CHAPTER 14

JUST-IN-TIME AND LEAN

OPERATIONS
Instructor: Wurong Shih
Presenter: Nguyen Thi Bao Tram –
DB11G217

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
 CHAPTER 14:
 Lean management is now applied in many services and
manufacturing sectors
- Healthcare, banking, financial service and insurance,
public services, education, food-beverage services,
distribution, retail and logistics services, IT, airlines.
- Manufacturing, mass production, Industrial 4.0, etc
(Gupta et al., 2016; Narayanamurthy and Gurumurthy, 2016; Leite
and Vierira, 2015; Hadid and Mansouri, 2014),
[Link]
[Link]

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 LEAN OPERATIONS

 Lean operation
 A flexible system of operation that uses considerably
less resources than a traditional system
 Tend to achieve
Greater productivity
Lower costs
Shorter cycle times
Higher quality

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 LEAN: ULTIMATE GOAL
 The ultimate goal:
 Achieve a system that matches supply to
customer demand; supply is
synchronized to meet customer demand
in a smooth uninterrupted flow
 A balanced system
 One that achieves a smooth, rapid flow
of materials and/or work through the
system
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 GOALS AND BUILDING BLOCKS
OF LEAN SYSTEMS

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 LEAN: SUPPORTING GOALS
 The degree to which lean’s ultimate goal is achieved
depends upon how well its supporting goals are
achieved:
1. Eliminate disruptions (poor quality, equipment
breakdowns, changes to the schedule, late
deliveries )
2. Make the system flexible (long setup times and
long lead times)
3. Eliminate waste, especially excess inventory
(inventory, overproduction, waiting time,
unnecessary transporting, processing waste,
inefficient work methods, product defects)
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 WASTE Waste
Represents unproductive resources
Seven sources of waste in lean systems:
1. Inventory
2. Overproduction
3. Waiting time
4. Unnecessary transporting
5. Processing waste
6. Inefficient work methods
7. Product defects

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 LEAN: BUILDING BLOCKS

 Product design
 Process design
 Personnel/organizational elements
 Manufacturing planning and control

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 BUILDING
 Four BLOCKS: PRODUCT DESIGN
elements of product design important for lean
systems:
1. Standard parts (workers have fewer parts to deal
with; training time and costs are reduce; more
routine purchasing, handling, and checking quality)
2. Modular design (reducing the number of part to
deal with, simplifying the bill of materials)
3. Highly capable systems with quality built in
(qualify goods and processes, product design and
process design must go hand in hand)
4. Concurrent engineering

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 BUILDING BLOCKS: PROCESS DESIGN

 Seven aspects of process design that are

important for lean systems:
1. Small lot sizes Setup time reduction
2. Manufacturing cells
3. Quality improvement
4. Production flexibility
5. A balanced system
6. Little inventory storage
7. Fail-safe methods
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 PROCESS DESIGN: SMALL LOT SIZES

In the lean philosophy, the ideal lot size is one

Benefits of small lot size
Reduced in-process inventory
Lower carrying costs
Less storage space is necessary
Inspection and rework costs are less when problems with
quality do occur
Permits greater flexibility in scheduling
Less inventory to ‘work off’ before implementing product
improvements
Increased visibility of problems
Increased ease of balancing operations
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 PROCESS DESIGN: SETUP TIME REDUCTION
 Small lot sizes and changing product mixes require
frequent setups
 Unless these are quick and relatively inexpensive,
they can be prohibitive
 Setup time reduction requires deliberate
improvement efforts
 Single-minute exchange of die (SMED)
 A system for reducing changeover time
 Group technology may be used to reduce setup
time by capitalizing on similarities in recurring
operations
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 PROCESS DESIGN: MANUFACTURING CELLS

 One characteristic of lean production

systems is multiple manufacturing cells
 Benefits include
 Reduced changeover times
 High equipment utilization
 Ease of cross-training workers

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 PROCESS DESIGN: QUALITY IMPROVEMENT

 Quality defects during the process can disrupt the

orderly flow of work
 Autonomation (jidoka)
 Automatic detection of defects during production
 Two mechanisms are employed

