The Federal Signal Corporation is a leader in several business areas. Including community and industrial warning systems, emergency vehicle lighting, and ambulance systems. The company has enjoyed increased business and income, while eliminating much of the waste that has plagued many American corporations. Just In Time Management has allowed Federal Signal's, University Park, Illinois facility to reduce inventory from $20 million to under $10 million. The company has also deleted the use of over 100,000 square feet of floor space. And now leases it to another company. JIT is a concept designed to help achieve high volume production while using minimal inventories of raw materials. Work in process. And even finished good. JIT follows the logic that nothing will be produced until it's needed. So need is created when the product is pulled toward the user or customer. In theory, when an item is sold, the market pulls the replacement from the last position in the system. There are two kinds of Just In Time. Big JIT and little JIT. Big JIT is a philosophy that seeks to rid a firm of waste in all aspects of its production activities. Little JIT on the other hand, focuses more narrowly on scheduling inventory of goods, and providing service resources only where and when they are needed. Just In Time is routed in the Japanese belief that eliminating waste is essential for a successful and productive business. Many consider waste as being anything other than the minimal amount of equipment, materials, and workers essential to a production process. However this leaves no room for surplus, or safety stock, which have been used traditionally in American manufacturing and are still sometimes needed. Part of Federal Signal's JIT training is based on the work of Kiyoshi Suzaki. Who identifies several types of waste. Including inventory waste. Waste of motion. And waste from over production, among others. >> Before Just In Time, we operated on conveyors. One person would put each component on and then send it down the conveyor to the next person would put another component on. Now, one person is responsible for building the whole system, testing it, and making sure it's a quality product. With the exception of the circuit board area, the company uses group technology during the assembly process and to eliminate waste of motion and waiting time. By grouping all of the machines required to make an item into one area, or work cell, inventory and manual labour is also reduced. Due to sophisticated equipment, the circuit boards for all products manufactured at this facility are assembled in one area. However, each employee in that area knows which business unit they are working for. So once boards are completed, they are sent to work cells within that business unit. The electrical products group, for example, makes factory paging systems, and process monitoring lights. Once a circuit board is completed for a particular paging unit, it is then delivered to a work cell assembling that system. The cell's prep area is in the centre with the product assembly at the parameters. Oftentimes, as they are here, machines and assembly stations are on wheels. Making it easier to move a cell or simply change it for better ergonomics. For the same reason, floor markings outlining work areas are taped instead of painted. To regulate JIT flows, Federal Signal has adopted the Kanban production pull system. Kanban -- Japanese for sign, uses visual cues such as cards and containers. Or in this case, bags, to determine when parts are needed. The authority to order supplies comes from the worker on the floor. If a container is down to fewer than two bags of a particular part such as screws, a refill order is placed. >> Kanbaning acts as an order mechanism for us. Whether it be we use containers as a Kanban that we send over to respective areas, to tell them -- to give them the message to build us some more parts. Whether it be PC boards, or a manufactured item back in the machine shop. It allows us to send a right priority to those areas as opposed to in the past, there was a priority they tried to build from and they tried to guess what, in fact, what they really needed to build as opposed, by us sending them Kanban, we tell them what we actually need them to build for us. >> Kanban eliminates the need to store excess parts as well as reducing accounting and loading dock paperwork. With the two-bag system, two storeroom employees visit the production floor to examine each Kanban bin. If there are still two bags of a part in a bin, nothing additional is ordered. However, if one or one-and-a-half of the bins are in the bin, only one bag is ordered. And of course, if the bin is empty, two bags of the part will be needed. Once the bar codes for each product are scanned, orders are then sent to the vendor electronically. The vendor fills each scanned order, and delivers them on Friday of that week. Once the products are received, they are either delivered to the individual's cell, or picked up by a worker from that cell. Extra parts are ordered only if overtime is scheduled. Therefore, if a product design is changed an over abundance of an old part would not go to waste. >> Before Kanban we had a huge storeroom. We had to wait a couple of days to get parts from that storeroom. And that we had to have orders printed. Then we had to take those orders to storeroom people. Then they had to pull the parts. Then they had to bring them to the line. Another department had to update the information as far as where the parts were. Since the Kanban system has come into effect, the parts come to our line. We don't have to have anybody pulling parts. They're in smaller containers. There's much more variety of parts at one time. So we're able to build a variety of products. >> This is a prime example of the cooperation needed between Federal Signal and all of its suppliers. In order to make the Kanban system work, Federal Signal vendors deliver most parts as they are needed instead of sending large shipments once a month. Organization on the floor is also essential to the system. So to assure operations run smoothly, Federal Signal has placed engineers on the floor. Making them more accessible to workers, who may need their expertise. Workers are also responsible for setting or resetting their own equipment. This eliminates wasteful downtime, often experienced while waiting for a second party to do the work. Automated machines ease the task of resetting, as well as help the company work toward a JIT goal of 0 inventory. Prior to this implementation, setting old machines required additional time and labour. Therefore, excess items were produced, in part to justify the effort. With JIT and automated machines, lot sizes are smaller. Resetting times have been reduced significantly. And equipment operators have the knowledge and authority to work on their own machines. This allows Federal Signal to stay ahead of the competition by quickly adapting to design changes, without having large amounts of outdated product. >> Well the old process used to be set up where you would cut a piece individually on the shear. And then bring it over to the whistler. And set individual punches per job, as many as it took to do it and steps and operations. Where now, you just generally go into the computer. Feed it up on the computer and send it over to the machine. And most jobs there's no setup required at all. >> Each production area at this company is designed around the specific product that a business unit produces. Oftentimes, the product is customized for a particular customer. Whether it's community warning systems, emergency vehicle lighting, or any other Federal Signal product, Just In Time management has helped improve quality, reduced waste, and enhanced the overall efficiency of this organization. But Federal Signal is not alone. Since the 1970s, Just In Time Management has found its way into American companies to varied degrees. And as more companies continue to strive for leaner and more efficient manufacturing operations, JIT will have a greater impact on US production.

As a supplier of emergency responses products, what are some ways that Federal Signal was able to reduce inventory levels using Lean / JIT inventory management methods?

What is meant by "waste" and in what ways did the company reduce waste through use of the JIT inventory management method?

Consider the various forms of costs of inventory from the chapter / slides. How was Federal Signal able to reduce these costs?

How would you describe the specific Kanban method at Federal Signal?