Quản trị kinh doanh - Just - In - time and lean thinking

Just-in-time and lean thinkingLearning outcomesUnderstand the concept of Just-in-timeUnderstand the Lean thinking concepts and how it can be applied to cutting waste out of supply chains Identify and address three major issues managers must addressDifferentiate between push and pull schedulingAt the end of this lecture, students should be able toJust-in-time1What are the implications of Just-in-time for logistics?2How can just-in-time principles be applied to other forms of material control such as reorder point and material requirements planning?Key issuesJust-In-Time (JIT)Powerful strategy for improving operationsMaterials arrive where they are needed when they are neededIdentifying problems and driving out waste reduces costs and variability and improves throughputRequires a meaningful buyer-supplier relationshipJust-in-timeGood production systems require that managers address three issues that are pervasive and fundamental to operations management: eliminate waste, remove variability, and improve throughputJust-in-time: A definition Just-in-time is actually a broad philosophy of management that seeks to eliminate waste and improve quality in all business processes.KanbanKanban is the Japanese word for cardThe card is an authorization for the next container of material to be producedA sequence of kanbans pulls material through the processMany different sorts of signals are used, but the system is still called a kanbanKanbanUser removes a standard sized containerSignal is seen by the producing department as authorization to replenishPart numbers mark locationSignal marker on boxesKanbanKanbanKanbanFinal assemblyWork cellKanbanMaterial/Parts SupplierFinished goodsCustomer orderJust-in-timeLittle JITthe application of JIT to logisticsCentral themes surrounding Just-in-timeSimplicityQualityElimination of wasteEliminate WasteWaste is anything that does not add value from the customer point of viewStorage, inspection, delay, waiting in queues, and defective products do not add value and are 100% wasteOhno’s Seven WastesOverproductionQueuesTransportationInventoryMotionOverprocessingDefective productsOther resources such as energy, water, and air are often wastedEfficient, sustainable production minimizes inputs, reduces wasteTraditional “housekeeping” has been expanded to the 5 SsThe 5 SsSort/segregate – when in doubt, throw it outSimplify/straighten – methods analysis toolsShine/sweep – clean dailyStandardize – remove variations from processesSustain/self-discipline – review work and recognize progressTwo additional SsSafety – build in good practicesSupport/maintenance – reduce variability and unplanned downtimeRemove VariabilityJIT systems require managers to reduce variability caused by both internal and external factorsVariability is any deviation from the optimum processInventory hides variabilityLess variability results in less wasteSources of VariabilityIncomplete or inaccurate drawings or specificationsPoor production processes resulting in incorrect quantities, late, or non-conforming unitsUnknown customer demandsBoth JIT and inventory reduction are effective tools in identifying causes of variability3. Improve ThroughputThe time it takes to move an order from receipt to deliveryThe time between the arrival of raw materials and the shipping of the finished order is called manufacturing cycle timeA pull system increases throughputImprove ThroughputBy pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvementManufacturing cycle time is reducedPush systems dump orders on the downstream stations regardless of the needJust-in-timePull schedulingA system of controlling materials whereby the user/buyers signals to the maker or provider that more material is needed.Push schedulingA system of controlling materials whereby makers and providers make or send material in response to a pre-set schedule, regardless of whether the next process needs them at the time.supplierbuyerPush: traditional wayPull: Just-in-timeThe just-in-time systemCompanies achieve the ability to produce and deliver just-in-time to satisfy actual demand because they develop a production system that is capable of working in this way. Such a system can be envisaged as a number of ‘factors’ that interact with each other, as shown below. This shows JIT capability as founded on layers of factors that interact together to form a system that is designed for flow. Excellence in each of the six factors determines the effectiveness with which JIT capability can be achieved: that is, how easy it is to get to the top of the pyramid.Just-in-timeJust-in-time systemJIT Pyramid of key factorsJust-in-timeMinimum delayMinimum inventory21Minimum defects3Simplicity and visibilityMinimum downtime546Level 1Level 2Level 3Just-in-timeJust-in-time systemFactor 1The top of the pyramid is full capability for JIT supply supported by Level 2 and Level 3 operation.Factor 2‘Delay’ and ‘inventory’ interact positively with each otherThe concept of KanbanFactor 3Defect → delay → inventoryJust-in-time systemFactor 3Defect → delay → inventoryBad designMachine downtimeUnreliable supplierPoor qualityInefficient layoutInventory hides problemsJust-in-timeJust-in-time systemFactor 4BreakdownsPlanned maintenanceChangeover timeMachine