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JITImplementation using Value Analysis

A Case Study, ISEN5881

Consider the steel cabinet manufacturing line with the following process flow diagram.

(see Figure 1**)

Processing, storage/handling time (Hrs)

0.3 Hr
0.15

96 hrs. (storage time)

8 Hrs. (storage time)

0.20 Hrs

0.1 Hrs Inspection,
And Rework

3.0 Hrs. (storage time)

0.5 Hrs. (Storage time)

0.1 Hrs Inspection
and 0.1 Hrs for

Rework

0.5 Hrs

3.00 Hrs

1.5 Hr

, 0.1 Hrs for Inspection
and 0.1 Hrs for Rework

34 hours ( 2.5 hours from plant to Company
To Customers warehouse and 31.5 hrs. From warehouse to customers

Figure 1**

Steel coil preprocessing stamping

Buffer
Inventory

1 Step Cabinet
Manufacturing

Inspect (QC
station)

Rework

Buffer Inventory

Spray and Dry

Buffer Inventory
Rework

Inspect (QC station)

Inspect (QC Station)

Rework

Coil Storage

Final assembly

** See “Legend” for Figure 1 on page 3

The value-added analysis using a flow chart is a mechanism to improve cycle times
and productivity by visually separating value-adding from non-value-adding activities.
The process is very straightforward and explained here. Follow this procedure apply it
to the case study.

Lis 1. List all of the steps in the process from beginning to end (Figure 1)

2. Figure 1 shows a box for every step, in sequence.

3. Use the production rate in each box and determine the Total Cycle Time.

4. Identify those steps that do not add value to the process. Non value-added operations.

5. to separate the value-added and non-value-added activities, move the boxes representing non-
value-added processes to the right of the value added steps (as shown in Fiq.. 2)

. 6 From the information collected in step 5 determine the Non-Value-Added Cycle Time. This is the
maximum waste that could be eliminated from the processing operations

. 7. Repeat step 5 and 6 above for all operations and then determine the Value Added Cycle time.
. Now determine the ratio R1= value added time as % of total cycle time)

. 8. Move the boxes representing the value-added processes to the left of the value- adding steps
(see Fig 2) Calculate the percentage of the current Total Cycle Time that is spent on Non-Value-
Added operations. Construct a pie chart to communicate the analysis performed in steps 7 and 8
above.

A recent study by a group of Industrial Engineers proved that some operation simplification
and./or modifications could eliminate waste and substantially shorten the total cycle time. The
following assumptions/facts must be used as the basis for elimination some non-value-added
operations

• Assume A)-The existing Layout could not be modified,
B)-The existing layout could be modified

• A stock entering a buffer storage must be moved to the next process within 0.5 hours

• Only one Inspection-Rework station should be used throughout the manufacturing cycle (You
need to determine which one to keep). Note that, all other inspection functions could be
incorporated into the individual processes. In addition, the items found defective in a
processing station will be allowed to move through the system (with no further processing)
and will be rejected at the end of the line.

• Steel coil inventory time should be reduced to 10 hours.

10.

10. After step 8, the remaining processes are usually called Target Processes.
a)- Develop the Diagram of the new layout (similar to figure 2) with Target Processes only, and
determine the total Target Cycle Time.
b)- Determine the ratio R2= value added time as % of total cycle time). Compare R1 and R2
and comment on the changes/improvements because of waste elimination.

c)- Analyze the Non-Value-Added steps (in the improved system) and suggest at least 3
alternatives method of improving those non value added activities.

APPENDIX

V Value-Added Non-Value-Added

Figure 2

Symbols used in Figure 1:

Symbol Used to indicate

Processing Unit

Storage (buffer or offline storage)

Rework/Reclamation station

Material/product handling (Time requires
insignificant)
Material/product handling (Time requires significant)

Operation
2

Operati
on 1

Operati
on c

R
e
w
o
r
k

JIT Implementation using Value Analysis
A Case Study (For help, See tutorial on page 4)

Consider the steel cabinet manufacturing line with the following process flow diagram.

(see Figure 1**)

Processing, storage/handling time (Hrs)

0.3 Hr
0.15

96 hrs. (storage time)

8 Hrs. (storage time)

0.20 Hrs

0.1 Hrs Inspection,
And Rework

3.0 Hrs. (storage time)

0.5 Hrs. (Storage time)

0.1 Hrs Inspection
and 0.1 Hrs for

Rework

0.5 Hrs

3.00 Hrs

1.5 Hr

, 0.1 Hrs for Inspection
and 0.1 Hrs for Rework

34 hours ( 2.5 hours from plant to Company
To Customers warehouse and 31.5 hrs. From warehouse to customers

Figure 1**

** See “Legend” for Figure 1 on page 3

Steel coil preprocessing stamping

Buffer
Inventory

1 Step Cabinet
Manufacturing

Inspect (QC
station)

Rework

Buffer Inventory

Spray and Dry

Buffer Inventory
Rework

Inspect (QC station)

Inspect (QC Station)

Rework

Coil Storage

Final assembly

Lis 1. List all of the steps in the process from beginning to end (Figure 1)

2. Figure 1 shows a box for every step, in sequence.

3. Use the production rate in each box and determine the Total Cycle Time.

4. Identify those steps that do not add value to the process. Non value-added operations.

5. to separate the value-added and non-value-added activities, move the boxes representing non-
value-added processes to the right of the value added steps (as shown in Fiq.. 2)

. 6 From the information collected in step 5 determine the Non-Value-Added Cycle Time. This is the
maximum waste that could be eliminated from the processing operations

. 7. Repeat step 5 and 6 above for all operations and then determine the Value Added Cycle time.
. Now determine the ratio R1= value added time as % of total cycle time)

• Assume A)-The existing Layout could not be modified,
B)-The existing layout could be modified

• A stock entering a buffer storage must be moved to the next process within 0.5 hours

• Steel coil inventory time should be reduced to 10 hours.

