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CPIM Exam – Basics of Supply Chain Management Practice Study Sheet
Chapter Fifteen – Just-in-Time Manufacturing
• Just in time manufacturing can be defined as the elimination of all waste and continuous improvement in productivity. This means there should be no safety stocks, and lead times are minimal
• Adding value to a product does not mean adding cost. Waste can be caused by poor product specification and design. Component standardization can also minimize waste
• Seven important sources of waste in manufacturing (per Toyota):
1. the process – best process makes the product with a minimum of scrap, in quantities needed, with least cost added
2. Methods – waste is added if operators have wasted movement, time for effort
3. Movement – moving and storing components adds cost but not value
4. Product defects – they interrupt the flow of work, also reworking defects is waste
5. waiting time – ideally material passes from one work center to the next and is processed without waiting in queue
6. overproduction – production beyond what is needed for immediate use
7. inventory – costs money to carry, and excess inventory adds cost to the product
• Just in time elements include 1) flow manufacturing 2) process flexibility 3) total quality management 4) total productive maintenance 5) uninterrupted flow 6) continuous process improvement 7) supplier partnerships 8) total employee involvement
• Flow manufacturing systems (repetitive manufacturing) are often very cost effective, but system is not suitable for making a variety of different products
• If you can’t justify flow manufacturing, work cells group machines on a functional basis. The layout can be improved based on product flows by using miniature flow lines or work cells. Parts now pass one by one, or in very small lots. This reduces lead times and queue times, simplifies production activity control, reduce needed floor space, and get immediate feedback for defects
• Process flexibility allows the company to react to changes in the volume and mix of their product (flexible machines and quick changeovers). Short setup times reduce economic order quantity by reducing the lot size. Reductions of up to 90% in setup time can occur by organizing the preparation, streamlining the setup, and eliminating adjustments.
• Benefits of a good quality program are less scrap, less rework, less inventory, better on-time production, timely deliveries, and more satisfied customers. Quality at the source means doing it right the first time and stopping the process and fixing it if something does go wrong
• Traditional maintenance fixes machines when they break down. Use preventive maintenance with inspections and other maintenance tasks. Total productive maintenance is preventative maintenance plus continuing efforts to adapt, modify and refine equipment to increase flexibility, reduce material handling, and promote continuous flow
• Uninterrupted flow occurs when material flows smoothly from one operation to the next with no delays. Requires 1) uniform plant loading 2) pull system 3) valid schedules 4) linearity
• Uniform plant loading means that the work done at each workstation should take about the same time (also called balancing the line). The result will be no bottlenecks and no build up in WIP
• Pull system – the demand on each workstation should come from the next workstation. The pull system starts at the end of the line. Kanban is a pull system (a 2 bin, fixed order quantity, order point system)
• Valid schedule – to maintain an even flow, the schedule must be level (produce the same amount every day). The company will have to make multiple products since inventories are at a minimum. Mixed-model schedule uses a level schedule in terms of total production but shifts among different models
• Linearity – JIT focuses on meeting the plan and it happens by scheduling less that at full capacity (so there is some slack left)
• Partnering is a commitment between two or more organizations to achieve specific goals. 1) long term commitment 2) trust (shared information) 3) shared vision. Benefits to purchasing organization should include 1) meeting quality goals 2) make frequent or JIT deliveries 3) work to improve performance, quality and cost. Benefit to supplier should include 1) more business and long-term security 2) ability to plan better 3) more competitive as JIT supplier
• Supplier selection criteria should include 1) supplier has stable and committed management 2) supplier will keep confidential information 3) supplier has an effective quality system 4) share same view of the customer
• Just in time is not a planning and control system. It is a philosophy and a set of techniques for designing and operating a manufacturing plant. Impacts of JIT 1) forecasting – shortened lead time (match production rates to sales rates and forecasting becomes less important) 2) production planning – environment where supplier and buyer can work together to plan the flow of material 3) master production scheduling – level schedule based on capacity and material flow (also move to daily from weekly time buckets)
• Material requirements planning has the following changes 1) daily not weekly budget 2) pure JIT environment has no inventory, so production occurs in the same time bucket as the gross requirement, and no offsetting is needed 3) bills of material can be flattened because of the elimination of many inventory transactions
• Backflushing (post-deduct) – raw materials are recorded into WIP; when work is completed the WIP is relieved by multiplying the # of units completed by the components in the bill of material (this works if the BOM are accurate and lead times are short)
• MRP is a “push” system. The trigger for the whole plan is the final projected need. MRP may not be effective based on 1) changes to demand 2) supplier delivery problems 3) inaccurate demand 4) production problems
• Pull system – don’t preplan and generate schedules, instead react to the final customer order and produce only what is needed to satisfy demand and then only when needed
• Reorder points typically do not work is that there is an assumption of constant demand. Also EOQ assumes that the holding cost and order cost are known and fixed. But if order cost is setup, a major JIT effort could reduce setup costs
• Kanban system – means card or ticket. The system is simple – the Kanban signal identifies the material to which it is attached. A card limits the inventory allowed (take a card, reorder). Kanban rules:
1. every container with parts shall have one Kanban
2. There are no partial container stores – every container will be filled, empty, or in the process of being filled or empty (inventory is easy – don’t count parts, just containers)
3. No production or movement unless there is an authorization in the form of an unattached Kanban card
• Kanban alternatives include:
1. single card systems – single card is the production card, empty container is move signal
2. color coding of containers
3. designated storage spaces
4. computer systems (bar coding)
• MRP (ERP)
1. best – effective with variability or uncertainty. Good for product changes or process changes
2. worst – high data burden – if system is stable , better to use a less data intensive system (Kanban)
• JIT (Kanban)
1. best – highly stable and predictable environment
2. worst – highly volatile environment in terms of demand, design or process
• Theory of constraints (drum – buffer – rope)
1. best – assumes a constraint can be identified and managed
2. worst – where constraint cannot be identified (product mix changes) – also needs more stable environment
JIT and TOC – JIT does process improvement but TOC focuses on overall bottleneck