downtimeSafety stocksPreventive maintenanceFlexible productionJust-in-timeJust-in-time systemFactor 5Simply and visible process help to reduce inventory and could be better maintained.Factor 6It’s more difficult to see the flow of a process with increased inventory.Just-in-timeThe supply chain ‘game plan’ForecastsOrdersMaster scheduleMaterial planPurchase ordersWork ordersSourceMakeDeliverBill of materialsDemand managementLogistics planningLogistics executionMaterial Requirements PlanningIndependent demandDependent demandJust-in-timeThe supply chain ‘game plan’Independent demandDemand for a product that is ordered directly by customers.items are those items that we sell to customersDependent demandDemand for parts or subassemblies that make up independent demand products.items are those items whose demand is determined by other itemsJust-in-timeDemand characteristics and planning approachesEconomic order quantities (EOQ)Buffer stockReorder pointUsage rateRecorder quantityStockLead timeTimeJust-in-timeAssumptions in Economic Order Quantity ModelDemand is deterministic. There is no uncertainty about the quantity or timing of demand.Demand is constant over time. In fact, it can be represented as a straight line, so that if annual demand is 365 units this translates into a daily demand of one unit.A production run incurs a constant setup cost. Regardless of the size of the lot or the status of the factory, the setup cost is the same.Products can be analyzed singly. There is only a single product.NotationD = Demand rate (in units per year).c = Unit production cost, not counting setup or inventory costs (in dollars per unit).A = Constant setup (ordering) cost to produce (purchase) a lot (in dollars).h = Holding cost (in dollars per unit per year)Q = Lot size (in units); this is the decision variableJust-in-timeEOQ modelAverage inventory levelThe holding cost per unitThe setup cost per unitThe production cost per unitJust-in-timeEOQ modelJust-in-timePracticePam runs a mail-order business for gym equipment.  Annual demand for the TricoFlexers is 16,000.  The annual holding cost per unit is $2.50 and the cost to place an order is $50.  What is the economic order quantity?Just-in-timeDemand characteristics and planning approachesPeriodic order quantity (POQ) and target stock levelsEconomic order quantityHow much to order?When to order?Periodic order quantityJust-in-timeJIT and material requirements planning (MRP)Material requirements planning (MRP) - A methodology for defining the raw material requirements for a specific item, component, or sub-assembly ordered by a customer, or required by a business process. MRP systems will usually define what is needed, when it is needed, and by having access to current inventories and pre-existing commitment of that inventory to other orders to other customers, will indicate what additional items need to be ordered to fulfill this order. Just-in-timeFeature of MRPMRP is based on JIT Pull scheduling logicMRP is good at planning, but weak at controlJIT is good at control, but weak at planningTPS Vs. FPSLean thinking1What are the principles of lean thinking?2How can the principles of lean thinking be applied to cutting waste out of supply chains?Key issuesLean thinkingFordism: Henry Ford 1863-1947 The father of mass productionTaylorism: Frederick Taylor 1856-1915 The father of scientific managementToyota: Taiichi Ohno The father of Toyota Production SystemLean thinkingLean thinking refers to the elimination of waste in all aspects of a business and thereby enriching value from the customer perspective.Lean thinkingNine wastesWatching a machine runWaiting for partsCounting partsOverproductionMoving parts over long distanceStoring inventoryLooking for toolsMachine breakdownsReworkConsistentProcessDesiredResultsInconsistentProcessInconsistentResultsTraditional = People doing whatever they can to get resultsLean = People using standard process to get resultsLean thinkingLean thinkingRole of lean practicesSmall-batch productionReduce total cost across a supply chain, such as removing the waste of overproduction.Rapid changeoverRely on developments in machinery and product designProvide the flexibility to make possible small-batch production that responds to customer needsLean thinkingDesign strategyLean product designA reduction in the number of parts they contain and the materials from which they are madeFeatures that aid assembly, such as asymmetrical parts that can be assembled in only one wayRedundant features on common, core parts that allow variety to be achieved without complexity with the addition of peripheral partsModular designs that allow parts to be upgraded over the product lifeLean facility designLean thinkingDesign strategyLean product designLean facility designModular design of equipment to allow prompt repair and maintenanceModular design of layout to allow teams to be brought together with all the facilities they needSmall machines which can be moved to match the demand for themOpen systems architectures that allow equipment to fit together and work when it is moved and connected to other itemsLean thinkingApplication of lean thinking involves examining the process, quantifying waste within it, identifying root causes of the waste, and developing and implementing solutions akpe na mi!