10.

c)- Analyze the Non-Value-Added steps (in the improved system) and suggest at least 3
alternatives method of improving those non value added activities.

APPENDIX

V Value-Added Non-Value-Added

Figure 2

Symbols used in Figure 1:

Symbol Used to indicate

Processing Unit

Storage (buffer or offline storage)

Rework/Reclamation station

Material/product handling (Time requires insignificant)
Material/product handling (Time requires significant)

Operation
2

Operati
on 1

Operati
on c

R
e
w
o
r
k

Tutorial: Value Added & Waste elimination

Necessary and Un-necessary Activities.

Distinguishing necessary, nonvalue-added activities from the unnecessary,

purely wasteful ones is tricky because unnecessary activities in organizations

often seem necessary. For example, most purchasing-related tasks are

necessary because they procure the materials needed by value-added activities

for transformation the raw material into the final output.

Inspecting incoming parts for defects or counting materials in inventory also

seem necessary; inspection prevents defective parts from going into the

product (a valuable endeavor) and counting ensures that inventories are kept at

the right levels (also valuable). But the fact that an activity fulfills a valuable

purpose should not be confused with its adding value. For activities like

inspection and counting, alternatives might exist that would eleminate the

need for either. For example, requiring vendors to deliver only zero-defect

parts would eliminate the need for incoming inspection.

Here is a simple procedure to keep all this straight:

About each step, task, or activity in a process ask:

1. Does it transform something? If yes, go to 2. If no, go to 4.

2. Are customers willingly to pay for it? If yes, go to 3. If no, go to 4.

3. Is it done right the first time? If yes, it’s a value-added activity. If no, go to 4.

4. Is it necessary for the business or regulations? If yes, it’s a necessary nonvalue-

added activity. If no, it’s an unnecessary nonvalue-added activity, waste.

Support Organization:

To distinguish value-added from nonvalue-added activities, it is useful to

think of an organization as comprised of two organizations: One, the

production organization, makes the product or provides the service; the

other, the support organization, assists and supports the production

organization but does little that qualifies as value added. In common parlance,

the production organization is called the line (or frontline) and the support

organization is called the staff.

The number of activities classified within the support organization can be very

large. Some of these activities include:

• Planning, control, and accounting activities.

• Logistical activities.

• Quality Activities.

• Change activities

Waste Elimination

Sources Of Waste

When all the obvious sources of waste have been removed, continuous

improvement efforts switch to searching for the hidden sources. What are

classified as waste?

Toyota’s Seven Wastes + 1

◾ Waste from producing defects

◾ Waste from overproduction

◾ Wasted (nonutilized) human talent

◾ Waste in transportation

◾ Waste from inventory

◾ Waste of motion

◾ Waste in processing

A way to help remember the eight wastes is the acronym DOWNTIME:

Defects, Overproduction, Waiting, Nonutilized human talent,

Transportation, Inventory, Motion, and Excess processing.

Canon’s Nine Wastes
Toyota’s seven wastes emphasize factory wastes. Canon corporation uses a

broader classification scheme of nine wastes that could be applied even to

service companies:

◾ Waste caused by work-in-process

◾ Waste caused by defects

◾ Waste in equipment

◾ Waste in expense

◾ Waste in indirect labor

◾ Waste in planning

◾ Waste in human resources

◾ Waste in operations

◾ Waste in startup

Classifying wastes is useful because it is easier to focus on wastes than to try

to attack everything at once. A company can begin eliminating waste by using

the eight or nine waste categories, then tailor the categories to better suit its

purposes and programs.

============================================

Improvement Kickoff
Making housekeeping the responsibility of everyone is a way to ease workers

into the improvement process and to prepare them for greater responsibility

later on. To this end, staffers and frontline workers should get together to

clean and organize their workplace. Keeping it that way on a continuous basis.

Five-S
One way to instigate and maintain ongoing, workplace improvement is with a

5S projects. 5S refers to Japanese names for five steps to workplace

organization. The five Ss are:

◾ (sort): sort everything; toss out anything not needed

◾ (straighten): specify a place for everything; designate locations
by number, color coding, name; put everything in its place,

◾ (shine): wash, clean, or paint everything so abnormal or
problematic situations become obvious).

◾ (standardize): Standardize (create procedures, rules, or
guidelines for maintaining the first three Ss

◾ (sustain): self-discipline (develop habits and culture to
maintain a clean,
organized

NOTE: At some companies, a sixth S for safety is added and everything is
organized with an eye on safety as well as functionality.

