CH 13 PPT - Jillian Westcott PDF

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9/9/19

Introduction to Operations and Supply Chain Management Fifth Edition

Chapter 13 JIT/Lean Production

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Chapter Objectives (1 of 2) Be able to: • Describe JIT/Lean and differentiate between the Lean philosophy and kanban systems. • Discuss the Lean perspective on waste and describe the eight major forms of waste, or muda, in an organization. • Discuss the Lean perspective on inventory and describe how a kanban system helps control inventory levels and synchronize the flow of goods and material across a supply chain.

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Chapter Objectives (2 of 2) Be able to: • Describe how the concepts of Lean supply chain and Lean Six Sigma represent natural extensions of the Lean philosophy. • Explain how a two-card kanban system works. • Calculate the number of kanban cards needed in a simple production environment. • Show how MRP and kanban can be linked together and illustrate the process using a numerical example.

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Introduction (1 of 3) • Just-in-time – A philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity. In a broad sense, it applies to all forms of manufacturing and to many service industries as well. • Lean – A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of an enterprise. It involves identifying and eliminating non-value-adding activities in design, production, supply chain management, and dealing with customers. © 2013 APICS Dictionary

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Introduction (2 of 3) Figure 13.1 The Performance Advantage of a JIT Plant, Circa 1986

Source: Based on J. Womack, D. Jones, and D. Daniel Roos, The Machine That Changed the World: The Story of Lean Production (New York: HarperCollins,1991).

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Introduction (3 of 3) • The Lean philosophy can be applied to a wide range of production and service environments. • Companies following the Lean philosophy can and do use a wide range of planning and control techniques, not just kanban. • The Lean philosophy is entirely consistent with business process improvement, quality improvement, and supplier management initiatives.

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The Lean Perspective on Waste (1 of 2) • Waste – Any activity that does not add value to the good or service in the eyes of the consumer. © 2016 APICS Dictionary

– Called “muda” in Japanese – Started with Taiichi Ohno, a Toyota engineer.

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The Lean Perspective on Waste (2 of 2) • Eight commonly recognized sources of waste – Overproduction – Waiting – – – – –

Unnecessary transportation Inappropriate process Unnecessary inventory Unnecessary/excess motion Defects

– Underutilization of employees

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The Lean Perspective on Inventory (1 of 3) • Triangles represent inventory between work centers A, B, and C. • The buildup of inventory hides the problems/disruptions that may occur but at a cost. Figure 13.2 Inventory Positioned throughout a Supply Chain

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The Lean Perspective on Inventory (2 of 3) • After a successful Lean program has been put in place, wasted movement and space are eliminated and work centers are moved closer together. • Inventory levels are reduced dramatically and work centers make only what is needed when it is needed. Figure 13.3 Supply Chain after the Elimination of Excess Inventories

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The Lean Perspective on Inventory (3 of 3) Figure 13.4 How Inventory Hides Problems

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Recent Developments in Lean Thinking • Lean Six Sigma – A methodology that combines the organizational elements and tools of Six Sigma with Lean’s focus on waste reduction. • Lean Supply Chain Management – An extension of the Lean philosophy to supply chain efforts beyond production. Lean supply chain management seeks to minimize the level of resources required to carry out all supply chain activities.

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Kanban Systems (1 of 10) • Kanban system – A production control approach that uses containers, cards, or visual cues to control the production and movement of goods through the supply chain. • Key characteristics: – Uses simple signaling mechanisms to indicate when specific items should be produced or moved. – Can be used to synchronize activities either within a plant or between different supply chain partners. – Are not considered planning tools, but rather control mechanisms that are designed to pull parts or goods through the supply chain based on downstream demand. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved.

Kanban Systems (2 of 10) • Two-card kanban system – A special form of the Kanban system that uses one card to control production and another card to control movement of materials. – Move card – A kanban card that is used to indicate when a container of parts should be moved to the next process step. – Production card – A kanban card that is used to indicate when another container of parts should be produced.

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Kanban Systems (3 of 10) Figure 13.5 Kanban System for Two Work Centers

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Kanban Systems (4 of 10) Figure 13.6 Release of Finished Materials from Work Center B

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Kanban Systems (5 of 10) Figure 13.7 Pulling of Raw Materials Into Production at Work Center B

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Kanban Systems (6 of 10) Figure 13.8 Removal of Finished Materials from Work Center A

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Kanban Systems (7 of 10) • Summary of Kanban System – A downstream station pulls finished material out of work center B. (Figure 13.6) – Work center B pulls raw material into production. (Figure 13.7) – Demand for more raw material in work center B pulls finished material out of work center A. (Figure 13.8)

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Kanban Systems (8 of 10) • Pull system – A production system in which actual downstream demand sets off a chain of events that pulls material through the various process steps. – A kanban system is also called a pull system.

