Assignment

on
JUST-IN-TIME















Introduction:
The basic elements of Just-in-time were developed by Toyota in 1950s and are known as the
Toyota Production System (TPS). It was well-established in many Japanese factories in the
1970s and later in the United States in the 1980s. JIT is largely attributed to Taichi Ohno of
Toyota. He was inspired by the visit to an American supermarket where customers got just
what they wanted and when they wanted it.
Just-in-time means making only what is needed, when it is needed, and in the amount
needed. It is a production strategy that strives to improve a business return on investment by
reducing in-process inventory and associated carrying costs. To meet Just-in-time objectives,
the process relies on signals (Kanban) between different points involved in the process.
Kanbans tell the production when to make the next part; they are usually tickets or simple
visual signals (presence/absence of a part on a shelf). Supplying what is needed, when it is
needed, and in the amount needed according to the JIT production plan eliminates the waste,
inconsistencies and unreasonable requirements, henceforth improving productivity.
According to APICS dictionary; JIT is defined as,
A philosophy of manufacturing based on planned elimination of all waste
and on continuous improvement of productivity.
JIT is also described as an approach with the objective of producing the right part in the right
place at the right time. JIT is also known as lean production or stockless production. In a JIT
system underutilized capacity is used instead of buffer inventories to hedge against problems
that may arise. JIT applies primarily to repetitive manufacturing processes in which the same
products and components are produced over and over again. The general idea is to establish
flow processes by linking work centers so that there is an even, balanced flow of material
throughout the entire production process, similar in case of assembly line. Just-in-time
inventory systems let small business owners produce products after they receive a request
from customers, rather than having already assembled products on the shelves waiting for
purchase. Just in time is a pull system of production, so actual orders provide a signal for
when a product should be manufactured. Demand-pull enables a firm to produce only what is
required, in the correct quantity and at the correct time. This means that stock levels of raw
materials, components, work in progress and finished goods can be kept to a minimum. This
requires a carefully planned scheduling and flow of resources through the production process.
Modern manufacturing firms use sophisticated production scheduling software to plan
production for each period of time, which includes ordering the correct stock. Information is
exchanged with suppliers and customers through EDI (Electronic Data Interchange) to help
ensure that every detail is correct. Supplies are delivered right to the production line only
when they are needed. For example, a car manufacturing plant might receive exactly the right
number and type of tyres for one days production, and the supplier would be expected to
deliver them to the correct loading bay on the production line within a very narrow time slot.
The philosophy of JIT is simple: the storage of unused inventory is a waste of resources. JIT
inventory systems expose hidden cost of keeping inventory, and are therefore not a simple
solution for a company to adopt it. The company must follow an array of new methods to
manage the consequences of the change. The ideas in this way of working come from many
different disciplines including statistics, industrial engineering, production management, and
behavioral science. The JIT inventory philosophy defines how inventory is viewed and how it
relates to management. Inventory is seen as incurring costs, or waste, instead of adding and
storing value, contrary to traditional accounting. This does not mean to say JIT is
implemented without awareness that removing inventory exposes pre-existing manufacturing
issues. This way of working encourages businesses to eliminate inventory that does not
compensate for manufacturing process issues, and to constantly improve those processes to
require less inventory. Secondly, allowing any stock habituates management to stock
keeping. Management may be tempted to keep stock to hide production problems. These
problems include backups at work centres, machine reliability, and process variability, lack
of flexibility of employees and equipment, and inadequate capacity. In short, the Just-in-Time
inventory system focus is having the right material, at the right time, at the right place, and
in the exact amount, without the safety net of inventory. The JIT system has broad
implications for implementers.





