Ji tstrategy


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Ji tstrategy

  1. 1. just in time strategy 1. Introduction: The objective of this Executive summary is to introduce the basic concepts of an effective operationstrategy called Just-in-Time (JIT) manufacturing system. This summary will be written in a way to provide top management with a basic overview of JIT manufacturing especially in the automobile industry. 2. Strategy Definition & General Description: Just-in-time (JIT) is a method of running manufacturing systems with the purpose of reducing waste, and lowering cost, which in effect increases profit. It is based on the total elimination of waste. JIT requiresthat equipment, resources and labor are made accessible only in the amounts and time required to do the job. In other words, it is based on producing only the necessary parts in the necessary quantities at the necessary time by matching the production rates with the market demand. Since the materials arrive just in time for manufacturing, there is no need for inventory warehousing. JIT has its positive effects on productivity and work performance, while saving costs. The most common industry using JIT manufacturing is the automobile industries. 3. JIT & Toyota Production System: The current idea of JIT manufacturing goes back to Toyota motor company in Japan. However, beforeusing JIT manufacturing in Japan, Toyota studied American production methods such as Ford’s practices. In Japan JIT manufacturing is named Toyota Production System. After World War II, the Japanese automotive manufactures acknowledged that they were far behind the American motor companies. Thepresident of Toyota made a comment about the gap, "Catch up with America in three years, otherwise the automobile industry of Japan will not survive." Toyota realized that they could not follow the same manufacturing technique as American manufacturing because of their differences in space, resources,and demand. At that time, the American auto manufacturers used the traditional way of batch production. To do this they ordered enough parts to complete the batch, and then stocked cars and materials. So Toyota came up with a system that would better fit Japans capabilities. The whole! idea is based on the elimination of waste principle. Time, resources, and materials were all areas where waste could be found. Limiting setup time is also a key factor in the Toyota Production System. Since setup time is also down time in which production lines stops and employees get paid for waiting. To decrease setup time, Toyota reengineered machines so that optimal setup time could be achieved. Toyota has always been one of the most successful companies because of applying JIT principles. 4. Characteristics & Objectives of JIT strategy:Implementing or integrating JIT into Toyota or any other company for this matter is not an easy decision. It must be planned very cautiously. Implementing JIT takes time and commitment from all levels in the company. An overall objective of JIT is to limit resources used in the manufacturing system aiming toimprove efficiency. The following are more specific areas that could be corrected to improve efficiency of producing cars: *Overproduction (waste from producing more cars than is needed) *Transportation (waste such as that associated with moving items around a factory) *Processing time (waste such as that associated with spending more time than is necessary processing cars on a machine)
  2. 2. *Time spent waiting (waste such as that associated with a worker or a robot being idle) *Inventory (waste associated with keeping stocks of cars) *Defects (waste associated with defective components)There are six other objectives that are a key part to obtain the overall objective. These objectives need to be taken into consideration by any company looking to integrate JIT, and are crucial to being successful in the integration*Optimize each step of the manufacturing system process. In other words make each step as efficient as possible to get the most from the least. *Make a product with no flaws or defects. This ensures that each part of the production line will go as planned. *Reduce the manufacturing cost, the lesser the cost is the larger the profit. *Make a product that is demanded by consumers. If there is no demand then there is only cost. *Achieve flexibility in the system. Things will not always go as planned and there needs to be a flexible enough system so that it can be modified easily.*Achieve strong relationship between customers and suppliers. Since JIT technique has virtually no extra stock or materials the companies need to rely on each other to be reliable and on time. 5.Keys to successful Implementation of JIT: Just-in Time manufacturing is hard to setup because each company needs to customize it for their company in order to fit their specific needs. There are many key points that has to be addressed to have a successful implementation. These points are things any company can control to help the successful integration of the JIT system. *Create proper JIT partnerships which exists only when suppliers and auto manufacturers work together to remove waste and drive down costs. This partnership has four goals: eliminate unnecessary activities, eliminate in-plant inventory, eliminate in transit inventory, and eliminate poor suppliers. Since JIT is a stockless production and does not allow room for defects or error having trustworthy reliable suppliers is an important factor. When choosing a reliable supplier, the location and the labor issues such as strikes must be considered. Once a reliable supplier is found creating a good relationship is the next step. This must be a two way relationship in that both the company and supplier benefit from it.