Just-in-Time

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 Outline
• The Goal debrief
• JIT Defined
• The Toyota Production System
• Blocking, Starving, and Buffers
• JIT Implementation Requirements
• JIT in Services

B01.2314 -- Operations -- Prof. Juran 2

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 Historical Development of OM
• Craft System
• Industrial Revolution
• Scientific Management
• Organizational Science
• Operations Research
• JIT and TQM
• Supply Chain Management
• Internet Commerce

Operations -- Prof. Juran 3

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 JIT and TQM

Taiichi Ohno Kaoru Ishikawa Genichi Taguchi

1912 - 1990 1915 - 1989 1924 - 2012

Operations -- Prof. Juran 4

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 Just-In-Time (JIT) Defined
• JIT can be defined as an integrated set of
activities designed to achieve high-volume
production using minimal inventories (raw
materials, work in process, and finished goods)
• JIT also involves the elimination of waste in
production effort
• JIT also involves the timing of production
resources (i.e., parts arrive at the next
workstation “just in time”)

B01.2314 -- Operations -- Prof. Juran 5

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 Just-In-Time (JIT) Defined
• Not one tool or technique, but many ideas that work together
• Key elements
– Product/Process design with an eye towards variance reduction
• Setup time reduction
• Small lot sizes
• Quality management
– Communication links with suppliers and customers
– Balance between production stability and responsiveness
– Redefined role of inventory
– JIT also involves the timing of production resources (i.e., parts arrive at
the next workstation “just in time”)

B01.2314 -- Operations -- Prof. Juran 6

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 Planning Implementation
Traditional Approach

Planning Implementation
JIT Approach

B01.2314 -- Operations -- Prof. Juran 7

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 Key Terms
• Pull system
• Focused factories
• Group technology
• Heijunka (uniform plant loading)
• Kanban (card)

B01.2314 -- Operations -- Prof. Juran 8

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 JIT and Lean Management
• JIT can be divided into two terms: “Big JIT” and “Little
JIT”
• Big JIT (also called Lean Management) is a philosophy
of operations management that seeks to eliminate
waste in all aspects of a firm’s production activities:
human relations, vendor relations, technology, and the
management of materials and inventory
• Little JIT focuses more narrowly on scheduling goods
inventory and providing service resources where and
when needed

B01.2314 -- Operations -- Prof. Juran 9

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 Push vs. Pull Systems
• Push systems have production planned in
advanced and each stage in the supply chain
pushes inventory to its downstream
neighbor.
• In a pull system each unit in the supply chain
requests inventory from its upstream
neighbor.
• The beer game resembles more of a pull
system.

© The McGraw-Hill Companies, Inc., 2004

B01.2314 -- Operations -- Prof. Juran 11
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 Push Systems

• Also known as Materials Resource Planning.

• Requires a bill of materials (BOM).
• Generate advanced demand forecasts and then use leadtimes in
order to work backwards and figure out how much inventory is
needed at each point in time in the supply chain.
• Inventory is pushed downwards through the supply chain.

© The McGraw-Hill Companies, Inc., 2004

 Push Systems

Production schedule at Demand forecast at

factory retailer
Week 4 5 6 7 8 Week 12 13 14 15 16

Cases of Cases of
Beer 4 5 3 6 5 Beer 4 5 3 6 5

Factory Distributor Wholesaler Retailer

Ready or not hear

comes the
inventory!
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 Drawbacks of Push Systems
• Changes in demand forecast require a revision of the
entire production schedule.
• Consequently, push systems can be somewhat inflexible.
• Inflexibility can be offset by safety stocks.
• Tend to set production quotas for fixed time periods and
hence no EOQ.
• Large inventory levels can hide quality problems.

© The McGraw-Hill Companies, Inc., 2004

 Pull Systems

• Each stage in the supply chain requests parts

from its upstream supplier
• Often operated as a just-in-time system.

