Unit I: Just-in-Time - JIT ~ total quality strategies for manufacturing success and WCM model, MRP and MRP I, developments, gaining competitive edge, advantages and implementation issues. ur Just-in-time (JIT) manufacturing, also known as just-in-time production or the Toyota Production System (TPS), is a methodology aimed primarily at reducing times within production system as well as response times from suppliers and to customers. Its origin and development ‘vas in Japan, largely in the 1960s and 1970s and particularly at Toyota JIT Objectives kz &£& & °°» Tero allres Flexible . = — ta 5 Tero (et SIT 2%. ey aintine Flow process: Eliminate waste er Delay ‘The just-in-time inventory system is a management strategy that aligns raw-material orders from suppliers directly with production schedules. Companies use this inventory strategy to increase efficiency and decrease waste by receiving goods only as they need them for the production process, which reduces inventory costs. This method requires producers to forecast demand accurately. It originally referred to the production of goods to meet customer demand exactly, in time, quality and quantity, whether the “customer’ is the final purchaser of the product or another process further along the production line JIT concept> Elements of JIT include: + Continuous improvement. © Attacking fundamental problems - anything that does not add value to the product. © Devising systems to identify problems. © Striving for simplicity - simpler systems may be easier to understand, easier to ‘manage and less likely to go wrong. © A product oriented layout - produces less time spent moving of materials and parts © Quality control at source - each worker is responsible for the quality of their own ‘output © Poka-yoke - “foolproof tools, methods, jigs ete. prevent mistakes © Preventative maintenance, Total productive maintenance - ensuring machinery and equipment functions perfectly when it is requited, and continually improving it. ‘+ Eliminating waste. There are seven types of waste: © Waste from overproduction. © Waste of wait © Transportation waste. © Processing waste. fo Inventory waste, © Waste of motion. © Waste fiom product defects. ‘+ Good housekeeping - workplace cleanliness and organisation. ‘+ Set-up time reduction - increases flexibility and allows smaller hatches. Ideal bateh size is litem, Multi-process handling - a multi-skilled workforce has greater productivity, flexibility and job satisfaction, ‘+ Levelled / mixed production - to smooth the low of products through the factory. + Kanbans - simple tools to "pull’ products and components through the process. ‘+ Jidoka (Autonomation) - providing machines with the autonomous capability to use judgment, so workers can do more useful things than standing watching them work. Andon (trouble lights) - to signal problems to initiate corrective action + Just-in-Time Inventory System Advantages JIT inventory controls have several advantages over traditional models. Production runs remain short, which means manufacturers can move from one product to another easily. This method reduces costs by minimizing warehouse needs. Companies also spend less money on raw ‘materials because they buy just enough resources to make just the ordered products and no more. Just-in-time manufacturing keeps stock holding costs to a bare minimum. The release of storage space results in better utilization of space and thereby bears a favorable impact on the rent paid ‘and on any insurance premiums that would otherwise need to be made.Justin-time manufacturing eliminates waste, as out-of-date or expired products; do not enter into this equation at al {As under this technique, only essential stocks are obtained, lessworking capital is required to finance procurement, Here, a minimum re-order level is set, and only once that mark is reached, fresh stocks are ordered making this a boon to inventory management too. Due to the aforementioned low level of stocks held, te organizations retum on investment (referred to as ROI, in management parlance) would generally be high. ‘As justin-time production works on a demand-pull basis, all goods made would be sold, and thus it incorporates changes in demand with surprising ease. ‘This makes it especially appealing today, where the market demand is volatile and somewhat unpredictable. concept, so that inspection costs Justin-time manufacturing encourages the ‘ight First time and cost of rework is minimized. High quality products and greater efficiency can be derived from following a just-in-time production system. Close relationships are fostered along the prod system. Constant communication with the customer resulls in tigh customer satisfaction Overproduction nn chain under a justin-time manufacturing, climinated when justin-time manufacturing is adopted. ‘The disadvantages of JIT inventories involve disruptions in the supply chain, If a raw ‘materials supplier has a breakdown and cannot deliver the goods on time, one supplier can shut down the entire production process. A sudden order for goods that surpasses expectations may delay delivery of finished produets to clients. Just-in-time manufacturing provides zero tolerance for mistakes, as it makes re-working very difficult in practice, as inventory is kept to a bare minimum, There is a high reliance on suppliers, whose performance the manufacturer, Due to there being no buffers for delays, production downtime and fine idling can occur which \would bear a detrimental effect on finances and on the equilibrium of the production process. s generally outside the purview of ‘The organization would not be able to meet an unexpected increase in orders due to the fact that there are no excess finish goods. Transaction costs would be relatively high as frequent transactions wouldbe made. JJustin-time manufacturing may have certain detrimental effects