JIT: Value Added and Waste Elimination

Outline
Value-added focus
Sources of waste
JIT Principles
The meaning of JIT

Value-added Focus
Distinguish necessary and unnecessary activities
Improve the necessary ones, eliminate the unnecessary ones

The Support Organization
A large portion of most companies is involved in support activities
Planning, control, accounting
Logistics
Quality activities
Change activities
Most of these don’t add value, and many may be unnecessary

Employee involvement
The people most familiar with the processes are the workers
Employee involvement is critical to successful improvement efforts

Sources of Waste
Toyota’s seven wastes
Canon’s nine wastes

Toyota’s Seven Wastes
Producing defects
Transportation
Inventory
Overproduction
Waiting time
Processing
Motion

Canon’s Nine Wastes
Work-in-process
Defects
Equipment
Expense
Indirect Labour
Planning
Human resources
Operations
Startup

Waste Reduction and the Environment
Design for environment (DFE)
Minimize use of environmentally unfriendly materials and processes
Maximize use of environmentally friendly alternatives
Design products for ease of repair
Design products for ease of disassembly after disposal

JIT Principles
Simplification
Cleanliness and organization
Visibility
Cycle timing
Agility
Variation reduction
Measurement

Product Simplification

Process Simplification

Procedure Simplification

Cleanliness and organization
– the Five S’s
Seiri – proper arrangement and organization
Seiton – orderliness
Seiso – cleanup
Seiketsu – cleanliness
Shitsuke – discipline

Cleanliness and organization

Visibility

Library shelf

Work station

Visual kanbans

Tool board

Machine controls

Better

Good

Best
30-50
How
to
sensor

Information should be visible.

Cycle timing
Processes should be repetitive and predictable
Cycle time should be based on demand

Agility
Lean manufacturers are also agile
Agility means responding to unpredictable change
Changing demand
Changing product mix
New products
Agile elements of Lean
Short setups and small batches
Flexible equipment
Flexible workers

Variation reduction
Variability always makes performance worse
The goal is to reduce or eliminate variability of all kinds
Example:
Batch and queue has high variability
Every day is different
Small lot, repetitive, flow production has low variability
Every day is the same

Measurement
Measurement is critical to improvement
Without measurement, how do we know things are better (or worse)?

Other Issues
Limitations and implementation barriers
Attitudes
Time commitment
Quality commitment
Variation reduction and stability
Misunderstanding of JIT
Social impact needs to be considered
Implement lean practices FIRST, then automate
Learn as you go

.Main Page
.Home Page

Information should be visible.

JUST

–

TIME SYSTEMS

Basic Elements

f JIT

JIT is a philosophy and

tegrated management system based on the

concept of eliminating all

waste

Just

-in-

time

production is also known as

lean production

. The intention

just

-in-time

production is to produce only what is n

eeded, when it is

needed.

Waste has a very comprehensive meaning in just

-in-time

systems. S

ome examples of

waste

are

Watching a machine run

Waiting for parts

Counting parts

Overproduction

Moving parts over long dist

ances

Storing inventory

Looking for tools

Machine breakdowns

Rework

Many techniques are used for eliminating waste in a

just-in-time

production system

. Ideas come from employees working on continuous

programs of improvement. There are also other common

elements of

just-in-

time that define the philosop

hy and management system:

Flexible resources

Cellular layouts

Pull production system

· Kanban production control

· Small-lot production

· Quick set-ups

· Uniform production

· Quality at the source

· Total productive maintenance

· Supplier networks

Flexible Resources

Flexibility is the key to eliminating waste, like excess or obsolete inventory and worker idle time. The following resources are the source of such flexibility:

· Multifunctional workers — workers able to operate multiple machines or skilled at multiple tasks. They can be easily rotated as demand changes.

With workers operating several machines, an incentive is created to modify machines so that they require minimal human intervention.

· General purpose machines — create flexibility by allowing various machining operations to be performed on a single machine.

· Improved operator movements and operations — Time and motion studies lead to new ideas of how to minimize movement and travel.

Cellular Layouts

Intersecting flow patterns are a problem in process (functional) layouts where similar machines are grouped together. Cellular layouts eliminate the intersecting flow pattern by:

·
Using group technology to group parts into families with similar processing requirements.

·
Grouping dissimilar machines in a U-shape or manufacturing cell to produce a family of parts

· Laying out the cell so that work flows in one direction through the cell.

· Adjusting the cycle time by changing work paths. Workers in a cell may operate several machines. The workers do not necessarily operate in the same consecutive flow pattern as the product

The Pull System/Kanban Production System
In a pull system, the system pace is determined by the slowest workstation in the system. A worker cannot pass on any work to the next station until the next station has passed its work on to its subsequent station

Pull production (Kanban System) is a process that aims to arrange an organization so that customer preference or orders are what cause materials to be “pulled” through a system.

Kanban is the Japanese word for card. It is the “visible record” used in a pull system. Kanbans provide the means for signaling when work needs to flow. The kanban system should always be kept as simple as possible.

Small-lot Production

Producing in small lots has many benefits, including

·
Requires less space and capital investment.