*Changing over the current output production in the factories to limited or constant quantity is a good start in the process to determine exactly how many resources are going into making a certain amount of products. Setup time is an issue that each company can look to improve its efficiency. Reducing setup time might need redesigning several areas such as the product or the process itself. Once a reduced setup time is achieved the system now can produce smaller batches of products more efficiently. However, this will require deliveries of materials to be more frequent. *Reducing time in between the transportation of the individual parts can also improve the efficiency. To achieve this, work stations can be moved closer together. As well as the amount of time a part is waiting to be processed at an individual station can be lowered. Finding a supplier closer to the factory or convincing one to relocate closer will also reduce lead time. *Using down time is also another way to help with productivity and efficiency. While a worker or machineis waiting for other parts of the system to be used maintenance can be performed on the machinery. This makes the most of the workers time and can help to prevent future breakdowns do to lack of maintenance. *Provide the workers with more responsibilities and training. This can include training on several machines, ability to maintain the machines, and perform correct inspection this will make the companies’ work force more adaptable. *Although the kanban system is not required in a JIT system it is a good organizational tool to help
  3. 3. eliminate misunderstandings and increase communication. 6. JIT as a competitive advantage:JIT, as an important element of Lean Manufacturing, when implemented as a complete strategy can be a competitive advantage. But in order for the JIT to be a complete strategy it requires modifications in the strategies of layouts, inventory, scheduling, preventive maintenance, quality production, suppliers, employee empowerment, and commitment. Exhibit 1 in the appendix summarizes the requirements and the results necessary to obtain a competitive advantage from using JIT principles. 7. Advantages & Disadvantages of JIT: There are many advantages of the JIT strategy. However they can differ from company to company. Although the advantages might outweigh the disadvantages, the disadvantages can have a negative effect on the company. American automotive companies such as Ford and General Motors haveimplemented JIT into their production, however, not as efficiently as Toyota. They came across several problems including strikes and the supplier’s inability to supply the materials demanded .Since JIT is a stockless production system it leaves the company at the mercy of the suppliers. Many automobile companies experienced problems with JIT suppliers that may have cost them millions of dollars. They had to shut down plants leaving many workers with nothing to do. A statement by Keith Crain of Automotive news sums up these problem very well, "JIT manufacturing, along with single source suppliers, creates terrific manufacturing efficiencies, quality improvements, and lower costs. Unfortunately!, the downside is it creates and Achilles heel for manufacturers. any natural or unnatural disaster at anycritical supply plant whether its a flood, fire, or strike- that shuts off the flow of materials from that critical plant to the assembly process can shut down a manufacturing operation in a matter of hours."¬¬¬¬¬(2) Listed below are some advantages and disadvantages of the JIT system: Advantages: •Possible increase in profits •Quality products •Set up times are significantly reduced in the warehouse •Eliminates costs of storage facilities •More flexible employees •Increased emphasis on supplier relationships •Elimination of waste •No down time •Better consistency of scheduling and consistency of employee work hours Disadvantages: •Long term commitment •Possible large initial cost with no short term returns •Problems with supplier can cost company large amounts of money •Risk of never successfully implementing JIT •Zero buffer inventory means that production is not protected from external shocks
  4. 4. 8. Conclusion: Just-in-time manufacturing can be a positive influence on a company. However there are many risksassociated with implementing it although it looks very simple, quick, and easy thing to do. In reality it is a very complicated technique that takes long term commitment and an initial cost with no guarantee of success. If implemented successfully it would eliminate waste, make the company more productive and more efficient. Although there are many companies that are successful using JIT, many companies arenot. Even though there are enormous risks many still consider implementing JIT for its many advantages. 9. Related Subjects : • Lean Manufacturing • Toyota Production System • TQM 10. Sources (1) Jay Heizer & Barry Render, Principles of operation management, 6th edition,pages 628-632. (2) No Author (n.d.). Just In Time, Toyota Production System & Lean Manufacturing: Origins & History. Retrieved April 14, 2004 from, Web site: http://www.strategosinc.com/just_in_time.htm (3) Beasley J. E. (n.d.). Just-In-Time (JIT). Retrieved March 2, 2004 from , Web site: http://mscmga.ms.ic.ac.uk/jeb/or/jit.html (4) No Author (n.d.). Just-In-Time Manufacturing. Retrieved April 13, 2004 from Curtain University of Techonology, Department of Computer Engineering Web site: http://kernow.curtin.edu.au/www/jit/jit.htm