1. One for detecting defects when they occur

2. Another for stopping production to correct
the cause of the defects

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 PROCESS DESIGN: WORK FLEXIBILITY
 Guidelines for increasing flexibility
1. Reduce downtime due to changeovers by reducing
changeover time
2. Use preventive maintenance on key equipment to reduce
breakdowns and downtime
3. Cross-train workers so they can help when bottlenecks occur
or other workers are absent
4. Use many small units of capacity; many small cells make it
easier to shift capacity temporarily and to add or subtract
capacity
5. Use off-line buffers. Store infrequently used safety stock away
from the production area
6. Reserve capacity for important customers
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 PROCESS DESIGN: BALANCED SYSTEM

 Takt time
 The cycle time needed to match customer demand for final
product
 Sometimes referred to as the heartbeat of a lean system
 Takt time is often set for a work shift
 Procedure:

1. Determine the net time available per shift

2. If there is more than one shift per day, multiply the net
time by the number of shifts
3. Compute the takt time by dividing the net available time
by demand
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 TAKT TIME EXAMPLE

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 PROCESS DESIGN: INVENTORY STORAGE

 Lean systems are designed to minimize inventory

storage
 Inventories are buffers that tend to cover up
recurring problems that are never resolved
 partly because they are not obvious
 partly because the presence of inventory
makes them seem less serious

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 PROCESS DESIGN: FAIL-SAFE METHODS

 Poka-yoke (Fail Safing)

 Building safeguards into a process to reduce or
eliminate the potential for errors during a process
 Examples
Electric breakers
Seatbelt fastener warnings
ATMs that signal if a card is let in a machine
Designing parts that can only be assembled in the
correct position
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 BUILDING BLOCKS:
PERSONNEL/ORGANIZATIONAL
 Five personnel/organizational elements
that are important for lean systems:
 Workers as assets
 Cross-trained workers
 Continuous improvement
 Cost accounting
 Leadership/project management

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 PERSONNEL/ORGANIZATIONAL:
WORKERS AS ASSETS
 Workers as assets
 Well-trained and motivated workers are
the heart of the lean system
 They are given greater authority to
make decisions, but more is expected
of them

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 PERSONNEL/ORGANIZATIONAL:
CROSS-TRAINED WORKERS
 Cross-trained workers
 Workers are trained to perform several
parts of a process and operate a variety
of machines
 Facilitates flexibility
 Helps in line balancing

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 PERSONNEL/ORGANIZATIONAL:
CONTINUOUS IMPROVEMENT
 Continuous improvement
 Workers in lean systems have greater responsibility
for quality, and they are expected to be involved in
problem solving and continuous improvement
 Lean workers receive training in
 Statistical process control
 Quality improvement
 Problem solving

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 PERSONNEL/ORGANIZATIONAL:
COST ACCOUNTING

 Cost accounting
 Activity-based costing
 Allocation of overhead to specific jobs
based on their percentage of activities

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 PERSONNEL/ORGANIZATIONAL:
LEADERSHIP

 Leadership/project management
 Managers are expected to be leaders and
facilitators, not order givers
 Lean systems encourage two-way
communication between workers and
managers

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 BUILDING BLOCKS: MPC

 Seven elements of manufacturing planning and control

(MPC) are particularly important for lean system:
1. Level loading
2. Pull systems
3. Visual systems
4. Limited work-in-process (WIP)
5. Close vendor relationships
6. Reduced transaction processing
7. Preventive maintenance and housekeeping

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 MPC: LEVEL LOADING
 Lean systems place a strong emphasis on achieving
stable, level daily mix schedules
 MPS – developed to provide level capacity loading
 Mixed model scheduling
 Three issues need to be resolved
 What is the appropriate product sequence to
use?
 How many times should the sequence be
repeated daily?
 How many units of each model should be
produced in each cycle?
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 MPC: PULL SYSTEMS