Some Key Elements of JIT
1. Stabilize and level the MPS with uniform plant loading: To create a uniform load on all
work centres through constant daily production (establish freeze windows to prevent changes
in the production plan for some period of time) and mixed model assembly (produce roughly
the same mix of products each day, using a repeating sequence if several products are
produced on the same line). Meet demand fluctuations through end-item inventory rather
than through fluctuations in production level. Use of a stable production schedule also
permits the use of back flushing to manage inventory: an end items bill of materials is
periodically exploded to calculate the usage quantities of the various components that were
used to make the item, eliminating the need to collect detailed usage information on the shop
floor.
2. Reduce or eliminate setup times: aim for single digit setup times (less than 10 minutes) or
"one-touch" setup -- this can be done through better planning, process redesign, and product
redesign. A good example of the potential for improved setup times can be found in auto
racing, where a NASCAR pit crew can change all four tires and put gas in the tank in under
20 seconds. (How long would it take you to change just one tire on your car?) The pit
crews efficiency is the result of a team effort using specialized equipment and a coordinated,
well-rehearsed process.
3. Reduce lot sizes (manufacturing and purchase): reducing setup times allows economical
production of smaller lots; close cooperation with suppliers is necessary to achieve reductions
in order lot sizes for purchased items, since this will require more frequent deliveries.
4. Reduce lead times (production and delivery): production lead times can be reduced by
moving work stations closer together, applying group technology and cellular manufacturing
concepts, reducing queue length (reducing the number of jobs waiting to be processed at a
given machine), and improving the coordination and cooperation between successive
processes; delivery lead times can be reduced through close cooperation with suppliers,
possibly by inducing suppliers to locate closer to the factory.
5. Preventive maintenance: use machine and worker idle time to maintain equipment and
prevent breakdowns.
6. Flexible work force: workers should be trained to operate several machines, to perform
maintenance tasks, and to perform quality inspections. In general, JIT requires teams of
competent, empowered employees who have more responsibility for their own work. The
Toyota Production System concept of respect for people contributes to a good relationship
between workers and management.
7. Require supplier quality assurance and implement a zero defects quality program: errors
leading to defective items must be eliminated, since there are no buffers of excess
parts. A quality at the source program must be implemented to give workers the personal
responsibility for the quality of the work they do, and the authority to stop production when
something goes wrong. Techniques such as "JIT lights" (to indicate line slowdowns or
stoppages) and "tally boards" (to record and analyze causes of production stoppages and
slowdowns to facilitate correcting them later) may be used.
8. Small-lot (single unit) conveyance: use a control system such as a Kanban (card) system
(or other signalling system) to convey parts between work stations in small quantities
(ideally, one unit at a time). In its largest sense, JIT is not the same thing as a kanban system,
and a kanban system is not required to implement JIT (some companies have instituted a JIT
program along with a MRP system), although JIT is required to implement a kanban system
and the two concepts are frequently equated with one another.









Advantages of JIT
Reduced setup time. Cutting setup time allows the company to reduce or eliminate
inventory for "changeover" time. The tool used here is SMED (single-minute exchange of
dies).
The flow of goods from warehouse to shelves improves. Small or individual piece lot sizes
reduce lot delay inventories, which simplifies inventory flow and its management.
Employees with multiple skills are used more efficiently. Having employees trained to
work on different parts of the process allows companies to move workers where they are
needed.
Production scheduling and work hour consistency synchronized with demand. If there is
no demand for a product at the time, it is not made. This saves the company money,
either by not having to pay workers overtime or by having them focus on other work or
participate in training.
Increased emphasis on supplier relationships. A company without inventory does not
want a supply system problem that creates a part shortage. This makes supplier
relationships extremely important.
Supplies come in at regular intervals throughout the production day. Supply is
synchronized with production demand and the optimal amount of inventory is on hand at
any time. When parts move directly from the truck to the point of assembly, the need for
storage facilities is reduced.
Minimizes storage space needed.
Smaller chance of inventory breaking/expiring.

Disadvantages of JIT
There is little room for mistakes as minimal stock is kept for re-working faulty
product
Production is very reliant on suppliers and if stock is not delivered on time, the whole
production schedule can be delayed
There is no spare finished product available to meet unexpected orders, because all
product is made to meet actual orders however, JIT is a very responsive method of
production
Examples of Companies implementing JIT
Toyota
Toyota is considered by many to be the poster child for JIT success. The Toyota production
strategy is highlighted by the fact that raw materials are not brought to the production floor
until an order is received and this product is ready to be built. No parts are allowed at a node
unless they are required for the next node, or they are part of an assembly for the next node.
This philosophy has allowed Toyota to keep a minimum amount of inventory which means
lower costs. This also means that Toyota can adapt quickly to changes in demand without
having to worry about disposing of expensive inventory.
Important Factors to Toyota Success:
Small amounts of raw material inventory must be kept at each node in production, so that
production can take place for any product. These parts are then replenished when they are
used.
Accuracy of forecasting is important so the correct amount of raw materials can be
stocked.