on the environment due to the frequent deliveries that would result in increased use of transportation, which in tum would consume more fossil fuels‘Total quality strategies for manufacturing success and WCM model & Manufacturing excellence through value added manufacturing + Value added manufacturing. eliminating wastes suggested by Hall 1987. + Three overlapping categories of work ‘Total quality control Justin time ‘Total people involvement ‘Strategies for Improving Quality Management in Manufacturing Quality is the one attribute any manuf: ‘any marketing campaign or PR strategy. Nothing says more about « manufacturer than how they prioritize quality management in manufacturing and information, intelligence, systems and processes necessary to excel in this critical area, In service industries, the higher the quality and gher the profitability of a business. cturer cannot hide ~ it sereams who they are louder than more consistent a customers’ experience the Manufacturers who choose to embed quality deep into their enterprises, doing the hard work of ‘making ita core part of their DNA over time see the following benefits: Reduced manufacturing costs atributable to less material waste; Greater efficiency of tools and manufacturing equipment; Greater optimization of skilled workers’ time and talents; Improved supplier quality: Improved traceability across the entire production process; Continual reductions in non-compliance. Of the many strat the following five are delivering solid, Long-term results: +s manufacturers are using for improving quality management performance, 1. Creating and reinforcing a strategic framework of quality that permeates every aspect of a manufacturer's value chain is essential. Taking a piecemeal, incremental approach to quality management leads to information silos and fuels politic infighting over quality performance, creating more problems than it solves . A unified framework of quality management that integrates common practices, TQM, JIT and ‘TPM techniques at a minimum is essential Supplier quality management objectives need to be defined before procurement and strategic sourcing is undertaken and integrated into inbound inspection, traceability and audits. Manufacturers who make the deliberate decision to invest in supplier quality management from procurement and strategic sourcing through fulfillment have greater control over cost of quality and greater visibility into overall ‘manufacturing quality performance3. Quality Control and compliance departments need to get beyond just reacting to quality management problems and take a much more proactive, strategic approach instead 4. Measurements of quality performance are the baseline that supplier management, production, fulfillment and services measure themselves by. Manufacturers who improve the most on the most critical dimensions of quality are using metrics and key performance indicators (KPIs) to evaluate the entire value chain, not just selected functional. ‘The most valuable metrics according to studies conducted of quality metrics’ impact on profitability include defect rates, cost of rework, warranty expenses, alter sales service costs, opportunity costs and costs of good and bad quality. 5. Quality process control programs need to be based on metrics and KPIs that serve as guard rails to keep quality management on track to meeting and ‘exceeding customer requirements first. ‘The most widely known WCM models include: ‘ASE MODEL (esteemed gnod paces) 1 GENERATION GENARATIONS tu GENERATION ScHonsenetR’s MODEL ‘shaRaan’s MODEL ‘Aciue’s Mone (0986) (2008) 03) WALLS MODEL NAQHAPPAN'S MODEL (ase) (2003) uns mone. canpa's Moe. (1987) ou) maskews moon, |_| onovar’smooa |_| (391) 012 Fig. 2 Selected WCM models and generations 1. Schonberger's model (1986). It is based on the set of good practices written in the form of rules. The WCM status can be achieved by any of the two parallel paths: the quality path, and the JIT production path. Hencethe presence of concepts, such as: TQC (Total Quality Control), JIT (Just in Time), TPM (Total Productive Maintenance). + Richard Schonberger, a lea manufacturing.” 12 manufacturing consultant, ereated the term “world-class To achieve world-class status, companies must change procedures and concepts, which in ‘urn lead to transforming relations among suppliers, purchasers, producers and customers. Enterprise automation ¢ manufacturing innovators markets 4 operate at peak efficiency and exceed customer expectations 2. Howang’s model + Inthis model the establishment of WCM relies on the establishment of four systems: 1. Justinstime (JIT), 2. ‘Total Quality control (TQC), 3. Computer Integrated Manufacturing (CIM), and 4. Total Preventive Maintenance (TPM). All the systems depend directly on the cooperation of the employees. In other words, the elective combination of the four factors needs good, educated loyal employees, who look for ways to make themselves and their courses of action beter. 3. Hall's modet (1987), which is based on three pillars: TQC, JiT Manufacturing, TPI (Total People Involvement), and in practice is often referred to as the value-added manufacturing, model 3. Gunn's model (1987). It is based on the set of good practices grouped in three pillars: CIM (Computer Integrated Manufacturing), TQC, JiT Production 4. Maskell’s model (1991). It is based on the set of good practices grouped in four pillars: TQC, Management), FP (Flexible Production. IT, WM (Workforce‘According to him WCM generally includes ‘Anew approach to product quality Justin Time Change in the way in which work force is managed 4. A flexible approach to customer requirements 5. Dr.Ross’ model of WOM Ross model is obtained the fundamental definition of WCM. It considers the nature and substance of WCM as continuous improvement of the organization's key resources. Hence, this ‘model is