MNO 3701 Production & Ops Management
Chapter 8
Lean Operations & JIT
What is lean and just-in-time?
The key principle of lean operations is relatively straightforward to understand - it means moving
towards the elimination of all waste in order to develop an operation that is faster, more dependable,
produces higher-quality products and services and, above all, operates at low cost.
Often used interchangeably with 'lean' - just-in-time or sometimes lean synchronization. At its most
basic, JIT can be taken literally. It means producing goods and services exactly when they are needed:
not before they are needed so that they wait as inventory, nor after they are needed so that it is the
customers who have to wait.
JIT aims to meet demand instantaneously, with perfect quality and no waste.
The main argument against this traditional approach lies in the very conditions it seeks to promote,
namely the insulation of the stages from one another. When a problem occurs at one stage, the
problem will not immediately be apparent elsewhere in the process
Here items are worked on and then passed directly to the next stage 'just-in-time'. Problems at any
stage have a very different effect in such a process.
One result of this is that the responsibility for solving the problem is no longer confined to the staff at
stage A but is now shared by everyone.
By preventing inventory from accumulating between stages, the operation has increased the chances of
the intrinsic efficiency of the plant being improved.
Although simplified, this example highlights the differences between a traditional and a JIT approach.
1
,Traditional approaches seek to encourage efficiency by protecting each part of the operation from
disruption. Long, uninterrupted runs are its ideal state. The JIT approach takes the opposite view.
Exposure of processes to problems can both make them more evident and change the 'motivation
structure' of the whole system towards solving the problems.
JIT sees inventory as a 'blanket of obscurity' which lies over the processes and prevents problems
being noticed
JIT and capacity utilisation
Even in advanced lean operations, achieving high standards in all performance objectives demands
some sacrifice. In JIT the main sacrifice is capacity utilisation.
When stoppages occur in the traditional system, the buffers allow each stage to continue working and
thus achieve high capacity utilisation. The high utilisation does not necessarily make the process as a
whole produce more. Often extra 'production' goes into buffer inventories.
In a lean process, any stoppage will affect the whole process. This will necessarily lead to lower
capacity utilisation, at least in the short term.
There is no point in producing output just for its own sake. Unless the output is
useful and causes the operation as a whole to produce saleable (b) JIT approach products,
there is no point in producing it anyway. In fact, producing just to keep utilisation high is not only
pointless, it is counter-productive because the extra inventory produced merely serves to make
improvements less likely
Lean - a philosophy and a set of JIT techniques
Lean can be viewed as a philosophy of operations management.
It gives a clear view which can be used to guide the way operations are managed in many different
contexts.
2
, Within this philosophy there is a collection of many tools and techniques that both implement and
support the lean philosophy. These techniques are more generally called just-in-time techniques.
The lean philosophy
The lean approach to managing operations is founded on doing the simple things well, on gradually
doing them better and on squeezing out waste every step of the way.
Three key issues define the lean philosophy that in turn underpins the techniques of JIT:
the elimination of waste,
the involvement of staff in the operation
the drive for continuous improvement.
Eliminate waste
Waste can be defined as any activity which does not add value. Two simple devices are commonly
used in lean improvement. One, 'the seven forms of waste', is concerned with identifying waste as the
first step towards eliminating it; the other, 'the 5Ss', is a simple set of principles for reducing waste.
The seven forms of waste
Toyota has identified seven forms of waste, which have been found to apply in many different types of
operations - both service and production - and which form the core of lean philosophy.
Over-production. Producing more than is immediately needed by the next process in the
operation is the greatest source of waste according to Toyota.
Waiting time. Equipment efficiency and labour efficiency are two popular measures which are
widely used to measure equipment and labour waiting time, respectively.
Transport. Moving items around the operation, together with the double and triple handling of
WIP, does not add value.
Process. The process itself may be a source of waste.
3
Chapter 8
Lean Operations & JIT
What is lean and just-in-time?
The key principle of lean operations is relatively straightforward to understand - it means moving
towards the elimination of all waste in order to develop an operation that is faster, more dependable,
produces higher-quality products and services and, above all, operates at low cost.
Often used interchangeably with 'lean' - just-in-time or sometimes lean synchronization. At its most
basic, JIT can be taken literally. It means producing goods and services exactly when they are needed:
not before they are needed so that they wait as inventory, nor after they are needed so that it is the
customers who have to wait.
JIT aims to meet demand instantaneously, with perfect quality and no waste.
The main argument against this traditional approach lies in the very conditions it seeks to promote,
namely the insulation of the stages from one another. When a problem occurs at one stage, the
problem will not immediately be apparent elsewhere in the process
Here items are worked on and then passed directly to the next stage 'just-in-time'. Problems at any
stage have a very different effect in such a process.
One result of this is that the responsibility for solving the problem is no longer confined to the staff at
stage A but is now shared by everyone.
By preventing inventory from accumulating between stages, the operation has increased the chances of
the intrinsic efficiency of the plant being improved.
Although simplified, this example highlights the differences between a traditional and a JIT approach.
1
,Traditional approaches seek to encourage efficiency by protecting each part of the operation from
disruption. Long, uninterrupted runs are its ideal state. The JIT approach takes the opposite view.
Exposure of processes to problems can both make them more evident and change the 'motivation
structure' of the whole system towards solving the problems.
JIT sees inventory as a 'blanket of obscurity' which lies over the processes and prevents problems
being noticed
JIT and capacity utilisation
Even in advanced lean operations, achieving high standards in all performance objectives demands
some sacrifice. In JIT the main sacrifice is capacity utilisation.
When stoppages occur in the traditional system, the buffers allow each stage to continue working and
thus achieve high capacity utilisation. The high utilisation does not necessarily make the process as a
whole produce more. Often extra 'production' goes into buffer inventories.
In a lean process, any stoppage will affect the whole process. This will necessarily lead to lower
capacity utilisation, at least in the short term.
There is no point in producing output just for its own sake. Unless the output is
useful and causes the operation as a whole to produce saleable (b) JIT approach products,
there is no point in producing it anyway. In fact, producing just to keep utilisation high is not only
pointless, it is counter-productive because the extra inventory produced merely serves to make
improvements less likely
Lean - a philosophy and a set of JIT techniques
Lean can be viewed as a philosophy of operations management.
It gives a clear view which can be used to guide the way operations are managed in many different
contexts.
2
, Within this philosophy there is a collection of many tools and techniques that both implement and
support the lean philosophy. These techniques are more generally called just-in-time techniques.
The lean philosophy
The lean approach to managing operations is founded on doing the simple things well, on gradually
doing them better and on squeezing out waste every step of the way.
Three key issues define the lean philosophy that in turn underpins the techniques of JIT:
the elimination of waste,
the involvement of staff in the operation
the drive for continuous improvement.
Eliminate waste
Waste can be defined as any activity which does not add value. Two simple devices are commonly
used in lean improvement. One, 'the seven forms of waste', is concerned with identifying waste as the
first step towards eliminating it; the other, 'the 5Ss', is a simple set of principles for reducing waste.
The seven forms of waste
Toyota has identified seven forms of waste, which have been found to apply in many different types of
operations - both service and production - and which form the core of lean philosophy.
Over-production. Producing more than is immediately needed by the next process in the
operation is the greatest source of waste according to Toyota.
Waiting time. Equipment efficiency and labour efficiency are two popular measures which are
widely used to measure equipment and labour waiting time, respectively.
Transport. Moving items around the operation, together with the double and triple handling of
WIP, does not add value.
Process. The process itself may be a source of waste.
3