Push system
Work is pushed to the next station as it is completed
Pull system
A workstation pulls output from the preceding
workstation as it is needed
Output of the final operation is pulled by customer
demand or the master schedule
Pull systems are not appropriate for all operations
Large variations in volume, product mix, or product
design will undermine the system
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 MPC: COMMUNICATION
 Communication moves backward through the system
from station to station
 Each workstation (customer) communicates its
need for more work to the preceding workstation
(supplier)
 Assures that supply equals demand
 Work moves “just in time” for the next operation
 Flow of work is coordinated
 Accumulation of excessive inventories is avoided

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 MPC:
 Kanban VISUAL SYSTEMS
 Card or other device that communicates demand for
work or materials from the preceding station
 Kanban is the Japanese word meaning “signal” or
“visible record”
 Paperless production control system
 Authority to pull, or produce, comes
from a downstream process.
 Two main types of kanbans:

1. Production kanban (p-kanban): signals the need to

produce parts
2. Conveyance kanban (c-kanban): signals the need to
deliver parts to the next work center.
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 KANBANS
IDEAL NUMBER OF KANBAN CARDS

DT (1  X )
N
C
where
N Total number of containers (1 card per container)
D planned usage rate of using work center
Average waiting time for replenishment of parts plus
T
average production time for a container of parts
Policy variable set by management that relects possible inefficiency
X
in the system (the closer to 0, the more efficient the system
Capacity of a standard container (should be no more
C
than 10 percentof daily usage of the part

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 MPC: LIMITED WIP

 Benefits of lower WIP

 Lower carrying costs
 Increased flexibility
 Aids scheduling
 Saves costs of scrap and rework if there are
design changes
 Lower cycle-time variability

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 MPC: CLOSE typically
Lean systems VENDOR RELATIONSHIPS
have close relationships
with vendors
 They are expected to provide frequent, small
deliveries of high-quality goods
 A key feature of many lean systems is the
relatively small number of suppliers used

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 MPC: REDUCED TRANSACTION
PROCESSING

 Lean systems seek to reduce costs

associated with the ‘hidden factory’:
 Logistical transactions
 Balancing transactions
 Quality transactions
 Change transactions

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 PREVENTIVE MAINTENANCE
AND HOUSEKEEPING
 Preventive maintenance
 Maintaining equipment in good operating
condition and replacing parts that have a
tendency to fail before they actually do fail
 Housekeeping
 Maintaining a workplace that is clean and
free of unnecessary materials ( 5S’s: Sort,
Straighten, Sweep, Standardize, Self-
discipline)

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 LEAN VS. TRADITIONAL PHILOSOPHIES

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1. TRANSITIONING
Make sure top managementTO isLEAN SYSTEMS
committed and that they
know what will be required
2. Decide which parts will need the most effort to convert
3. Obtain support and cooperation of workers
4. Begin by trying to reduce setup times while maintaining
the current system
5. Gradually convert operations, begin at the end and work
backwards
6. Convert suppliers to JIT
7. Prepare for obstacles

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 OBSTACLES TO CONVERSION
1. Management may not be fully committed or willing
to devote the necessary resources to conversion

2. Workers/management may not be cooperative

3. It can be difficult to change the organizational

culture to one consistent with the lean philosophy

4. Suppliers may
resist

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 LEAN SERVICES
 In service the focus is often on the time needed
to perform the service because speed is often
the order winner
 Lean benefits can be achieved in the following
ways:
 Eliminate disruptions
 Make system flexible
 Reduce setup and lead times
 Eliminate waste
 Minimize work-in-process

 Simplify the process

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 JIT II

 JIT II:
• A supplier representative works right in
the company’s plant, making sure there
is an appropriate supply on hand
• It is often referred to as vendor managed
inventory (VMI)

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 OPERATIONS STRATEGY
 Be careful to study the requirements and benefits
of lean systems before making a decision to
convert operations
 Evaluate strengths and weaknesses of current
operations
 The decision to convert can be sequential
 Weigh the pros and cons of a lean approach to
inventories
 Supplier management is critical to a lean
operation
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 PAPER 1 LEAN MANAGEMENT IN HOTELS:
WHERE WE ARE AND WHERE WE MIGHT GO
 Purpose: 1) to offer an overview of lean management research in
the
hospitality industry; 2) to detect and propose lean management
research lines in hospitality industry.
 Methodology: using a systematic literature review based on a
structured, transparent, replicable multistage process. Thirty-six
references have been found, which indicates the paucity of
research studies in this field.