Place Place Place

order order order

Distributor Wholesaler Retailer

Factory

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 Here
Herethe
thecustomer
customerstarts
starts
the
theprocess,
process,pulling
pullingan
an JIT Demand-Pull Logic
inventory
inventoryitem
itemfrom
from
Final
FinalAssembly…
Assembly…
Then
Thensub-
sub-
assembly Fab Vendor
assemblywork
workisis
pulled
pulledforward
forwardbyby
that
thatdemand…
demand… Sub
Fab Vendor
Customers
Final
Assembly

The Sub Fab

Theprocess
processcontinues
continues Vendor
throughout
throughoutthe theentire
entire
production
productionprocessprocessand and
supply
supply chain
chain Fab
B01.2314 -- Operations -- Prof. Juran Vendor
16
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 Advantages of Pull Systems
• Lower inventory levels which leads to
– Reduced cost
– Higher quality
• More adaptive to customer demand
• Higher utilization of resources

© The McGraw-Hill Companies, Inc., 2004

 Disadvantages of Pull Systems
• Many small orders can result in high ordering
costs
• If lead times are large can be slow to respond to
customer demand
• Low inventory levels mean system can be
sensitive to a breakdown in a certain stage in the
supply chain
• Has the potential to place a high level variability
on the suppliers end of the supply chain which
can be unfair.

© The McGraw-Hill Companies, Inc., 2004

 Hybrid Systems
• Some supply chains may implement a hybrid
strategy which employs both push and pull
systems
• Upstream portion of the supply chain operates
on a push basis
– Demand upstream is aggregated from multiple
retailers and tends to be more stable
• Downstream portion of supply chain operates
as a pull system
– Demand at individual retailers tends to be more
variable

© The McGraw-Hill Companies, Inc., 2004

B01.2314 -- Operations -- Prof. Juran 20
© The McGraw-Hill Companies, Inc., 2004
B01.2314 -- Operations -- Prof. Juran 21
© The McGraw-Hill Companies, Inc., 2004
 The Toyota Production System

Based on two philosophies:

• 1. Elimination of waste
• 2. Respect for people

B01.2314 -- Operations -- Prof. Juran 22

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 Toyota Production System’s Four Rules
1. All work shall be highly specified as to content, sequence,
timing, and outcome

2. Every customer-supplier connection must be direct, and

there must be an unambiguous yes-or-no way to send
requests and receive responses

3. The pathway for every product and service must be

simple and direct

4. Any improvement must be made in accordance with the

scientific method, under the guidance of a teacher, at the
lowest possible level in the organization

B01.2314 -- Operations -- Prof. Juran 23

© The McGraw-Hill Companies, Inc., 2004
 Waste in Operations
1. Waste from overproduction
2. Waste of waiting time
3. Transportation waste
4. Inventory waste
5. Processing waste
6. Waste of motion
7. Waste from product defects

B01.2314 -- Operations -- Prof. Juran 24

© The McGraw-Hill Companies, Inc., 2004
 Minimizing Waste: These
Thesearearesmall
smallspecialized
specialized
plants
plantsthat
thatlimit
limitthe
therange
range
Focused Factory Networks of
ofproducts
productsproduced
produced
(sometimes
(sometimesonlyonlyone
onetype
typeof
of
product
productforforan
anentire
entire
facility)
facility)

Some
Someplants
plantsin
in
Japan
Japanhave
haveasas
Coordination few
fewas
as3030and
andas
as
System Integration many
manyasas1000
1000
employees
employees

B01.2314 -- Operations -- Prof. Juran 25

© The McGraw-Hill Companies, Inc., 2004
 Minimizing Waste: Group Technology (Part 1)
Note
Notehow
howthe
theflow
flowlines
linesare
aregoing
goingback
backand
andforth
forth
Using
UsingDepartmental Specialization(a.k.a.
DepartmentalSpecialization (a.k.a.Functional Layout)for
FunctionalLayout) forplant
plant
layout
layoutcan
cancause
causeaalot
lotof
ofunnecessary
unnecessarymaterial
materialmovement
movement

Saw Saw Saw Grinder Grinder

Heat Treat

Lathe Lathe Lathe Press Press Press

B01.2314 -- Operations -- Prof. Juran 26

© The McGraw-Hill Companies, Inc., 2004
 Minimizing Waste: Group Technology (Part 2)
Revising
Revisingby
byusing
usingGroup
GroupTechnology Cells(a.k.a.
TechnologyCells (a.k.a.Product
Product
Layout)can
Layout) canreduce
reducemovement
movementand
andimprove
improveproduct
productflow
flow

Grinder
1 2
Saw Lathe Lathe Press

Heat Treat

Grinder
Saw Lathe A B Lathe Press

B01.2314 -- Operations -- Prof. Juran 27

© The McGraw-Hill Companies, Inc., 2004
 Minimizing Waste: Uniform Plant Loading (Heijunka)

Suppose
Supposeweweoperate
operateaaproduction
productionplant
plantthat
thatproduces
producesaasingle
single
product.
product. The
Theschedule
scheduleofofproduction
productionfor
forthis
thisproduct
productcould
couldbe
be
accomplished
accomplishedusing
usingeither
eitherof
ofthe
thetwo
twoplant
plantloading
loadingschedules
schedules
below.
below.

