Just-In-Time Approach 165
• To reduce lead times by reducing setup times,
• To incrementally revise operations themselves,
• To accomplish these things at a minimum cost.
It is insufficient for firms just to be high-quality and low-cost producers. Today, they must also be first in getting products and services to customer fast. To compete in this new environment, order-to- delivery cycle must be drastically reduced. JIT is weapon of choice today to reduce elapsed time of this cycle.
Customer Places
Order
Order Entry
Engi- neering
Design
Schedul- ing
Manufacturing Lead Times Purchasing Lead Times
Distribution and Customer
Service Manufacturing
Cumulative Lead Time
Order-to-Delivery Cycle
Figure 8.2. Order-to-Delivery Cycle.
A JIT company adds value with every activity where JIT has been introduced; there have been dramatic increases in the proportion of the actual value-adding time to the total cycle time, often more than 70%. Since non-JIT companies usually report about 15%, JIT improves operating efficiency sig- nificantly [John Y. Lee et al]. By eliminating non-value added costs, such as defective materials, in- process inventories, and delays; JIT simplifies the entire manufacturing system and improves long- term productivity.
Recently, the business strategy commonly refereed to as just-in-time has become more and more dominant in many aspects of business. Many corporations have begun to use the system to improve efficiency and customer service. Although the system has been criticized as a lofty idea or a theory rather than an attainable business practice, the company that have implemented the idea have profited from it [Padraic Gurdon].
JIT has been found to be so effective that it increases productivity, work performance and prod- uct quality, while saving costs and it helps companies spotlight those areas that are falling behind and need improvement [John Y. Lee et al]. It also slashes inventory, free up space on the factory floor and shine a blinding spotlight on the delivery and quality performance of parts suppliers. Therefore, the result of JIT was smaller inventories of both parts and final products with smaller inventories, billions of dollars were freed up for investment purposes [Mike Whittenberg]. This protects companies during the lean years when demand may exceed production.
166 A Modern Approach to Operations Management assembly (produce roughly the same mix of products each day, using a repeating sequence if several products are produced on the same line). Meet demand fluctuations through end-item inventory rather than through fluctuations in production level.
• Reduce or eliminate setup times: The process of JIT is to produce parts in a lot size of 1. In many cases this is not economically feasible because of the cost of set up compared with inventory carrying cost. The JIT solution to this problem is to reduce the setup time as much as possible ideally to zero. Bringing down the set up time for machine is the key factor to implement JIT system. This concept is popularly known by the name ‘Single Minute Ex- change of Dies (SMED)’. This means the maximum time taken in changing a die to switch over from one type of component to another should be in single digit (0 to 9). This is possible by off-line set up of the dies. Aim for ‘one-touch’ setup - which is possible through better planning, process redesign, and product redesign.
• Reduce lot sizes (manufacturing and purchase): reducing setup times allows economical production of smaller lots; close cooperation with suppliers is necessary to achieve reduc- tions in order lot sizes for purchased items, since this will require more frequent deliveries.
• Reduce lead times (production and delivery): production lead times can be reduced by mov- ing work stations closer together, applying group technology and cellular manufacturing con- cepts, reducing queue length (reducing the number of jobs waiting to be processed at a given machine), and improving the coordination and cooperation between successive processes;
delivery lead times can be reduced through close cooperation with suppliers, possibly by inducing suppliers to locate closer to the factory.
• Preventive maintenance: use machine and worker idle time to maintain equipment and pre- vent breakdowns.
• Flexible work force: workers should be trained to operate several machines, to perform main- tenance tasks, and to perform quality inspections. In general, the attitude of respect for peo- ple leads to giving workers more responsibility for their own work.
• Require supplier quality assurance and implement a zero defects quality program: errors leading to defective items must be eliminated, since there are no buffers of excess parts. A quality at the source (jidoka) program must be implemented to give workers the personal responsibility for the quality of the work they do, and the authority to stop production when something goes wrong. Techniques such as “JIT lights” (to indicate line slowdowns or stop- pages) and “tally boards” (to record and analyze causes of production stoppages and slowdowns to facilitate correcting them later) may be used.