Dell
Dell has also leveraged JIT principles to make its manufacturing process a success. Dells
approach to JIT is different in that they leverage their suppliers to achieve the JIT goal. They
are also unique in that Dell is able to provide exceptionally short lead times to their
customers, by forcing their suppliers to carry inventory instead of carrying it themselves and
then demanding (and receiving) short lead times on components so that products can be
simply assembled by Dell quickly and then shipped to the customer.

Important Factors to Dells Success:
A dependable supplier with the ability to meet Dells demanding lead time requirements.
A seamless system that allows Dell to transmit its component requirements so that they
will arrive at Dell in time to fulfil its lead times.
A willingness of suppliers to keep inventory on hand allowing Dell to be free of this
responsibility.


Harley Davidson
Harley Davidsons use of JIT is mostly characterized by its transformation in the late World
War 2 era from an inefficient manufacturer that solved all of its problems with extra
inventory to a nimble manufacturer able to meet demand and provide short lead times.
Results of Harley Davidsons JIT Implementation:
Inventory levels decreased 75 percent.
Increased productivity.
Harley Davidsons success with the implementation of JIT had a lot to do with the fact that
when JIT was put into practice, process problems could no longer be hidden by costly
inventory that helped to meet ship dates. The inefficiencies in the processes were quickly
identified and solved.


Gift Basket Drop-Shipping
Drop-shipping companies let small business owners use the just-in-time inventory system to
service their customers. For example, an entrepreneur who wants to start a gift basket
business can purchase all of the supplies to create gift baskets for a variety of holidays and
occasions. If no one purchases the baskets, though, the entrepreneur is stuck with excess
inventory and more than likely will lose money. On the opposite end of the spectrum, a
business owner could partner with a drop-ship gift basket company and place orders as they
arrive. This way the business can avoid having inventory on hand and order simply based
solely on customer demand.


Fast-Food Restaurants
Fast-food restaurants use just-in-time inventory to serve their customers on a daily basis
during breakfast, lunch and dinner. Fast food restaurants have cheese, burger patties and all
the fixings and toppings on hand, but they don't start assembling and cooking their
hamburgers, sundaes or fish sandwiches until a customer place an order.
Florist
A florist, operating her business out of her home, can use a just-in-time inventory system to
manager her orders, save time and money, while still getting quality finished products to her
clients. A local, home-based florist can take orders from customers for everything from
weddings and baby showers to corporate events. Once an order is place, instead of reaching
into inventory that's been sitting (and starting to look unattractive), the florist can visit a
nearby flower shop or flower mart to pick up the flowers needed to make the arrangements.

Print-on-Demand Publishing
Many authors, across various genres, forgo the traditional approach to securing book deals
and self-publish their work. Self-published authors can elect to print a large portion of books
at once, in hope that they sell, or they can take advantage of just-in-time inventory by
working with a printer that offers print-on-demand services. Print-on-demand companies
don't print the books until a customer places an order.

Computer Manufacturers
Computer manufacturers use just-in-time inventory to control the manufacturing and ordering
of their computer systems. Rather than a warehouse filled with pre-assembled computers, the
companies places orders for computer parts as customers make purchases. The computer
firms by their parts from various suppliers.






Kanban System
In the TPS (Toyota Production System), a unique production control method called the "Kanban
system" plays an integral role. The Kanban system has also been called the "Supermarket method"
because the idea behind it was borrowed from supermarkets. Such mass merchandizing stores use
product control cards upon which product-related information, such as a product's name, code and
storage location, are entered. Because Toyota employed Kanban signs for use in their production
processes, the method came to be called the "Kanban system." At Toyota, when a process refers to a
preceding process to retrieve parts, it uses a Kanban to communicate which parts have been used.

Why use a supermarket concept?

A supermarket stocks the items needed by its customers when they are needed in the quantity needed,
and has all of these items available for sale at any given time.
Taichi Ohno (a former Toyota vice president), who promoted the idea of Just-in-Time, applied this
concept, equating the supermarket and the customer with the preceding process and the next process,
respectively. By having the next process (the customer) go to the preceding process (the supermarket)
to retrieve the necessary parts when they are needed and in the amount needed, it was possible to
improve upon the existing inefficient production system. No longer were the preceding processes
making excess parts and delivering them to the next process.