Chapter 16

JIT, TPS, and

Lean
Operations
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 Outline
 Global Company Profile:
Toyota Motor Corporation
 Just-in-Time, the Toyota Production System, and Lean
Operations
 Just-in-Time (JIT)
 Toyota Production System (TPS)
 Lean Operations
 Lean Operations in Services

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Learning Objectives
When you complete this chapter you
should be able to:
1. Define just-in-time, TPS, and lean
operations
2. Define the seven wastes and the 5Ss
3. Explain JIT partnerships
4. Determine optimal setup time
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Learning Objectives
When you complete this chapter you
should be able to:
5. Define kanban
6. Compute the required number of kanbans
7. Explain the principles of the Toyota
Production System

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Toyota Motor Corporation
 Largest vehicle manufacturer in the world with
annual sales of over 9 million vehicles
 Success due to two techniques, JIT and TPS
 Continual problem solving is central to JIT
 Eliminating excess inventory makes problems
immediately evident

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Toyota Motor Corporation
 Central to TPS is employee learning and a
continuing effort to produce products under ideal
conditions
 Respect for people is fundamental
 Small building but high levels of production
 Subassemblies are transferred to the assembly
line on a JIT basis
 High quality and low assembly time per vehicle

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TPS Elements

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JIT/TPS/Lean Operations
Good production systems require that
managers address three issues that are
pervasive and fundamental to
operations management: eliminate
waste, remove variability, and improve
throughput
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Just-In-Time, TPS, and
Lean Operations
o JIT focuses on continuous forced problem solving
o TPS emphasizes continuous improvement, respect
for people, and standard work practices in an
assembly-line environment
o Lean operations emphasize understanding the
customer

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Eliminate Waste
o Waste is anything that does not add value
from the customer point of view
o Storage, inspection, delay, waiting in queues,
and defective products do not add value and
are 100% waste

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Ohno’s Seven Wastes
◉ Overproduction
◉ Queues
◉ Transportation
◉ Inventory
◉ Motion
◉ Overprocessing
◉ Defective products

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Eliminate Waste
◉ Other resources such as energy, water, and air are
often wasted
◉ Efficient, sustainable production minimizes inputs,
reduces waste
◉ Traditional “housekeeping” has been expanded to the
5Ss

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The 5Ss
 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

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The 5Ss
 Sort/segregate – when in doubt, throw it out
 Simplify/straighten – methods analysis tools
 Shine/sweep – clean daily
a dd it ional Ss
Two
 Standardize – remove variations d p r ac ticesprocesses
from
t in go o
o Safety – buil – review work
 Sustain/self-discipline ucand
e va r iability
recognize
ain t en a nc e – red
progress
o Support/m d d ow n t im e
e
and unplann

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Remove Variability
o JIT systems require managers to reduce variability caused by both
internal and external factors
o Variability is any deviation from the optimum process
o Inventory hides variability
o Less variability results in less waste

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Sources of Variability
o Poor production processes resulting in improper
quantities, late, or non-conforming units
o Unknown customer demands
o Incomplete or inaccurate drawings, specifications,
or bills of material

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Sources of Variability
o Poor production processes resulting in improper
quantities, late, or non-conforming units
n v e n t o r y
and i
o Unknown customer demands
ot h JI T t o o l s i n
B e ff e c t iv e
o Incomplete or inaccurate
u c t i o n a r e drawings,
a r i a b ty
specifications,
i l i
d
e material auses of
or bills rof
v
n t i f y i n g c
id e

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Improve Throughput
 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
 A pull system increases throughput

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Improve Throughput
 By pulling material in small lots, inventory
cushions are removed, exposing problems and
emphasizing continual improvement
 Manufacturing cycle time is reduced
 Push systems dump orders on the downstream
stations regardless of the need

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Just-In-Time (JIT)
o Powerful strategy for improving operations
o Materials arrive where they
are needed when they are
needed
o Identifying problems and
driving out waste reduces
costs and variability and
improves throughput
o Requires a meaningful
buyer-supplier relationship
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JIT and Competitive Advantage

Figure 16.1
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JIT and Competitive Advantage

Figure 16.1
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JIT Partnerships
 JIT partnerships exist when a supplier and purchaser work together to
remove waste and drive down costs
 Four goals of JIT partnerships are:
o Removal of unnecessary activities
o Removal of in-plant inventory
o Removal of in-transit inventory
o Improved quality and reliability