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 the best-known continuous improvement methods is Lean
Management (Farrington et al.,2018).
 5 lean management characteristics developed for service
operations
- Reduction of performance trade-off goals focused on internal
efficiency and external flexibility
- Making value-adding processes flow and implementing JIT
customer-pull
- Elimination of waste from the activity’s entire value chain from
product elimination of waste from the activity’s entire value chain
from product development to product delivery
- Increased customer focus involvement in the product development
and delivery processes
- Empowerment of workers and teams. 44

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 hotel activities: reception, training, housekeeping, personnel
selection and recruitment, common area cleaning, marketing and
sales, laundry, information systems, food and beverage (F&B),
leisure activities, maintenance (exterior, interior, gardening) and
security and surveillance, to which could be added procurement,
warehouses and general administration
LM. Espino-Rodríguez and Ramírez-Fierro (2017)

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 RESULTS

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 DISCUSS: WHERE WE ARE

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 FURTHER LINES OF RESEARCH: WHERE WE
 MIGHT GO
20 top lean hospitality methods and tools that some of the most
promising are Kaizen, visual management, Poka-Yoke. Value stream
mapping is the most used tools are most applied to housekeeping,
restaurants and F&B, and booking and reception.
 Managers should be aware of the opportunity for waste elimination
presented by adaption to hotel process of other lean techniques
such as Set-up time reduction, Total Productive Maintenance and
Kaizen
 IT can play an importance role in management hotel processes and
activities under lean manufacturing.
 Connection between Industrial management and lean management
lead to a new business models to get more effective sales tactics
and provide a more personalized customer experience.
 => Lean management in hotel: great potential both for research
and practice 52

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 PAPER 2
LEAN MANUFACTURING AND INDUSTRY 4.0
COMBINATIVE APPLICATION:
 PRACTICES AND PERCEIVED BENEFITS
Purpose: to investigate the practices regarding the combinative use
of Industrial 4.0 and lean tools in the manufacturing sector.
 Methodology: a questionnaire survey was distributed among
manufacturing professionals in organizations which have adopted
Industry 4.0 technology and lean manufacturing.
- 1st stage concerned the theoretical concepts of Lean and its tools.
- 2nd stage concerned the technologies and capabilities of industrial
4.0.
- 3rd stage combined keywords that provide a bridge between the lean
and Industrial 4.0
The questionnaire was sent to 200 companies. 44 responses were
received.
1-5 Likert scale
 Research question 53

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 COMBINING INDUSTRY 4.0 TECHNOLOGIES
 WITH LEAN MANUFACTURING
Many research paper suggesting the combined use of Industry 4.0 and
lean tools to improve operational efficiency
 Cyber – Physical system based smart devices, smart watches allow
operators to receive error messages in real-time and act on repair
actions require no delay or equipped with proper sensors can recognize
failures and automatically trigger fault-repair actions (Kolberg and
Zuhlke, 2015).
 IoT and Cloud based logistics model incorporating Lean Six Sigma
allows a fully autonomous global supply chain, optimized flow and
overall efficiency (Jayaram et al. 2016)
 IoT achieved easy integration and data exchange between machines,
sensors and end users of software tools at industrial site (Ferrera 2017).
 Value Stream Mapping 4.0 focused on data collection, storage, handling
and utilization for KPI generation to achieve maximum waste reduction
and appreciation of how information flows within the logistics processes
(Meudt et al. 2017). 54

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 Results

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 CONCLUSION

 The evaluation of the perceived contribution of Industrial 4.0

applications to the operational performance of the company
 The perceived impact on aspects of efficiency and profitability is
not as clear as with the application of lean tools that the potential
efficiency and business profitability benefits not being fully
appreciated yet

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 Thank you
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