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Kanban Systems (9 of 10) • Other signaling methods: – Single-card systems, where the single card is the production card and the empty container serves as the move signal – Color coding of containers – Designated storage spaces – Computerized bar-coding systems

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Kanban Systems (10 of 10) • Controlling Inventory Levels using Kanbans

y=

DT (1 + x) C

where: y = number of kanbans (cards, containers, etc.) D = demand per unit of time (from the downstream process) T = time it takes to produce and move a container of parts to the downstream demand point x = a safety factor, expressed as a decimal (for example, 0.20 represents a 20% safety factor) C = container size (the number of parts it will hold) Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved.

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Example 13.2 – Marsica Industries, Part 1 (1 of 3) At Marsica Industries, work cell H provides subassemblies directly to final assembly. Determine the number of production cards needed using the following information: D

Final assembly’s demand for subassemblies from work cell H

300 assemblies per hour, on average

T

Time it takes to fill and move a container of subassemblies from work cell H to final assembly

2.6 hours, on average

x

Safety factor to account for variations in D or T

15%

C

Container size

45 subassemblies

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Example 13.2 – Marsica Industries, Part 1 (2 of 3) The number of production cards needed is:

DT (1+ x) C 300 * 2.6(1 + 0.15) = = 19.93, or 20 production cards 45

y=

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Example 13.2 – Marsica Industries, Part 1 (3 of 3) Convert the number of kanbans into the number of subassemblies and hours of work: (20 containers) (45 subassemblies per container)= 900 subassemblies And in hourly terms, 900 subassemblies equals: 900 subassemblies = 3 hours’ worth of subassemblies 300 units of demand each hour

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Example 13.3 – Marsica Industries, Part 2 (1 of 2) • After nearly a year of continuous improvement efforts in work cell H, the following improvements, were made: – Production lead time has been cut from 2.6 hours to a constant 1.6 hours. – Demand from final assembly has been stabilized at 300 subassemblies per hour. – Smaller, standardized containers that hold just 25 subassemblies are now being used.

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Example 13.3 – Marsica Industries, Part 2 (2 of 2) • If the safety factor is reduced to 4%, recalculate the number of kanban cards needed:

DT (1+ x) C 300 * 1.6(1 + 0.04) = = 19.97, or 20 production cards 25

y=

(20 containers) (25 subassemblies per container) = 500 subassemblies 500 subassemblies = 1.67 hours’ worth of subassemblies 300 units of demand each hour Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved.

Kanban Systems • Synchronizing the Supply Chain Using Kanbans – For a kanban system to work properly, there must be a smooth, consistent flow of material through the links. Figure 13.9 Using Kanban to Synchronize the Supply Chain

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Example 13.4 – Marsica Industries, Part 3 (1 of 4) • At Marsica Industries, the demand levels vary dramatically. They need a better way to anticipate the changes in demand so that the kanban system that they have in place works more effectively. Figure 13.11 MRP Record for Work Cell H’s Subassembly

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Example 13.4 – Marsica Industries, Part 3 (2 of 4) • Observations from the MRP record – There is no projected ending inventory. § This is consistent with the Lean philosophy of having no more inventory in the system than is needed. – Planned orders all occur in the same week as the planned receipts. § Because planning lead time is just 1.6 hours, orders released in a week should be completed in that week. – Planned order quantities can be used to calculate the demand rates (D) and production cards for the various weeks. Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved.

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Example 13.4 – Marsica Industries, Part 3 (3 of 4) Calculate D values

Dweeks 1- 2 =

12,000 = 300 subassemblies per hour 40 hours per week

14,000 = 350 subassemblies per hour 40 hours per week 16,000 = = 400 subassemblies per hour 40 hours per week

Dweeks 3- 5 = Dweeks 6- 8

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Example 13.4 – Marsica Industries, Part 3 (4 of 4) Calculate the number of production cards

300 *1.6(1 + 0.04) =19.97, or 20 production cards 25 350 *1.6(1 + 0.04) = = 23.29, or 24 production cards 25 400 *1.6(1 + 0.04) = = 26.62, or 27 production cards 25

y weeks 1- 2 = y weeks 3-5 y weeks 6-8

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JIT/Lean Production Case Study Supply Chain Challenges in Post-Earthquake Japan

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Copyright

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