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JIT Partnerships

Figure 16.2
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Concerns of Suppliers
 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

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JIT Layout
 Reduce waste due to movement

TABLE 16.1
JIT LAYOUT TACTICS
Build work cells for families of products
Include a large number operations in a small area
Minimize distance
Design little space for inventory
Improve employee communication
Use poka-yoke devices
Build flexible or movable equipment
Cross-train workers to add flexibility
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Distance Reduction
 Large lots and long production lines with single-
purpose machinery are being replaced by smaller
flexible cells
 Often U-shaped for shorter paths and improved
communication
 Often using group technology concepts

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Increased Flexibility
 Cells designed to be rearranged as volume or
designs change
 Applicable in office environments as well as
production settings
 Facilitates both product and process improvement

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Impact on Employees
 Employees may be cross trained for flexibility and
efficiency
 Improved communications facilitate the passing on of
important information about the process
 With little or no inventory buffer, getting it right the
first time is critical

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Reduced Space and Inventory
 With reduced space, inventory must be in very small
lots
 Units are always moving because there is no storage

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JIT Inventory
 Inventory is at the minimum level necessary to keep operations
running

TABLE 16.2
JIT INVENTORY TACTICS
Use a pull system to move inventory
Reduce lot sizes
Develop just-in-time delivery systems with suppliers
Deliver directly to point of use
Perform to schedule
Reduce setup time
Use group technology
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Reduce Variability

Inventory level

Process
Scrap downtime
Setup Quality
time problems
Late deliveries
Figure 16.3
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Reduce Variability

Inventory
level

Process
Scrap downtime
Setup Quality
time problems
Late deliveries
Figure 16.3
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Reduce Variability

Inventory
level

No scrap Quality
Setup problems
time removed
Process
reduced No late downtime
deliveries removed Figure 16.3
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Reduce Inventory
◉ Reducing inventory uncovers the “rocks”
◉ Problems are exposed
◉ Ultimately there will
be virtually no
inventory and no
problems Inventory
◉ Shingo says “Inventory is evil”

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Reduce Lot Sizes
Figure 16.4

Q1 When average order size = 200

average inventory is 100
Inventory

200 – Q2 When average order size = 100

average inventory is 50

100 –
Time

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Reduce Lot Sizes
 Ideal situation is to have lot sizes of one pulled from one process to
the next
 Often not feasible
 Can use EOQ analysis to calculate desired setup time
 Two key changes necessary
o Improve material handling
o Reduce setup time

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Lot Size Example
D = Annual demand = 400,000 units
d = Daily demand = 400,000/250 = 1,600 per day
p = Daily production rate = 4,000 units
Q = EOQ desired = 400
H = Holding cost = $20 per unit
S = Setup cost (to be determined)

Setup time = $2.40/($30/hour) = 0.08 hr = 4.8 minutes

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Reduce Setup Costs
o High setup costs encourage large lot sizes
o Reducing setup costs reduces lot size and reduces
average inventory
o Setup time can be reduced through preparation prior
to shutdown and changeover

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Lower
Figure 16.5
Setup Costs

Holding cost
Sum of ordering and
holding costs
Cost

T1
Setup cost curve (S2)
T2 Setup cost curve (S1)
S1
S2

Lot size
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 Reduce Setup Costs Figure 16.6

90 min —
Initial Setup Time

Separate setup into preparation and actual setup,

Step 1 doing as much as possible while the
machine/process is operating
(save 30 minutes)
60 min —
Move material closer and
Step 2 improve material handling
(save 20 minutes)
45 min —
Standardize and
Step 3 improve tooling
(save 15 minutes)
25 min —
Step 4 Use one-touch system to eliminate adjustments (save
10 minutes)
Training operators and standardizing work procedures 15 min —
Step 5 (save 2 minutes) 13 min —

Step 6 Repeat cycle until subminute setup is

achieved —
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JIT Scheduling
 Schedules must be communicated inside and outside the
organization
 Level schedules
o Process frequent small batches
o Freezing the schedule helps stability
 Kanban
o Signals used in a pull system

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JIT Scheduling
 Better scheduling improves performance

TABLE 16.3
JIT SCHEDULING TACTICS
Communicate schedules to suppliers
Make level schedules
Freeze part of the schedule
Perform to schedule
Seek one-piece-make and one-piece move
Eliminate waste
Produce in small lots
Use kanbans
Make each operation produce a perfect part