· Moves processes closer together.

· Makes quality problems easier to detect.

·
Makes processes more dependent on each other.

·
Prevents excess work-in-process inventory and allows quicker change to a new product when demand changes.

One of the Important goals of JIT is to reduce lead time, which is made up of four components:

·
Processing time — can be reduced by reducing the number of items processed and the efficiency or speed of the machine or worker.

·
Move time — can be decreased if machines are moved closer together, the method of movement is simplified, or the need for movement is eliminated.

· Waiting time can be reduced through better scheduling of materials, workers, and machines and sufficient capacity.

Setup times — can be reduced through a variety of techniques as described next.

Quick Setups

Setup time can be very lengthy — often hours long. When setups are long, manufacturers often want to produce a large number of the same item before changing to another. The concept of long setups does not work well with small lot production.

Shigeo Shingo

is well-known for his SMED (single-minute-exchange of dies) principles, which were developed to reduce setup times. For example, Shingo reduced the setup time on a 1,000 ton press from six hours to three minutes using the following principles:

· Separate internal setup from external setup — internal setups must be performed while the machine is stopped; external setups may be made while the machine is running.

· Convert internal setup to external setup

· Streamline all aspects of setup

· Perform setup activities in parallel or eliminate them entirely

Total Productive Maintenance

Two basic types of maintenance are

· Breakdown maintenance — repairs to make failed machine operational

· Preventive maintenance — system of periodic inspection and maintenance to keep machines operating

Total productive maintenance

(TPM) seeks a higher degree of maintenance than preventive maintenance. Total productive maintenance combines the practice of preventive maintenance with the concepts of total quality — employee involvement, decisions based on data, zero defects, and a strategic focus. TPM requires management to

· Design products that can be easily produced on existing machines.

· Design machines for easier operations, changeover, and maintenance.

· Train and retrain workers to operate machines.

· Purchase machines that maximize productive potential

· Design preventive maintenance plan spanning life of machine

Uniform Production Levels

Uniform production levels help moderate the amount of inventory in the system and avoid the use of excess overtime. Production is leveled by the use of better forecasting techniques and the use of mixed model sequencing.

A sequence of L-M-S-M-L repeated 40 times per day represents mixed model sequencing. Producing 80 L’s, then 80 M’s, then 40 S’s is batch production and sequencing..

Quality at the Source
Quality must be extremely high in a JIT system because there is little inventory to buffer against quality mistakes. A JIT system should have a zero defect policy that seeks to identify quality problems at their source. Workers, not inspectors should be responsible for quality. Worker responsibility for quality requires the following components:

· Jidoka – the authority to stop the production line.

· Andon lights – to signal quality problems on the line.

· Undercapacity scheduling – allows for planning, problem-solving, and maintenance

· Visual control – makes problems visible (Figure 15.9)

Poka Yoke

– devices, processes, and designs to prevents defects

· Kaizen – Continuous improvement which requires total employment involvement

The essence of JIT is the willingness of workers to

· spot quality problems

· halt production when necessary

· generate ideas for improvement

· analyze problems

· perform different functions

Supplier Networks

Just-in-time purchasing and supply has developed rapidly. Trends in supplier policies include:

· Locate near to the customer

· Use small, side loaded trucks and ship mixed loads

· Consider establishing small warehouses near to the customer or consolidating warehouses with other suppliers

· Use standardized containers and make deliveries according to a precise delivery schedule

· Become a certified supplier and accept payment at regular intervals rather than upon delivery

Benefits of JIT

The benefits of JIT are similar to those of advanced manufacturing technology, but they are achieved through reduction of waste and productive management of human resources. In essence, JIT achieves the four strategic objectives of manufacturing simultaneously — low cost, high quality, high flexibility, and quick delivery. These overall benefits come from

· Reduced inventory

· Reduced space requirements

· Shorter lead time

· Increased productivity

· Better relations with suppliers

· Simplified scheduling and control activities

· Increased capacity

· Better use of human resources

· More product variety

JIT Implementation

Just-in-time production began in Japan in the 1970’s and spread to the U. S. in the 1980’s. We can make these general observations about JIT:

· JIT is used to finely tune an operating system.

· JIT is somewhat different in U. S. than in Japan and goes by several names, including stockless production, material-as-needed, continuous-flow, zero inventory production system, and lean production.

· JIT is still evolving and meshing in new ways with advanced technology

· JIT isn’t for everyone — mass production is still best for very high volume production; job shops are still necessary for highly specialized products

JUST
–
IN
–
TIME SYSTEMS

Basic Elements of JIT

JIT is a philosophy and integrated management system based on the
concept of eliminating all
waste
.

Just
–
in
–
time production is also known as
lean production
. The intention
of just
–
in
–
time
production is to produce only what is n
eeded, when it is
needed.
Waste has a very comprehensive meaning in just
–
in
–
time
systems. S
ome examples of
waste

are

Watching a machine run

Waiting for parts

Counting parts

Overproduction

Moving parts over long dist
ances

Storing inventory

Looking for tools

Machine breakdowns

Rework

Many techniques are used for eliminating waste in a
just
–
in
–
time

production system
. Ideas come from employees working on continuous
programs of improvement. There are also other common
elements of
just
–
in
–
time that define the philosop
hy and management system:

Flexible resources

Cellular layouts

Pull production system

Overview:

Class Exercise/Lab. (JIT) Elimination of Waste

This exercise contains information about a Garment production system (see Below). Data on operations

are given by management asking us to determine Categories of waste. We must use the data to prove type

and existence of the waste in current operations. Once a waste is recognized, you must provide at least

two general method of eliminating the Waste. This exercise is composed of 2 parts.