Not uniform Jan. Units Feb. Units Mar. Units Total

1,200 3,500 4,300 9,000

or

Uniform Jan. Units Feb. Units Mar. Units Total

3,000 3,000 3,000 9,000

How
How does
does the
the uniform
uniform loading
loadinghelp
helpsave
savelabor
laborcosts?
costs?
B01.2314 -- Operations -- Prof. Juran 28
© The McGraw-Hill Companies, Inc., 2004
 Minimizing Waste: Inventory
Hides Problems
Example: By identifying
defective items from a
Machine vendor early in the
downtime
production process the
Scrap Vendor downstream work is
delinquencies Change saved
Work in
orders
process
queues Engineering design Design
(banks) redundancies backlogs
Example: By identifying
Paperwork Inspection Decision defective work by
backlog backlogs backlogs employees upstream, the
downstream work is
saved
B01.2314 -- Operations -- Prof. Juran 29
© The McGraw-Hill Companies, Inc., 2004
Slide courtesy of Robert B. Decosimo (MBA’11)

B01.2314 -- Operations -- Prof. Juran 30

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 Respect for People

• Level payrolls
• Cooperative employee unions
• Subcontractor networks
• Bottom-round management style
• Quality circles (Small Group Involvement
Activities or SGIA’s)

B01.2314 -- Operations -- Prof. Juran 31

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 Minimizing Waste: Kanban Systems
Once the Production kanban is
received, the Machine Center This puts the
produces a unit to replace the one system back were
taken by the Assembly Line
Withdrawal it was before the
people in the first place kanban item was pulled

Storage Storage
Machine Part A Part A Assembly
Center
Line

Production kanban
Material Flow
The process begins by the Assembly Line
people pulling
B01.2314 Part A from
-- Operations Storage
-- Prof. Juran Card (signal) Flow
32
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Determining the Number of Kanbans Needed

• Setting up a kanban system requires determining

the number of kanbans cards (or containers)
needed
• Each container represents the minimum
production lot size
• An accurate estimate of the lead time required to
produce a container is key to determining how
many kanbans are required

B01.2314 -- Operations -- Prof. Juran 33

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 k = Number of Kanbans
D = Average demand
L = Lead time
S = Safety stock (as a % of expected lead time demand)
C = Container size

Expected demand during lead time  Safety stock

k 
Size of the Container
DL 1  S 

C

B01.2314 -- Operations -- Prof. Juran 34

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Example of Kanban Card Determination
• A switch assembly is assembled in batches of 4 units from
an “upstream” assembly area and delivered in a special
container to a “downstream” control-panel assembly
operation
• The control-panel assembly area requires 5 switch
assemblies per hour
• The switch assembly area can produce a container of switch
assemblies in 2 hours
• Safety stock has been set at 10% of needed inventory

B01.2314 -- Operations -- Prof. Juran 35

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 Example of Kanban Card
Determination: Calculations

DL 1  S 
k 
C
5 2  1  0.10

4
 2.75

Always round up!

B01.2314 -- Operations -- Prof. Juran 36
© The McGraw-Hill Companies, Inc., 2004
 Blocking, Starving, Buffers
Assume that these are random processing times.

Buffer? Buffer? Buffer?

Activity A Activity B Activity C Activity D

4 per minute 8 per minute 3 per minute 5 per minute

Process Flow

Where is the most important place to have a buffer?

B01.2314 -- Operations -- Prof. Juran 37

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 Summary
• JIT Defined
• The Toyota Production System
• JIT Implementation Requirements
• JIT in Services

B01.2314 -- Operations -- Prof. Juran 38

© The McGraw-Hill Companies, Inc., 2004