• Small-lot (single unit) conveyance: use a control system such as a kanban (card) system to convey parts between work stations in small quantities (ideally, one unit at a time). In its largest sense, JIT is not the same thing as a kanban system, and a kanban system is not required to implement JIT (some companies have instituted a JIT program along with a MRP system), although JIT is required to implement a kanban system and the two concepts are frequently equated with one another.
8.2.1 THE KANBAN SYSTEM
The Kanban system was developed by Toyota in the early stages of JIT improvement campaign. The particular feature of a Kanban system is that it short-circuits normal ordering procedures: as supplies of a Kanban-controlled material are used up, new supplies are requested simply by releasing a re-order
Just-In-Time Approach 167 card which is sent direct to the supply point (i.e. the manufacturer or stock lists). It is often described as a ‘pull’ system, in contrast with traditional ordering procedures, which ‘push’ orders into the system.
The term ‘Kanban’ simply means ‘card’. To explain the Kanban concept, consider the case of an assembler who is drawing a particular component from a pallet which, when full, contains 100 pieces.
As the last piece is drawn, the assembler takes an identifying card from the empty pallet and sends it back down the line to the earlier work center where that part (among others) is made. On receiving the Kanban card, the work center responsible for supplying the component makes a new batch of 100 and sends it to the assembly post (so that the assembler isn’t kept waiting, there will probably be an extra pallet in the system to maintain the supply while the new batch is being made). This means that there is a minimum of paperwork, and the order cycle is generated on a ‘pull’ basis, the components only being made when there is an immediate need for them, thus keeping work-in-progress to a minimum. If you are familiar with the ‘two-bin’ method of stock control you will recognize the similarity.
Due to a lack of space and lack of natural resource, the Japanese have developed an aversion for waste by viewing scrap and rework as waste and thus strive for perfect quality. They also believe that inventory storage wastes space and ties up valuable capital and materials.
JIT uses a simple part withdrawal kanban (Figure 8.3) to pull parts from one work center to the next. Parts are kept in small containers, and only a specific number of these containers are provided.
When all containers are filled, the machines are shut off, and no more parts are produced until the subsequent work center provides another empty container. Thus the work-in-process inventory is lim- ited to available containers, and parts are provided only when needed.
Replenish
“Pull”
signal
Replenish
“Pull”
signal
Replenish
“Pull”
signal
Raw materials from vendor
Raw material buffer
Work-in process buffer
Finished goods
buffer Work
Cell # 2
Finished goods
buffer
Figure 8.3. JIT as Pull System.
A kanban is a card that is attached to a storage and transport container. It identifies the part number and container capacity, along with other information. There are two main types of kanban (some other variations are also used):
• Production Kanban (P-kanban): This signals the need to produce more parts.
• Conveyance Kanban (C-kanban): This signals the need to deliver more parts to the next work center (also called a “move kanban” or a “withdrawal kanban”).
A kanban system is a pull-system, in which the kanban is used to pull parts to the next produc- tion stage when they are needed; a MRP system (or any schedule-based system) is a push system, in which a detailed production schedule for each part is used to push parts to the next production stage when scheduled. The weakness of a push system (MRP) is that customer demand must be forecast and production lead times must be estimated. Bad guesses (forecasts or estimates) result in excess inven- tory, and the longer the lead time, the more room for error. The weakness of a pull system (kanban) is
168 A Modern Approach to Operations Management that following the JIT production philosophy is essential, especially concerning the elements of short setup times and small lot sizes.
(a) Two Card Kanban (Double Kanban). This is the original Toyota method, developed at a time when replenishment supplies were routed through a component or parts store (though it can also be used when no stores intervention is involved). The card released by the user authorizes the stores to
‘move’ a replenishment supply to the user. When they do so, a second card, which is found on the pallet they are about to supply, is removed and sent to the component supplier as authority to ‘produce’
another standard quantity.
Dual-Card Kanban Rules
• No parts to be made unless P-kanban authorizes production.