1)- list of possible wastes in this type of systems

2)-Your findings/proposals (list of waste and how to eliminate them)

PART I

Type and description of wastes

Additionally, while thinking about wastes, there are three types of activities that should be defined within

organizations:

1. Value adding activity: those activities that, in the eyes of the final customer, make a product or service

more valuable. A value adding activity is simple to define; industries can ask themselves if they as a

customer would be happy to pay for it.

2. Necessary non-value adding activity: those activities that, in the eyes of the final customer, do not

make a product or service more valuable but are necessary, in the event the existing supply process is

radically changed. Such waste is more difficult to remove in the short term and should be a target for

longer term or radical change.

3. Non-value adding activity: those activities which, in the eyes of the final customer, do not make a
product or service more valuable and are not necessary even under present circumstances. These

activities are clearly ‘wastes’ and should therefore be the target of immediate or, at least, short term

removal. L
EAMPLE: The ABC Garment Inc, operates two plants (see Figure 1) in Eastern Virginia. Plant 1&2 produce

a special winter Jacket and two other small size products. In this case study, we are interested in

application of Continuous Improvement in the operations, specifically, production of jackets and

Waste Type
1. Overproduction

2. Defects Frequent errors,

3. Unnecessary inventory

4. Inappropriate processing

5. Excessive motion

6. Waiting

7. Unnecessary motion

Description
Producing too much or too soon, resulting from poor flow of

Information

Product quality problems, or poor delivery performance

Excessive storage and delay of information or products, resulting

in excess inventory

Going about the work process using the wrong set of tools,

procedures or systems, often when a simpler approach may be

effective

Excessive movement of people, information or goods, resulting in

wasted time, effort and cost

Long periods of inactivity for people, information or goods

Poor workplace organization, resulting in poor ergonomics, for

example excessive bending or stretching and frequently lost items

Storage

Plant 2

purchase of raw material (yarn) used the production of jackets. After jackets are produced, they are

stored in a special storage (see figure 1). About 50% of raw material is stored in

Plant 1

building and the

rest, in Plant 2 building.
d= 30 miles d= distance in miles

To customers

A)- Historical data on Demand and Production of jackets and Yarn units in the 2 factories (about 55 miles

apart) operates

TABLE 1

Final Product (Jacket) Raw Material (Yarn)**

Year Production (SS) Demand (DD) Year Production (SS) Demand (DD)

Oct-2010

588202

261727

Oct-2010 110269 70944

Nov-2010 506152 664402 Nov-2010 104398 51926

Dec-2010 473379 565576 Dec-2010 123191 75568

Jan-2011

376092 242484 Jan-2011 50050 32292

Feb-2011

307313 175039 Feb-2011 99606 105538

Mar-2011

490599

316520

Mar-2011 101114 67142

Apr-2011 235028 653664 Apr-2011 86466 19035
May-11 190817 262863 May-2011 74000 54129
Jun-2011 252258 375152 Jun-2011 83486 27945

July-2011 23541 0 July-2011 0 0

Aug-2011 24526 0 Aug-2011 0 0
Sep-2011 276557 345262 Sep-2011 76758 10858

Oct-2011

2888552

301597

Oct-2011 20872 39447

Nov-2011 102433 193575 Nov-2011 65559 0

Dec-2011 171556 125249 Dec-2011 72882 0

Jan-2012

221032

205633

Jan-2012 65430 0

Feb-2012

269635

122749

Feb-2012 61887 17181

Mar-2012 240788 534905 Mar-2012 73770 1700

Apr-2012 231783 304739 Apr-2012 67653 20736

May-2012

186023

62232

May-2012 44593 30749

Jun-2012 267355 583408 Jun-2012 67017 51359
**All data points should be used except the those for July & August 2011 on Raw Material (yarn).

Note: demand statistics for Yarn is 50% of the Yarn needed in the whole operations

d=45 miles

Plant 1

B)- The standard practice (if followed) requires using 0.10 units of yarn for each jacket. Yarn purchased

is used in producing jackets and two other garments. Historical data shows that, total yarn used in the

production of the two other garments is approximately the same as the total used for jacket., Data

required to do this project is given in table 1 above.

Assumptions:

Assuming the company receives the raw material at the beginning of each month and ship the finished

product (produced in a period) at the end of the same period. Determine average inventory level for

the jackets and Yarn units. Note that, standard practice requires only 1200 units of yarn and jacket

(each) in inventory. The following cost information is made available for your study.

Per unit of jacket per unit of yarn

Inventory carrying cost $ 3.75 $0.91

Transportation/handling cost/mile $.65 $.22

What is required.