introduced, information technology, human resources and cultural structure as a strategie resources. The functional structure of the company will attempt to improve this resource, The Important point in this model is the role of IT as a liaison between a strategic resource and the functional structure of the company. Although it is important in organizations to define the role of information technology. However, this model is not clearly articulate its role as ‘one of the causes of World Class Manufacturing (WCM). Also, in this model there is ignored concepts such as: competition, organization’s competitive advantages and globalization that form the theoretical foundation of WCM. The model is presented below , before anything else, suggests the existence causes of WCM as the comerstone and foundation of the building of WCM and then after the competition and emphasis on core competencies , mentions creating competitive advantages as Provocatives of world-class manufacturing and then four pillars: Lean ‘and continuous production, and total quality management (\WCM), developing and implementing vf business eavelleuve models aud assess urgauizatioual poufonsuauce is esseutial For achieving, excellence and consequently, promotion of the structure of WCM. Model Ross for WOM (Soltanzadeh 2009) Representing a model, he answers the question "why some companies, establishing new productive technologies make no progress?” In his idea, there are four critical elements in establishing WCM: Technologyby Culture and structure ©) Information d) Employees. His studies show that the majority of companies have focused on technology, and ignored the other factors; just those companies which have focused on these four elements altogether have made progress. Tn culture and structure, he emphasizes the nevessities of organizational re-designing new channels of transmitting information, and distribution. This model needs the roles and skills that ‘make the organization's management establish educational opportunities for employees during the work. Tineeds a new operational culture in relation to team work, elimination of wastages, production with added value, on-the-job training (OST), commitment to total quality, and omission of organizational barrels. About information, there is an emphasis on the foundations like the vitality of the company’s access to the How of information 6. The suggestive model This model with an inductive point of view, analyzes the world sourcing maturity, world operation maturity, world delivery matwsity and world strategic planning maturity in the subordinate companies of an industry. After that by combining the data, the WCM maturity in each of these companies will be extracted. Finally, by adding up the maturity of these subordinate companies, the WCM maturity of st iudustiy will be calculated, Thesefure, dis ssodel works lietaichically, aud is seprescated in two scales: company and industry. It is necessary to mention that by world sourcing, it is meant providing the essential primary material from suppliers, by world operation, assembling ‘nd making the product, and by world delivery, presenting the products to the customers. In the cend, world strategic planning as a supporter of sourcing, operation, and delivery is shown 7. Sharma and Kodali's model (2008). It is based on the set of good practices grouped in four pillars: TQM (Total Quality Management), LM (Lean Manufacturing), TPM, JiT, called also the ME/WCM model (ME - Manufacturing Excellence). 8. Nachiappan et. alll mode! (2009). It is based on the set of good practices grouped in three pillars: TPM, 6S (Six Sigma), LM. 9, Gandhi et. all mode! (2011). It is based on the set of good practices grouped in four pillars: LM, FCIM (Flexible Computer Integrated Manufacturing), AM (Agile Manufacturing), L&D (innovation and R&D) 10, Okhovat et. al model (2012). It is based on the set of good practices grouped in two pillars: LAS (Lean Six Sigma), TPM. 11, Dudek (2013). It is based on the set of good practices grouped in three vertical pillars: TPM, L6S, AM, and two horizontal pillars: TEM (Total Flow Management) and TSM (Total Service Management) [1]All of the presented contemporary models (since 2008) are based on the classic system of two pillars: technical and managerial. Technical pillars are sets of organizational guidelines in the most important production areas, responsible for so-called production adaptivity. Managerial pillars are a complement to the technical-area pillars, The creation of individual world class ‘manufacturing systems involves the definition and selection of, most often, ten basic technical ‘and managerial pillars from the set ofthe available areas of potential improvements, MRP and MRP IL MRPT Material requirements planning (MRP) isa production planning, scheduling, and inventory control system used to manage manufacturing processes. Most. MRP. systems are software-based, but itis possible to conduct MRP by band as well. ‘An MRP system is intended to simultaneously meet three objectives: ure materials are available forproduction and products are available for delivery to customers + Maintain the lowest possible material and product levels in store + Plan manufacturing activities, detivery schedules and purchasing activities, MRP is especially suited to manufacturing settings where the demand of many of the components and subassemblies depend on the demands of items that face extemal demands. Demands for end items are independent. In contrast, demand for components wiod to ‘manufacture end items depend on the demands for the end items. The distinctions between independent and dependent demands are important in classifying inventory items and in developing systems to manage items within each demand classification. MRP systems were developed to cope better with dependent demand items ‘The three major inputs of an MRP