Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

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.

The setup time reduction in Section 6.2.1 can achieve sufficiently short setup times even without cyclic planning. In this case, it is no longer necessary to reduce setup times by forming groups of orders for which a queue and thus some buffer inventory is required. Because priority rules for the waiting orders before the workstations are less necessary or fall away altogether, control in job shops becomes less complex.

Maintaining overcapacity, or — in case of expensive production equipment — of flexible capacity was discussed in the first part of Section 6.2.3 as part of the lean /JIT concept. This measure has the following positive consequences:

  • It reduces queue time. This is crucial if the focus is on delivery reliability, given that queue time is one of the least predictable factors in job shop production. If queue time varies little or is very short, this improves planning, particularly for several production structure levels. Decreased size of production areas, thanks to smaller inventory in queues to the work­stations, represents a further advantage.
  • It allows for simpler control techniques, such as the Kanban technique. But any technique at all of capacity planning will function better. In addition, when an IT-supported control technique (e.g., with ERP or SCM software) is introduced, there will quickly be external costs of at least $100,000 and total costs of at least three times that amount. Therefore, increasing capacity can prove to be a viable alternati­ve, particularly when it can be implemented more rapidly than a computer control technique. In a medium-sized Swiss electronics manufacturing firm, for example, the purchase of two additional coiling machines resolved a bottle­neck in capacity. In this way, the firm was not only able to avoid investing in an expensive control technique, but also chose a measure that could be put into effect immediately.

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Course section 6.2: Subsections and their intended learning outcomes