This is a JIT project and the objective is to improve the operations by eliminating waste as much as

possible. Use the data provided and Determine:

1). Types of waste (list as many as you recognize from the list shown above)

2). Quantify the waste (In time, $,%..).

3). Develop at least 2 alternative solution to eliminate the waste. (Explain your solution (a few lines)

4. Show % improvement in operation if we implement your recommendations

Hints: It is possible to find all types of wastes listed in page 1 of this document in this system. Some

(page 1, items, 1, 3, &5) more severe than others.

Question 1 …….

Question 2:……

Question 3:……….

Question 4:……

SOLUTION: (See the last page for direction and understanding the solution)

As a first step, it is necessary to compare production/purchase with demand for the jackets as well as

demand for yarn (on average per month basis)

A)- Production/purchase B)-Demand A-B (overproduction)

——————————— ——————- —————————

Jackets 400454 315.688.5 84765.5

Yarn 77874.5 36008.6 41805.9 **

Figure 1 and 2 shows the absence of balance between production volume and demand for jacket.

(Random)

Conclusion: On average, the company carried an average extra inventory of 84765.5 jacket. Similar

statement is also true for Yarn. If the produced/purchased Yarn shown in table was for all products

(Jacket & the other two products), then average extra inventory of yarn =38145.8-32728.6 =5417 units

➔ Types of waste involved include: 1)-Overproduction Waste. 2)-Unnecessary Inventory. In addition

to the ese 2 obvious Waste, There were probably waste involving “Excessive and/or Unnecessary

motion”

Figure 1(vertical access in in 1000)

Figure 2 (vertical access in in 1000)

Answer s to Questions

Question 1: Types of waste involved are:

1)-Overproduction

2)- Excess Inventory

3)- Unnecessary transportation (location of the warehouse with respect to the two plants)

4)- Excess motion /move ( excess inventory require more than required handling)

5)- Overproduction and excess inventory require more labor, more monitoring, more

waiting and more damaged product (reject and waste) which are all unnecessary.

P
ro

u
se

Question #2:

1)-Overproduction. We proved before that volume of overproduction was:

Jacket: ➔ 84765.5 units per month (average value) ➔ 84765.5/400454 =21.16%

**Yarn ➔41805.9 “ “ “ “ “ “ (this may be = 5857 if the assumption

discussed in “Conclusion” is applied ➔ 5857/77874.5 = 7.52%

2)- Excess inventory. (the same values as in item 1 above. However, if we consider the

requirement for a safety stock of (desired by management) 1200, then excess inventory

will be 83565.8 and 4657 units for Jackets and Yarn respectfully.

Cost associate with excess inventory = 83656.8*3.73 + 4657 *0.91 = $315924

3)- cost associated with unnecessary transportation/handling is that the warehouse is location. should

Change from current location to a new location approximately between the two plants

➔ The excess (unnecessary) transportation = (75-55) /75 = 26.67 %

4)- No data is available to quantify other wastes

Question 3-4

Overproduction:

1)- cut overproduction/purchase quantity. Purchase enough to meet the demand (the purchased

quantity must be X% more than demand, where X is the percentage required for safety stock and

rejected (damaged, scrapped, …)

2)- Improve sales forecast. only through a good forecasting system, the company could predict

demand level for the next month.

Excess Inventory:

1)- if we eliminate the overproduction problem as stated in the previous part, the

Excess inventory cost/waste will be eliminated resulting in $315924 savings

2)- If possible, the production planning and inventory replenishment should be based on say a

weekly schedule not monthly. (closer to JIT inventory system)

Using weekly replenishment, average inventory will be smaller and cost of carrying

inventory will drop from $315924 to ($315924 *12/52) = $72906. This is a reduction of

77% in inventory carrying cost.

3)- Use EOQ system of inventory

Excess motion/transportation:

1)- Move the warehouse to a location where total distance traveled from the two plant to the

warehouse will be minimized (55 miles). The savings (cost reduction) due to this waste

reduction alternative, is shown in question 2 as 26.67 % and the $ value is:

Total transportation cost/month of moving 400454 units of Jackets and 77874.5 units of Yarn

= (400454) *0.65 + (77874.5) * 0.22 = $223427.5

Savings (if we change location of warehouse) = (26.67%) *(223427.5 = $69420.7

2)- Implementing the item2 1 and 2 (See overproduction above) will result in eliminating

excess/unnecessary labor usage, excess motion, and related wastes). We need additional data

to quantify other savings because of waste elimination.

Discussion & Assignment Help: waste Elimination.

In JIT project, the primary focus is on eliminating waste. But, to eliminate waste, as a first step, we

have to define it (in the context of the system under study) and then determine the types of waste

in the system and quantify the impact of each type, on the performance measures of the system.

Note that in early part of the study, we need to look at waste in the overall system (those that are

obvious) and after that, if further studies are needed, search for waste in the sub-systems and

continue this process to the smallest component of the whole system.

In Assignment #2 that you are working on now, It is obvious that monthly production volume of

jackets and yarn compared to their corresponding demand volume, are random and does not follow

a logical pattern. Comparing production with demand for each product on a monthly basis will

show that we had shortage (Demand > production) in some months or overproduction (Production

> demand) in others.

