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JIT inventory

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Supply chain (JIT Inventory

Supply chain (JIT Inventory

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  • 1. JUST IN TIME INVENTORY Presented By:- Bhawan Singh Devesh Mishra Deepak Rajak Gauri Gupta Gaurav Singh 4/10/2014 1SCM
  • 2. Just In Time:- An inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. Inventory - .important assets that most businesses possess .turnover of inventory is the primary sources of revenue .generation and subsequent earnings for the company's shareholders/owners. Just- In- Time, commonly known as “Toyota Production System” JIT consists of 3 parts JIT purchasing JIT manufacturing JIT distribution 4/10/2014 1SCM
  • 3. Examples of Just-in-Time Inventory •Gift Basket Drop-Shipping – •Fast-Food Restaurants- use just-in-time inventory to serve their customers on a daily basis during breakfast, lunch and dinner. •Florist - can use a just-in-time inventory system to manager her orders, save time and money. •Print-on-Demand Publishing - take advantage of just-in-time inventory by working with a printer that offers print-on-demand services. •Computer Manufacturers - use just-in-time inventory to control the manufacturing and ordering of their computer systems. http://smallbusiness.chron.com/examples-justintime-inventory-11970.html use the just-in-time inventory system to service their customers. 4/10/2014 1SCM
  • 4. Type of Inventory:- The function of the inventory, the firm maintain the four type of Inventory  Raw material inventory Work in progress inventory Finished goods inventory and  Maintenance/repair/overhauling(MRO) supply. Classification of Inventory Cycle Inventory Safety Inventory Seasonal Inventory Pipeline Inventory or Inventory Transit 4/10/2014 1SCM
  • 5. Inventory within the Supply Chain Network Supplier Including Subcontracting and Direct site Movement Production Stock as material Work in Progress Finish goods Factory/CFA warehouses Customers Distribution Channel/Retailers Type of cost Associated with Inventory  Inventory Holding or Carrying Cost  Taxes, insurance and shrinkage related costs  Storage and handling costs Ordering Cost Carrying cost 4/10/2014 1SCM
  • 6. Inventory Models Inventory models for Independent Demand Basic economic order quantity(EOQ) model Production Order quantity model Quantity discount model Minimum Inventory=0 Order Quantity = Q (Maximum inventory Level Usage Rate Average Inventor y on hand Inventory 4/10/2014 1SCM
  • 7. Annual Cost Set-up(order) Cost curve Holding cost curve Optimal order quantity Min Total cost Curve for total cost of holding and setup Q = Number of piece per order Q* = Optimal number of piece per order (EOQ) D = Annual demand in units for the inventory item d = Daily demand rate, or usage rate S = Setup or ordering cost for each order H = Holding and carrying cost per unit per year t = Length of production run in day P = Daily production rate L = Order lead time 4/10/2014 1SCM
  • 8. How Just-in-time benefits your organisation. Just-in-time is itself, based on four key principles that work together to support this unique concept at every level Heijunka is the . elimination of uneve ness in workload (mura). . Heijunka also eliminates muri . Both mura and muri are thought of as types of muda Waste (muda) is defined as anything that does not add value.  Takt time – the heartbeat of production Takt is the rate of customer demand. , determines the flow-rate and enables the calculation of how much work can be done. The kanban card is a simple, highly visible device that the Toyota Production System uses to call-up components as they are required, Heijunka Elimination of waste Takt time Kanban 4/10/2014 1SCM
  • 9. Just in time Efforts:- Following are the various JIT efforts Cellular manufacturing Multi skilled workforce Kaizen/continuous improvement  set-up time reduction Small-lot sizing Stable production schedules Total productive maintenance (TPM) Total Quality management (TOM) Vendor development Kanban Standard containers Quality circle 4/10/2014 1SCM
  • 10. Reason for Just In Time Efforts Simplifying stable production plan, or minimum variability  High volume repetitive manufacturing  Proximity of suppliers  Rising inventory level  To gain competitive advantage in the market Mission of the Just In Time  Elimination of in transit inventory  Elimination of in plant inventory  Elimination of unnecessary activities  Elimination of redundant  Reduce inventory  Reduce lot sizes 4/10/2014 1SCM
  • 11.  An inventory system designed to produce efficient output with minimum lead time at the lowest possible cost, minimizing waste, with great consistency. Objectives:  Create only want the customer wants at the rate the customer needs them.  Produce at products of consistent high quality.  With minimal waste of labor, material, and equipment. Process Overview Take order Manage Inventory Sales Forecasting Order Completed Served to the customer Pull inventory Prepare order Just-In-Time Inventory System 4/10/2014 1SCM
  • 12. Vendor Managed Inventory:- Vendor managed inventory (VMI) can be define as a Mechanism where the supplier create the purchase orders based on the demand information exchanged by the focal firm manufacture, retailer, or customer. VMI is a backward- replenishment model where the supplier does the demand Creation and demand fulfilment. Advantage of Vendor Managed Inventory Distributer Benefits Planning and ordering cost will decrease due to the responsibility being shifted to the Manufacturer. The overall service level is improved by having the right product at the right time. The manufacturer is more focused than ever on providing great service. Manufacturer Benefits Visibility of the Distributor’s Point of Sale data makes forecasting easier. Promotions can be more easily incorporated into the inventory plan. A reduction in Distributor ordering errors 4/10/2014 1SCM
  • 13. Advantages of JIT  Less space required for stock  Closer relationships with suppliers  Reduced the cost of production  Less vulnerability to fashion and technology changes  Reduction in stockholding costs  Increase in cash flow  Reduce the wastage Disadvantages of JIT  Danger of lost sales  High dependence on suppliers  Less time for quality control on arrival of materials  Increased ordering and admin costs  May lose bulk-buying discounts  It takes time to established 4/10/2014 1SCM
  • 14. To increase efficiency, Henry Ford had components and raw materials delivered to his factories just as they were needed. Businesses that use just in time inventory strategies often utilize intermodal shipping systems. 4/10/2014 14SCM
  • 15. 4/10/2014 1SCM