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Lecture 11

GMS 401 Lecture 11: Chapter 11 JIT Production

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Global Management Studies
GMS 401
Payman Ahi

Chapter 11: JIT and Lean Operations Just-in-Time is a highly-coordinated processing system used to produce or deliver goods just as they are needed. - A philosophy that believes that unproductive energy/entity is considered waste, and waste should be taken out of the system - Make the product only when there is a need for it - With JIT, problems are identified early in the process - Helpful in supporting strategies with rapid response and low cost Just-in-Time Partnership is a partnership between the suppliers and purchasers that removes waste and drives down the costs for mutual benefits. - Goals of a JIT partnership include: o Removal of unnecessary/non-value added/unproductive activities o removal of in-plant inventory (WIP or any product just sitting there) by delivering small lots directly to the using department as needed o Removal of in-transit inventory by encouraging suppliers to locate nearby and provide frequent small shipments, the shorter the flow of material in the resource pipeline, less inventory o Obtaining improved quality and reliability Characteristics of a Just in Time Partnership - High degree of respect by both supplier and purchaser - Organizations viewing suppliers as extensions of their own organization - Supplier are expected to be fully committed to improvement - Concerns of suppliers are to be addressed Concerns of suppliers Diversification  ties to only one customer increases risk  suppliers may not want to tie themselves to long-term contracts with only one customer (as risk is reduced with a variety of customers (opposed to one)) Scheduling  don’t believe customers can create a smooth schedule many suppler have little faith in the purchaser’s ability to produce orders to a smooth coordinated schedule. Lead Time  short lead time means engineering or specification can create problems because of inadequate notice for suppliers to implement the necessary changes Quality Limited by capital budgets, processes or technology that limit the ability to respond to changes in the product and quality Lot (batch) Sizes Small lot sizes may transfer costs to supplier suppliers may see frequent delivery in small batches as a way to transfer buyers holding costs to supplier Consignment Inventory is an arrangement in which the supplier maintains title to the inventory until it is used - An inventory reduction technique - A variation of Vendor management inventory (VMI) Eliminating Waste - Waste is considered all non-value added activities - Ex storage, inspection, delay, defectives products Ohno’s Seven Wastes - Overproduction - Ques (idle time, storage, waiting) - Transportation (moving materials between plants or work centres, handling material more than once to the same destination) - Inventory (unnecessary raw materials, WIP, finished goods and excess operation supplies - Motion (movement of equipment or people that adds no value) - Over processing (work performed on the product that adds no value) - Defective product (returns, warranty claims, rework and scrap) Housekeeping is expanded to the 5S’s which is a lean production checklist - Sort/Segregate  keep what is needed and remove everything else. When in doubt, throw it out. - Simplify/straighten  arrange and use methods analysis tools to improve workflow and reduce wasted motion - Shine/Sweep clean daily; eliminate all forms of dirt, contamination and cluster from the work area - Standardize remove variations from processes by developing standard operating procedures/checklists - Sustain/self-discipline repeat the above - There are two additional S’s added by North American managers o Safety build a good safety practice into the original 5Ss activities o Support/maintenance reduce variability, unplanned downtime, and costs. Integrate daily shine tasks with preventative maintenance Remove Variability as any deviation from the optimum process that delivers perfect product on time, every time - Variability is a polite word for problems - Inventory hides variability - Less variability means less waste Sources of variability - Poor production processes resulting from improper quantities or late/non-conforming units - Unknown customer demands incomplete or inaccurate drawing, specifications and bills of material - JIT and inventory reducing are effective tools - The precise timing of JIT makes variability evident Throughput is the time required to move orders through the production process, from receipt to delivery - Each minute that products remain on the books, costs accum
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