In this case study (or similar ones), since initial inventory is not given, do not conduct an inventory

analysis to find out whether in a row (Monthly data) there is a balance between Production volume

data and data on demand for that month. The information represents 2 years of data from an

ongoing operation. The data provided does in table 1 does not imply that this company’s

operations started on September 2010 or stopped on June 2012. For instance, they we able to sell

more jacket in September 2010 than they produce the same period, because, the beginning

inventory in September was high enough to allow them to meet the demand from the inventory.

To find and quantify wastes in the system. let us assume that the sample data is large enough to be

used in the Waste Elimination study. (in real-life situations, we need at least 30 pieces of data to

make sure that the sample is large enough to make the result statistically valid). Let:

X= Average monthly production Y= Average monthly demand

If X > Y, this imply that we have “Overproduction”. This will create other waste in the system

which may include inventory, labor force, ….

If X < Y, there are two interpretation (see below)

a) We did not satisfy customer demand (waste of resources. Capability….). ➔ We did

not use all our resources efficiently to produce enough to meet the demand.

b). On September 1, 2010, we had a large inventory of jackets in storage which

allowed us to (combined with production) meet customers demand for 2 years

As shown in this case study, a lean system aims at balancing periodic input and output, while a

traditional system continues operations without requiring such a balance. This is possible because

a traditional system maintains large volume of inventories and allows us to satisfy customer

demand from Inventory. Inventory and operations related to maintaining inventory are all very

costly.

Using the data provided, you can quantify those losses and determine the cost associated with each

type of waste

Chapter 3: JIT, Value Added and Waste

Elimination

Part1- What is Just-In-Time (JIT)?

Continuous Improvement is a basic and important concept in modern manufacturing,
and it is a cornerstone of JIT and TOM. However, it is a very general and open-
ended concept. Another important element of the modern manufacturing and service
operations is the concept of VALUE_ADDED

Just-in-time (JIT) is an approach to manufacturing which aims to increase “value-

add” activity and eliminate waste by providing the environment to simplify and

perfect processes within an organization. Just-in-time manufacturing means

producing the necessary items, in the required quantities at the appropriate time.

JIT can deliver significant improvements in operating efficiency. Having raw

materials arrive at a manufacturing facility, just in time to enter the production

process allows an organization to minimize the amount of inventory it must hold

and store. It also minimizes the potential cost of obsolescence, which can arise due

to change in product specifications, customer demands, etc..

Putting the JIT concept into practice means a reversal of traditional thinking with

regard to managing a manufacturing process flow. In conventional production

processes, units are transported to the next production stage as soon as they are

ready. In JIT, each stage in the production process looks back to the previous stage

to pick up the exact number of units needed. Product (and services) are pulled

through the process driven by demand from customers, rather than the traditional

approach where product and services are pushed forward based on planned

schedules.

A)-The benefits associated with Just In Time Manufacturing

While the prevailing view of JIT is that of an inventory control system, it is much

more. JIT is an operational philosophy which can deliver a broad range of benefits.

Examples of the benefits associated with implementing a JIT process:

– The production of high quality, high reliability products that customers want,

resulting is satisfied and loyal customers.

– The delivery of products which match the rate that the customers require.

– Optimized manufacturing process lead-times.

– Minimized and eliminated waste of labor, material and equipment.

– All activity having a defined purpose towards meeting customer needs.

– Continuous reductions in process and equipment set-up and change-over times.

– The elimination of unnecessary inventory and improved inventory management

and control.

– Continuous reductions in supplier lead times.

– Ongoing significant improvements in organizational productivity and efficiency.

B)-IS JIT applicable only to Manufacturing?

The concepts of Just In Time are applied to all value creating organizations. While
JIT originated in manufacturing in Toyota and Ford, the concepts, principles,
approaches and benefits are equally applicable to all industries. In fact, many of the
JIT benefits achieved in manufacturing environments, arise due to JIT
implementation, in the support and back-off services, purchasing, human
resources, customer services, etc..

2) Value-Added

This principal state that, if an operation does not add value to the product, it should
be considered waste. Value added Waste Elimination

3)- What are JIT elements

1)-Simplification

2)-Clearness & Organization

3)-Visibility

Components of JIT

4)- Cycle timing

5)- Variability Reduction

6)- measurement Principle

1)Simplification: Eliminate unnecessary elements of a system. If possible, try to
simplify/shorten the operations (cut # of steps)

2)- Clearness & Organization. Pay attention to details and take all variables into

account

3)- Visibility. Provide ease of data collection, analysis and reporting to ensure the

shop floor workers get the right information at the right time

4)- Cycle Timing. Cycle times of different components of the says must be as

Close/equal as possible. The cycle time of the system must closely

coincide with customer demand. A flexible cycle time is essential

because of variations in customer demand.

Examples for Element # 4 The Product

Op. 1

Op. 3

Demand 185 units/week
OP. 2 (5 days/week)

Based on the Cycle Timing requirement of JIT manufacturing system, cycle times

must be changed as follows

Process

Current Cycle time

Minutes/unit

Change cycle times TO

(Different Alternatives) **

1 2 3 Others

Production of table Legs

5 3.75 3 5 ….

Production of Tabletop

12 15 12 20 ….