system are the master production schedule, the product structure records, and the inventory status records. Without these basic inputs the MRP system cannot function The demand for end items is scheduled over a number of time periods and recorded ‘on a master production schedule (MPS). The master production schedule expresses how much of cach item is wanted and when it is wanted. The MPS is developed from forecasts and firm customer orders for end items, safety stock requirements, and intemal orders. MRP takes the ‘master schedule for end items and translates. it into individual time-phased component requirements, ‘The product structure records, also known as bill of material records (BOM), contain information on every item or assembly required to produce end items. Information on cach item, such as part number, description, quantity per assembly, next higher assembly, lead times, and quantity per end item, must be available, ‘The inventory status records contain the status of all items in inventory, including ‘on hand inventory and scheduled receipts. These records must be kept up to date, with each receipt, disbursement, or withdrawal documented (0 maintain record integrity. MRP will 9determine from the master production schedule and the product structure records the gross component requirements; the gross component requirements will be reduced by the available inventory as indicated in the inventory status records + Iisa production planning process that starts from the demand for finished products and plans the production step by step of subassemblies and parts. Materials Requirements Planning (MRP) is a set of techniques that takes the Master Production Schedule and other information from inventory records and product structure records as inputs to determine the requirements and schedule of timing for each item. Purpose of MRP + Control inventory levels + Assign operating priorities + Plan capacity to load the produetion system. MRP PROCESS 1. Exploding and Offsetting Gross and Net Requirements Releasing Orders Low level Coding and Netting BEY Exploding and Offsetting Lead time ~ itis the time needed to perform the process. It includes onder preparation, queuing, processing moving receiving and inspecting time as well as any expected delays. + Exploding the requirements ~ it is the process of multiplying the requirements by usage quantity of each item and recording the appropriate requirements throughout the product tree. + Offsetting — itis a process of placing the exploded requirements in their proper periods based oon lead time. 10Gross and Net Requirements Gross Requirement - Total expected demand of the product. + Net Requirements - Actual amount needed in each time period, Net Requirements = Gross Requirement ~ available inventory + Planned on hand - Expected inventory on hand at the beginning of each time period. + Planned-order receipts - Quantity expected to received at the beginning of the period + Planned-order releases - Planned amount to order in each time period Releasing an order — means authorization is given to buy the necessary material or to ‘manufacturing of required component. + Scheduled Receipts ~ are orders placed on manufacturing or on a vendor and represent a commitment to make or buy. + Now, considering Scheduled Receipts, ‘Net Requirement = Gross Requirement ~ Scheduled Re, pls — available inventory Netling — is & process iar whith any stuck ou liad is subuacted lui die yiuss seyuiveament determined through explosion, giving the quantity of each item needed to manufacture the required finished products + Low Level Code ~ is the lowest level on which a part resides in all bills of material Low level codes are determined by starting at lowest level of bill of material and working up, recording the level against the part. If part exists on higher level, its existence on the lower level is already recorded, BENEFITS OF MRP Keep inventory levels t a cost-effective minimum. + Keeps track of inventory that is used. + Tracks the amount of material that is require. + Set safety stock levels for emergencies. + Determine the best lot sizes to fulfill orders + Set up production times among the separate manufacturing stages. + Plan for future needs of raw DRAWBACKS Inaccurate information can result in mis-planning, overstock, under-stock, or lack of appropriate resources, u+ The inaccurate master schedule will provide wrong lengths of time for production Hence affecting planning. + MRP systems can be costly and time-consuming to set up. MRP IL Manufacturing Resource Planning (MRP Il) embeds additional procedures to address the shortcomings of MRP. In addition, MRP II attempts to be an integrated manufacturing system by bringing together other functional areas such as marketing and finance. The additional functions of MRP Il include forecasting, demand management, rough-cut capacity planning (RCCP), and capacity requirement planning (CRP), scheduling dispatching rules, and inpuoutput control ‘MRP Il works within a hierarchy that divides planning into long-range planning, medium range planning, and shost-term control. + Manufacturing resource planning (MRPI) is defined as a method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units and financial planning, + This is not exclusively a software function, but a combination of people skills, dedication to data base accuracy, and computer resources. Its a total company management concept for using human resources which is used more productively 2BENEFITS OF MRP IL + More efficient use of resources Reduced inventories Less idle time Fewer bottlenecks + Better priority planning Quicker production starts, Schedule flexibility + Improved customer service Meet delivery dates Improved quality Lower price possibility + Improved employee moral + Better management information DISADV + Error Due To Poor Information + Use of averages 13