Operations Management / Supply Chain Management

Module 13: JIT and Lean Operations

Just-in-time (JIT) approaches to manufacturing planning and control result in change for both manufacturing practices and Manufacturing Planning and Control execution.  Just-in-Time typically reduces:  the complexity of detailed material planning, the need for shop-floor tracking, work-in-process inventories, and the transactions associated with shop floor and purchasing systems.  Just-in-Time manufacturing initiatives normally include one or more of the following key elements:

  • Elimination of discrete batches
  • Reduction of work-in-process inventory
  • Level loaded capacity schedules
  • Mixed model master production schedules (all items are made all of the time)
  • Visual control systems
  • Direct ties to vendors

In manufacturing, JIT focuses on reducing lot sizes.  In order not to dramatically increase costs of change-over, production personnel are challenged to implement process or systems to reduce setup times to the absolute minimum.  Quality problems can ruin a JIT initiative so “No defects” is the goal.  Quality improvement is expected through process improvement.  Preventive maintenance certainly occurs, but then is expanded through Total Productive Maintenance.  This is a process where production workers play a direct role in maintaining equipment and identifying needed improvements to help equipment be utilized more effectively.  In addition, a Japanese process called “Poka-yoke” is followed to mistake-proof operations.  Just-in-Time initiative utilize continuous improvement process tools (such as brainstorming, Pareto, Fishbone, etc) in an atmosphere that encourages and supports worker involvement.

Cellular manufacturing is employed in job-shop type environments to reduce wasted movements and provide a more continuous flow of work between operations.

A key focus of JIT is to eliminate waste in all operations.  Manufacturing Planning and Control systems are typically transaction heavy.  There are Logistical Transactions affiliated with inventory movements.  There are Balancing Transactions in finance and supply chain operations.  There are Quality Transactions related to establishment of product quality measurement results.  There are also Change Transactions throughout the system.  Every time a manual transaction occurs, there is a danger of an error occurring.  Each transaction also requires resources to execute.  Just-in-Time initiatives look for ways to simplify processes and eliminate transactions wherever possible.  This may be done through automation, through implementation of information management solutions (EDI, Bar Coding, RFID, etc.)

The text summarizes seven primary sources of waste that should be eliminated:

  • Overproduction
  • Queues
  • Transportation
  • Inventory
  • Motion
  • Over-processing
  • Defective products

There are many different approaches that can be utilized to identify and eliminate waste in companies / facilities – not just manufacturing ones.

One such approach is called “5S”  which refers to the following steps to achieve a Lean Environment within and organization:

  • Sort/segregate – when in doubt, throw it out
  • Simplify/straighten – methods analysis tools
  • Shine/sweep – clean daily
  • Standardize – remove variations from processes
  • Sustain/self-discipline – review work and recognize progress

Sometimes two additional “Ss” are added: Safety and Support / Maintenance to reduce variability and unplanned downtime.

Just in time initiatives focus on the reduction in variability.  JIT systems require managers to reduce variability caused by both internal and external factors.   Variability is any deviation from the optimum process.  In general, inventory hides variability and less variability results in less waste.  Variability can result from poor production processes resulting in improper quantities, late, or non-conforming units; unknown customer demands; and incomplete or inaccurate drawings, specifications, or bills of material.  Both JIT and inventory reduction are effective tools in identifying causes of variability.

Just in Time initiatives should improve throughput in an operation.  As mentioned in a previous Module, Throughput is the time it takes to move an order from receipt to delivery.  The time between the arrival of raw materials and the shipping of the finished order is called manufacturing cycle time.  Implementation of a pull system increases throughput.  By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement.  Therefore, manufacturing cycle time is reduced.  The alternate approach (“Push” systems) dump orders on the downstream stations regardless of the need.

JIT / Lean approaches represent a powerful strategy for improving operations.  When implemented, materials arrive where they are needed when they are needed.  Problems are identified and driving out waste reduces costs and variability and improves throughput.

Meaningful buyer-supplier relationships are key to any successful JIT implementation.  JIT partnerships exist when a supplier and purchaser work together to remove waste and drive down costs.  There are four goals of JIT partnerships:

  • Removal of unnecessary activities
  • Removal of in-plant inventory
  • Removal of in-transit inventory
  • Improved quality and reliability

Similarly, there are many relevant concerns from a supplier’s perspective.

  • Diversification – ties to only one customer increases risk
  • Scheduling – don’t believe customers can create a smooth schedule
  • Lead time – short lead times mean engineering or specification changes can create problems
  • Quality – limited by capital budgets, processes, or technology
  • Lot sizes – small lot sizes may transfer costs to suppliers

In the following section we will review the physical and process related implications of JIT on manufacturing and service production.