Assembly Operations

# of Tables can produce/hr.

15 12 20 ….

4 5 3

** These times are calculated using the equation that for producing one unit out of assembly, we

need one unit of output from Op/2 and 4 units of output from Op. 1

NOTE: Through application of JIT principles, we can have almost uniform speed

and produce flexible volume of output to meet variable demand.

Assembly
4 units/he

Produce Legs
12 units/hr.

Produce. Tabletop
5 units/hr.

5) Variability Reduction. This principle requires a continuous effort to reduce

process variability (speed, quality, setup, man-hours, …) . Process

variability is one of the largest sources of waste which results in bad

quality and higher cost.

6)-Principle of Measurement. The measurement of impact of each element must

be precise. This will enable us to determine the sources of waste and

inefficiency in each part of the systems. A system of standard metrics

to be used in accurate evaluation of each system or sub-system must be

stablished

NOTE: Although the 6 elements listed above are called principals od JIT, they

are also considered the principals of competitive manufacturing

=============================

PART II: Implementing JIT

a)- Value Added Focus (for details, see Part III)

Every activity or element of a system (machine, labor, time, space, energy, ..)

Should add value to the output of the system. It should be noted that all

Improvements in a system are not necessarily VALUE-ADDED. For example,

in the table assembly operation, we may spend a lot of resources (time and

money) to reduce % reject to say 2%. But the benefit of improvement may be

much less that the additional profit we will realize. That improvement may

also complicates the assembly process or lower the quality, or increase labor

hours, and so on

2)- Necessary and unnecessary Activities Focus.

Elements of each operations are divided into two distinct group

Value Added

Elements of an operation Necessary

Non-Value added (services)

Unnecessary

We already covered the concept of value-added activities (called LINE operators)

Those providing services (do not add value to product in a direct way) are called

STAFF. The activities performed by the second group (STAFF) may be necessary

or unnecessary. ==============================

PART III: Value Analysis, an overview

What is a Value-Added operation?
Value analysis is a systematic effort to improve upon cost and/or performance of

products (services), either purchased or produced.

It examines the materials, processes, information systems, and the flow of materials
involved, and determines ways to improve quality and reduce product cost.

Why is it important
Implemented diligently, value analysis can result in

1)- Reduced material use and cos

2)- Reduced distribution costs

3)- Reduced waste

4)- Improved profit margins

5)- Increased customer satisfaction

. 6)- Increased employee morale

When to use it?

1- What is the function of the item?

2- Is the function Necessary?

3- Can a lower cost standard part that serve the purpose be

identified?

4- To achieve a lower price, can the item be simplified, or its

specifications be relaxed?

5- Can the item be designed/re-designed so it can be produced more

efficiently or more quickly?

6- Can the features that customer values highly, be added to the item?

Note: Value analysis should be part of all the continuous Improvement effort

Application Example:
Among all components of a product:

1)- A metal part can be substituted by plastic part. The substitution will

save $0.15 per unit in material cost.

2)- One of the drilled holes in the frame of the product can be eliminated.

(quality Improvement). Not drilling the hole will save $1.1 labor cost per unit.

3)- 20 hours of labor is required for the changes.

4)- Because of improved quality, sale price could be increased by $1/unit

If current sales price, cost/unit, and demand are $45, #22, and 50000 units/month
respectively. Is the proposed changes economically “valuable”?

Assume that the VA team will spend 100 hours to run the project and the total
average salary for the team is $60/hr.

Solution:

The per unit cost saving and value-added improvement:

=$15+$1.10+$1.00 = $2.25

Monthly profit w/o improvements = 50000($45-$22) = $1,150,000

Monthly profit with improvements =5000 [($45-$22) +$2.25] =$1,262,500

Net result of the project = 1262500-1150000 –($60 * 1000) = $52500

Conclusion: ➔ The project is valuable

========================

PART IV: Lean & Just-In-Time Manufacturing.

JIT versus a more traditional approach to organizational management

Every day, in every organization there is a need to manage:

1)-The levels of WIP (work in progress),

2)-To implement work arounds due to defective deliveries,

3)-Manage machine downtime,

4)-Manage unstable demand,

5)-Schedule unplanned rework,

6)-Respond to inaccurate quantities,

7)-Train staff where errors are identified,

8)-Schedule production flows,

Etc., etc..

The presence of inventory through the process allows managers to work around the

daily tasks and problems, while decisions can be made, and problems addressed.

When a problem arises, e.g. a process or equipment failure, the problem is addressed,

and work continues till the next problem. Most of the problem are not seen as major

issues, as they become part of daily work life. Many times, the solutions implemented

are just short-term fixes.

In a JIT environment, the process “STOPS”, when problems arise. JIT exposes any

productivity problems, delays, process failures, etc. and as there is no buffer

inventory, forces immediate and permanent solutions so that the problems do not re-

appear.

Under JIT, a process or equipment failure becomes a major failure. The result is an

immediate focus by technical, supervisory and management staff to identify and

implement a solution. Due to the major organizational focus on the problem, a permanent

solution is demanded, in order to ensure there is no repeat. As JIT gets implemented

throughout an organization, problems are permanently addressed and disappear.

Lean Manufacturing, Just In Time

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