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Level Schedules
o Process frequent small batches rather than a few large
batches
o Make and move small lots so the level schedule is
economical
o Freezing the schedule closest to the due dates can improve
performance

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 Scheduling Small Lots
Figure 16.7

JIT Level Material-Use Approach

A A B B B C A A B B B C

Large-Lot Approach
A A A A A A B B B B B B B B B C C C

Time
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Kanban
 Kanban is the Japanese word for card
 The card is an authorization for the next container of
material to be produced
 A sequence of kanbans
pulls material through
the process
 Many different sorts of
signals are used, but
the system is still called
a kanban

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Kanban Figure 16.8

Signal marker hanging on post

for part Z405 shows that
production should start for that
part. The post is located so that
workers in normal locations can
easily see it.
Signal marker on stack of boxes

Part numbers mark location of

specific part

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Kanban

Material/Parts Final Finished Customer

Supplier assembly goods order
Work
cell

Kanban
Kanban Kanban

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More Kanban
o When the producer and user are not in visual contact, a card can be
used; otherwise, a light or flag or empty spot on the floor may be
adequate
o Usually each card controls a specific quantity or parts although
multiple card systems may be used if there are several components
or if the lot size is different from the move size

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More Kanban
o Kanban cards provide a direct control and limit on the amount of
work-in-process between cells
o If there is an intermediate storage area, a two-card system can be
used with one card circulating between the user and storage area
and the other between the storage area and the producing area

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The Number of Kanban Cards
or Containers
o Need to know the lead time needed to produce a container
of parts
o Need to know the amount of safety stock needed

Demand during Safety

Number of kanbans lead time + stock
(containers) = Size of container

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Number of Kanbans Example
Daily demand = 500 cakes
Production lead time = 2 days
(Wait time +
Material handling time +
Processing time)
Safety stock = 1/2 day
Container size = 250 cakes

Demand during lead time = 2 days x 500 cakes = 1,000

Safety stock = ½ x Daily demand = 250
1,000 + 250
Number of kanbans = =5
250
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Advantages of Kanban
o Small containers require tight schedules, smooth operations, little
variability
o Shortages create an immediate impact
o Places emphasis on meeting schedules, reducing lead time and
setups, and economic material handling
o Standardized containers reduce weight, disposal costs, wasted
space, and labor

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JIT Quality
o Strong relationship
• JIT cuts the cost of obtaining good quality because JIT exposes poor
quality
• Because lead times are shorter, quality problems are exposed sooner
• Better quality means fewer buffers and allows simpler JIT systems to
be used

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JIT Quality Tactics

TABLE 16.4
JIT QUALITY TACTICS
Use statistical process control
Empower employees
Build fail-safe methods (poka-yoke, checklists,
etc.)
Expose poor quality with small lot JIT
Provide immediate feedback

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Toyota Production System
 Continuous improvement
o Build an organizational culture and value system that stresses
improvement of all processes, kaizen
o Part of everyone’s job
 Respect for people
o People are treated as
knowledge workers
o Engage mental and
physical capabilities
o Empower employees
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Toyota Production System
 Continuous improvement
o Build an organizational culture and value system that stresses
improvement of all processes, kaizen
o Part of everyone’s job
 Respect for people
o People are treated as
knowledge workers
o Engage mental and
physical capabilities
o Empower employees
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Toyota Production System
 Standard work practice
o Work shall be completely specified as to content,
sequence, timing, and outcome
o Internal and external customer-supplier connection are
direct
o Product and service flows must be simple and direct
o Any improvement must be made in accordance with the
scientific method at the lowest possible level of the
organization

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Lean Operations
 Broader than JIT in that it is externally focused on the
customer
 Starts with understanding what the customer wants
 Optimize the entire process from the customer’s
perspective

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Building a Lean Organization
 Transitioning to a lean system can be difficult
 Lean systems tend to have the following attributes
o Use JIT techniques
o Build systems that help employees produce perfect parts
o Reduce space requirements

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Building a Lean Organization
 Lean systems tend to have the following attributes
o Develop partnerships with suppliers
o Educate suppliers
o Eliminate all but value-added activities
o Develop employees
o Make jobs challenging
o Build worker flexibility

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Lean Sustainability
o Two sides of the same coin
o Maximize resource use and economic efficiency
o Focus on issues outside the immediate firm
o Driving out waste is the common ground

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Lean Operations in Services
 The JIT techniques
used in manufacturing
are used in services
o Suppliers
o Layouts
o Inventory
o Scheduling

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