Intended learning outcomes: Describe the effect of forecast errors through the combining of requirements in batches across many production structure levels. Explain the effect of longer and shorter lead time on the (customer) order penetration point.
The lean / just-in-time concept discussed in Sections 6.2.1 to 6.2.5 can also aid the MRP technique (see Section 12.3), which often does not achieve satisfactory results in the quasi-deterministic case. Lean/JIT corresponds exactly to the above two demands. Thus, production and procurement costs decrease.
1. Reduction of batch or lot size through reduction in setup time results in combining fewer requirements in production or procurement batches at all levels. This is particularly important for lower production structure levels, where forecast errors will affect orders for components that will be required for end products far in the future. Figure 6.2.6.1 shows the positive effect that results if a batch sizing policy of lot-for-lot — every requirement is translated into exactly one order — can be achieved (see also Section 12.4.1).
On the one hand, demand at lower production structure levels becomes more continuous, which with any stochastic technique results in smaller safety stocks. In the quasi-deterministic case, it is sometimes even possible to change over to purely stochastic techniques. On the other hand, the probability of production or procurement errors due to forecast errors decreases, because time buckets are reduced and orders are released only for requirements forecasted for the near future.
With product families with many variants (and thus nonrepetitive production to customer order), the prerequisite is lot size one (or batch size one). Here, companies have always been faced with the problem of how to reduce setup time. Lean/JIT is thus also advantageous for deterministic materials management.
Fig. 6.2.6.1 Effect of forecast errors through the combining of requirements in batches across many production structure levels.
2. Lead time reduction allows a (customer) order penetration point lower in the product structure. Figure 6.2.6.2 shows this positive effect
Fig. 6.2.6.2 (Customer) order penetration point with longer and shorter lead time.
The customer tolerance time now corresponds to a greater portion of the — now shortened — cumulative lead time. With this, a larger part of value-adding processes lie within a deterministic area. Forecast errors affect a smaller part of the value-adding chain. Because forecasts pertain to the near future, forecasted demand is also smaller.
Through increased production within the required delivery lead time, certain orders can now be produced — thanks to lead time reduction — for which there can be no stockpiling for economic reasons. This is the case with nonrepetitive production. In this way, additional sales can be realized. This is a further example of the advantages of the lean / just-in-time concept for deterministic materials management.
The following exercise illustrates the effect of lead time reduction explained before.
Drag the stocking level to the left, then to the right, and watch the delivery times and stocking levels change. Then apply JIT techniques ("after JIT") and find the differences.
Quiz: Find the correct answers to the following questions - not yet available
[kml_flashembed movie="https://opess.ethz.ch/wp-content/uploads/2016/09/Q_625.swf" height="75%" width="100%" /]Course section 6.2: Subsections and their intended learning outcomes
6.2 The Lean Concept / Just-in-Time Concept
Intended learning outcomes: Explain lead time reduction through setup time reduction and batch size reduction as well as further concepts. Describe line balancing through harmonizing the content of work. Disclose Just-in-Time Logistics. Present generally valid advantages of the lean / Just-in-Time concept for materials management and for capacity management.
6.2.1 Setup-Friendly Production Facilities — Lead Time Reduction through Setup Time Reduction and Batch Size Reduction
Intended learning outcomes: Identify the simplest formula for operation time. Produce an overview on setup-friendly production facilities.
6.2.1b Cyclic Planning and “Heijunka” — Lead Time Reduction through Setup Time Reduction and Batch Size Reduction
Intended learning outcomes: Present in detail cyclic production planning and leveling of the production (“heijunka”).
6.2.1c Reduction of Variants, Modular Product Concept, Single-Minute Exchange of Dies (SMED) — Lead Time Reduction through Setup Time Reduction and Batch Size Reduction
Intended learning outcomes: Describe harmonizing the product range through reduction of variants and a modular product concept. Explain single-minute exchange of dies (SMED).
6.2.2 Production Segmentation, or Manufacturing Segmentation — Lead Time Reduction Through Adaptation of the Production Infrastructure
Intended learning outcomes: Produce an overview on production or manufacturing segmentation.
6.2.2b Cellular Manufacturing and One-Piece Flow — Lead Time Reduction Through Adaptation of the Production Infrastructure
Intended learning outcomes: Explain cellular manufacturing, one-piece flow, and the formula for lead-time calculation with cellular manufacturing.
6.2.3 Standardizing the Production Infrastructure, Flexible Capacities, Structuring Assembly Processes, Complete Processing, Point-of-Use Inventory, Point-of-Use Delivery — Further Concepts of Lead Time Reduction
Intended learning outcomes: Disclose the effect of standardizing the production infrastructure and of flexible capacity. Describe structuring assembly processes and complete processing. Identify point-of-use inventory and point-of-use delivery.
6.2.4 Line Balancing — Harmonizing the Content of Work
Intended learning outcomes: Identify how tasks of the same duration at each production structure level result in a rhythmic flow of goods. Explain why the various operations at a workstation (for all the products) as well as the various operations for a single product should be of the same approximate duration.
6.2.4b Line Balancing — Changing Lead Time of Operations
Intended learning outcomes: Produce an overview on measures for changing lead time of operations.
6.2.5 Just-in-Time Logistics: Quality Circles, TQM, Genchi Genbutsu, Kaizen, Poka-Yokero, Andon, 5S, and Others
Intended learning outcomes: Produce an overview on measures for motivation, qualification, and empowerment of employees as well as employee involvement (EI and quality circles. Describe concepts such as genchi genbutsu, kaizen, poka-yokero, Andon, 5S.
6.2.6 Generally Valid Advantages of the Lean / Just-in-Time Concept for Materials Management
Intended learning outcomes: Describe the effect of forecast errors through the combining of requirements in batches across many production structure levels. Explain the effect of longer and shorter lead time on the (customer) order penetration point.
6.2.7 Generally Valid Advantages of the Lean / Just-in-Time Concept for Capacity Management
Intended learning outcomes: Explain how the lean /JIT concept reduces queue time. Describe how the lean /JIT concept allows for simpler control techniques.