• Exactly one P-kanban and one C-kanban should be there for each container (the number of containers per part number is a management decision).
• Only standard containers are used, and they are always filled with the prescribed (small) quantity.
(b) The 1 Card Kanban. Similar to the 2-card system, but a single card acts as both ‘move’ and
‘produce’ authority. This method is typically used where the supply point is close to the user point, so that the supply and user operatives move the empty and full pallets between the two work centers themselves without the intervention of a stores function. It is also commonly used where the movement of pallets is automated.
(c) The Container-Based Kanban. In this variant the Kanban card is dispensed with alto- gether. Instead, there are a predetermined number of containers or pallets in the system, all uniquely identified to a particular part number or component: if the maker of the component has an empty container waiting he or she fills it; if there is no empty container waiting, then the operator must stop production of that component and switch to some other task. This procedure is often used when spe- cial-purpose containers or pallets are provided, so that there is no doubt as to which components have to go into them. However, it is also possible to use multipurpose containers in what is in effect a cross between the container-based and the 1 card systems, by painting the appropriate part number and stand- ard quantity on the containers itself. Another useful technique is to paint containers for similar parts in different colors, so that operators can identify the right container easily.
(d) The Shelf-space Kanban. Anyone who has used a motorway cafeteria will be familiar with this method. At the cafeteria counter a range of dishes is provided to the customer via a display/dis- pensing cabinet, which is subdivided into a number of ‘pigeon-holes’, each providing one compart- ment for each type of dish. The instructions to the kitchen staff are ‘ensure that there is always at least one and not more than three of each type of dish available in the cabinet. If there are three dishes available of all types of dish, stop producing and find something else to do (like cleaning your equip- ment)’. The same principle, applied to the factory, takes the form of shelf spaces marked up with the part number/description of different parts. Someone is given the task of making sure that empty shelf places are filled. When all spaces are filled, production of the item stops.
(e) The Floor Grid Kanban. Exactly the same as a shelf-space Kanban, but typically used for bulky or heavy components which are unsuitable for putting on shelves.
Summary
In all the above examples of Kanban, an essential feature of the system is that the number of containers or locations is systematically reduced by management to the point where supply is kept just in balance with the rate of use, so that the replenishment supply arrives ‘just-in-time’ for the user. The usual way
Just-In-Time Approach 169 of doing this is to keep taking away one more container each day (or week) until you reach the point where production is interrupted because the next full container doesn’t arrive in time (i.e. it’s ‘just-too- late’!); replacing one container should then bring the supply back into balance with the rate of use. If you use this method, make sure you keep one or two full containers somewhere out of sight, ready to slip into the line quickly so that the interruption to production doesn’t cause a problem. This trial and error method of finding out how many Kanban containers are needed is popular because in practice Kanban are usually introduced gradually, in parallel with the old method of supply; if the same contain- ers are used as previously, some will become surplus to requirements anyway when the faster Kanban supply is implemented, so you might as well take advantage of this to reduce the number in use gradu- ally, in the way described.
If this trial and error method worries you, or if you’ve decided to buy a new type of container for your Kanbans, there is a way of working out in advance exactly how many containers will be needed;
using a ‘simulation’ model will enable you to test the effects of different demand levels and a different mix of production with a high degree of confidence.
From the above you will realize that Kanban is not just another name for just-in-time: it is only part of a JIT implementation. The ‘true’ Kanban system is normally only suitable for high turnover components, which are in regular use, and you should generally avoid using Kanbans on high-cost components. However, you can get some of the benefits of a Kanban system, even with high-cost components, by using the shelf-space or floor grid method.
If you decide to use the Kanban concept in your own factory, don’t constrain yourself by trying to conform too rigidly to what I have referred to as the ‘true’ Kanban system. Be flexible: adapt the basic concept to your own circumstances in whatever way you think appropriate, remembering that the prime considerations are minimizing material and work-in-progress stocks, simplifying re-ordering paperwork, and empowering the actual users of the material to call for supplies as and when they need them.
In the sections to follow, we will discuss some more features of JIT: