overproduction. Raw materials are not delivered until they are needed, reducing waste and cutting storage costs. • Provides flexibility in production: If there is a sudden drop in demand for a product, Kanban ensures you are not stuck with excess inventory. This gives you the flexibility to rapidly respond to a changing demand. Kanban also provides flexibility in how your production lines are used. Production areas are not locked in by their supply chain. • Increases Output: The flow of Kanban (cards, bins, pallets, etc.) will stop if there is a production problem. This makes problems visible quickly, allowing them to be corrected ASAP. Kanban reduces wait times by making supplies more accessible and breaking down administrative barriers. This results in an increase in production using the same resources. • • • • • • • • Reduces Total Cost: Preventing Over Production Developing Flexible Work Stations Reducing Waste and Scrap Minimizing Wait Times and Logistics Costs Reducing Stock Levels and Overhead Costs Saving Resources by Streamlining Production Reducing Inventory Costs The Kanban system reduces your total costs by:
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Applications of Kanban
• • • • • Re-engineering Modular production technology Kaizen 5S housekeeping Preventive maintenance
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TOYOTA PRODUCTION SYSTEM
Within Toyota Taichi Ohno is most commonly credited as the father/originator of this way of working. The beginnings of this production system are rooted in the historical situation that Toyota faced. After the Second World War the president of Toyota said "Catch up with America in three years, otherwise the automobile industry of Japan will not survive". At that time one American worker produced approximately nine times as much as a Japanese worker. Taichi Ohno examined the American industry and found that American manufacturers made great use of economic order quantities - the traditional idea that it is best to make a "lot" or "batch" of an item (such as a particular model of car or a particular component) before switching to a new item. They also made use of economic order quantities in terms of ordering and stocking the many parts needed to assemble a car. Ohno felt that such methods would not work in Japan - total domestic demand was low and the domestic marketplace demanded production of small quantities of many different models. Accordingly Ohno devised a new system of production based on the elimination of waste. In his system waste was eliminated by: • • Just-in-time - items only move through the production system as and when they are needed Autonomation - (spelt correctly in case you have never met the word before) automating the production system so as to include inspection - human attention only being needed when a defect is automatically detected whereupon the system will stop and not proceed until the problem has been solved
In this system inventory (stock) is regarded as an unnecessary waste as too has to deal with defects. Ohno regarded waste as a general term including time and resources as well as materials. He identified a number of sources of waste that he felt should be eliminated: • • Overproduction - waste from producing more than is needed Time spent waiting - waste such as that associated with a worker being idle whilst waiting for another worker to pass him an item he needs (e.g. such as may occur in a sequential line production process) Transportation/movement - waste such as that associated with transporting/moving items around a factory Processing time - waste such as that associated with spending more time than is necessary processing an item on a machine Inventory - waste associated with keeping stocks Defects - waste associated with defective items
• • • •
At the time car prices in the USA where typically set using selling price = cost plus profit mark-up. However in Japan low demand meant that manufacturers faced price resistance, so if the selling price is fixed how one can increase the profit mark-up? Obviously by reducing costs and hence a large focus of the system that Toyota implemented was to do with cost reduction. To aid in cost reduction Toyota instituted production leveling - eliminating unevenness in the flow if a of items. So component which required assembly had an associated requirement of 100 during a 25 day working month then 4 were assembled per day, one every two hours
40 in an eight hour working day. Leveling was also applied to the flow of finished goods out of the factory and to the flow of raw materials into the factory. Toyota changed their factory layout. Previously all machines of the same type, e.g. presses, were together in the same area of the factory. This meant that items had to be transported back and forth as they needed processing on different machines. To eliminate these transportation different machines were clustered together so items could move smoothly from one machine to another as they were processed. This meant that workers had to become skilled on more than one machine - previously workers were skilled at operating just one type of machine. Although this initially met resistance from the workforce it was eventually overcome. In order to help the workforce to adapt to what was a very different production environment Ohno introduced the analogy of teamwork in a baton relay race. As you are probably aware typically in such races four runners pass a baton between themselves and the winning team is the one that crosses the finishing line first carrying the baton and having made valid baton exchanges between runners. Within the newly rearranged factory floor workers were encouraged to think of themselves as members of a team - passing the baton (processed items) between themselves with the goal of reaching the finishing line appropriately. If one worker flagged (e.g. had an off day) then the other workers could help him, perhaps setting a machine up for him so that the team output was unaffected. In order to have a method of controlling production (the flow of items) in this new environment Toyota introduced the Kanban. The Kanban is essentially information as to what has to be done. Within Toyota the most common form of Kanban was a rectangular piece of paper within a transparent vinyl envelope. The information listed on the paper basically tells a worker what to do - which items to collect or which items to produce. In Toyota two types of Kanban are distinguished for controlling the flow of items: • • A withdrawal Kanban - which details the items which should be withdrawn from the preceding step in the process A production ordering Kanban - which details the items to be produced
All movement throughout the factory is controlled by these kanbans - in addition since the kanbans specify item quantities precisely no defects can be tolerated - e.g. if a defective component is found when processing a production ordering Kanban then obviously the quantity specified on the Kanban cannot be produced. Hence the importance of autonomation (as referred to above) - the system must detect and highlight defective items so that the problem that caused the defect to occur can be resolved. Another aspect of the Toyota Production System is the reduction of setup time. Machines and processes must be re-engineered so as to reduce the setup time required before processing of a new item can start. In the Toyota system the Andon, (Japanese term meaning trouble lights which immediately signal to the production line that there is a problem to be resolved) indicating a stoppage of the line, is hung from the factory ceiling so that it can be clearly seen by everyone. This coupled with line stoppage clearly raises the profile of the problem and encourages attention/effort to its solution so that it does not reoccur. As an indication though of the difficulty of implementing JIT in a Western environment when General Motors instituted an Andon for line stoppage workers were simply not prepared to take responsibility for stopping the line. Hence defective items were passed though the system, rather than the Andon functioning as planned and highlighting problems and hence leading to their resolution. General Motors resolved the problem by allowing workers to indicate that they had a problem whilst the line continued to operate.
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CANON PRODUCTION SYSTEM (CPS)
The Objectives of CPS The objectives of Canon Production System (CPS) are to manufacture better quality products at lower cost and deliver them faster. The Three Basic Structures of CPS 1. Quality Assurance (QA) System- Canon tries to ensure the best quality in all stages of development, production, and delivery to gain worldwide respect for their products. 2. Production Assurance (PA) System- PA is aimed to achieve just-in-time manufacturing, fast delivery, low cost, and also adopt the "visual control" philosophy. Canon has devised two subsystems to attain these PA goals: Canon's HIT System (equivalent to just-in-time) and Signal System. The HIT System means making parts and products only when needed and only in the quantity needed. Canon uses either HIT cards or signals for this purpose. 3. Personnel Training (PS) System- Under this system, Cannon's employees are continually educated through a life-long education program. The other critical instruments for realizing CPS objectives are the "four investments" (technologies, human resources, facilities, and welfare) and "elimination of 9 wastes." WASTE CATEGORIES AND 9 WASTES TO BE ELIMINATED 1. Work-in-process. Stocking items not immediately needed 2. Quality. Producing defective products. 3. Facilities. Having idle machinery and breakdowns, taking too long for setup. 4. Expenses. Over investing for required output. 5. Indirect labor. Excess personnel due to bad indirect labor system. 6. Talent. Employing people for jobs that can be mechanized or assigned to less skilled people. 7. Motion. Not working according to the best work standards. 8. Product Design. Producing products with more functions than necessary. 9. New-product run-up. Making a slow start in stabilizing the production of a new product.
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JIT MANUFACTURING IN DELL
Just in time manufacturing is designed to minimize costs and reduce waste. Everything is carefully planned to ensure that stock is only ordered as required. No stock is held in warehouses. JIT requires a very good relationship with suppliers. Supplies must be available as needed; therefore suppliers must be able to send components every day or every hour as required. This requires close cooperation. Customers get the freshest and most up to date technology.
BENEFITS OF JIT FOR DELL • Less capital is tied up in stock, freeing up money for alternative uses • Lower insurance is required • No warehouse required - more space is available for other uses • Fewer personnel required to control and manage the stock • No risk of stock becoming obsolete because computer systems are built to order • Cost savings and greater efficiencies for both Dell and its customers • Any reduction in component prices can be passed on almost immediately to the customer. BENEFITS OF JIT FOR SUPPLIERS • Lower inventory - by supplying components to meet demand the risk of having unwanted inventory is reduced when technology changes • Better awareness of customer needs - the close relationship with Dell ensures suppliers can make informed decisions to meet changing customer demands.
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BIBLIOGRAPHY
www.wikipedia.com www.google.co.in http://www.1000ventures.com/business_guide/cs_efficiency_canon_ps.html Book on “Just In Time- Making It Happen”
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