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Just in time final

  2. 2. COVER PAGE 2
  3. 3. A Project Report on Just In Time Submitted By Prashant Parsuram T.Y.B.M.S Semester V 2012 - 13 Submitted To University of MumbaiVidyalankar School of Information Technology (Affiliated to University of Mumbai) Vidyalankar Marg, Wadala (E), Mumbai 400 037 3
  4. 4. VIDYALANKAR SCHOOL OF INFORMATION TECHNOLOGY (Affiliated to Mumbai University) Certificate This is to certify thatMr./Ms. _________________________________ of B.M.SSemester _____ has undertaken & completed the project work titled______________________________ during the academic year__________ under the guidance of Mr./Ms. _______________submitted on _________ to this college in fulfillment of the curriculum ofBachelor of Management Studies, University of Mumbai. This is a bonafide project work & the information presented is True &original to the best of our knowledge and belief. DECLARATION PROJECT COURSE EXTERNAL PRINCIPAL GUIDE CO-ORDINATOR 4 EXAMINER
  5. 5. Vidyalankar School of Information Technology (Affiliated to University of Mumbai) Vidyalankar Marg, Wadala (E), Mumbai 400 037 I Prashant Parsuram of Vidyalankar School of Information Technology,T.Y.B.M.S Semester V hereby declare that I have completed the project on Justin Time in academic year 20012 - 13 The information submitted is true and original to the best of my knowledge Signature of the Student, Prashant ParshuramACKNOWLEDGMENT 5
  6. 6. I hereby acknowledge all those who directly or indirectly helped me to draft theproject report. It would not have been possible for me to complete the taskwithout their help and guidance First of all I would like to thank the principal Dr. Rohini Kelkar Madam andthe coordinator Prof. Vijay Gawde Sir who gave me the opportunity to do thisproject work. They also conveyed the important instructions from the universityfrom time to time. Secondly, I am very much obliged of Prof. Ms.SumbulSamreen for giving guidance for completing the project Then I must mention the person who co-operated with me [Name of thePerson] [Position in Company] of [Company Name]. They not only rendered timeout of their busy scheduled but also answered my queries without hesitation. He/She gave me information on their system of working in their organisation and toldme how Promotional Strategies are done in their organisation. Last but not the least, I am thankful to the University of Mumbai foroffering the project in the syllabus. I must mention my hearty gratitude towardsmy family, other faculties and friends who supported me to go ahead with theproject. EXECUTIVE SUMMARY 6
  7. 7. This report provides an analysis and evaluation of the Just-In-Timesystem, the advantages and disadvantages of the system and how it wouldbenefit AG & Z. The Just-In-Time (JIT) system is a process where goods areordered as required, as opposed to the currently used batch processing systemwhere goods are made in bulk and stored in warehouses until sold. The Just-In-Time system was initially developed to not only cut down the amount of wasteproduced by other systems, which was seen as incurring unnecessary costsrather than adding value to the company, but to also meet customer demandswith minimum delays. It has been found that when implemented correctly theJIT system can benefit the company in numerous ways. For example, it has beenshown to reduce the amount of inventory stored in warehouses as goods aresold direct to the customer as ordered. It has also been shown to speed upproduction lead times, eliminate and/or minimise the amount of quality controland reduce the amount of faulty stock returned. As well as benefitingcompanies in reducing transportation costs, as goods are sent from the factory tothe customer rather then via a warehouse first. Another advantage is, the JITsystem allows the company to keep up to date with customer demands and newtechnologies as the goods are made to order so the newest technology availableis used. This is extremely important when dealing with goods that have a highturn over such as computers, because the goods would be produced as needed.It has also been proven to eliminate waste on any goods manufactured whichhave become obsolete due to technological advances. While there are somedisadvantages to the JIT system, such as stock outs and possiblecommunication break downs, (explained in detail in the report), the advantagesfar out weight the disadvantages. 7
  8. 8. INTRODUCTION TO THE STUDYAim of doing the project: To Implement the management study and understand them better in the way of our project.Objective of doing the project: To implement our learning’s of the project. To be upgraded with the practical business life. To develop the project skills in us. To increase our confidence level. To implement the quality to work.Importance of doing the project: Acquiring detailed knowledge in a particular topic. Dealing with the practical corporate environment. Dealing with the practical models. Throwing out best possible project skills to stand out of the crowd. Enhancing the Creative and Innovative skills.Methodology of data collection:1.Primary Data Collection:survey,questionnaire,data analysis2.Secondary Data Collection: internet,newspaper,books 8
  10. 10. JUST IN TIME Introduction Just-in-time (JIT) is easy to grasp conceptually, everything happens just-in-time. For example consider my journey to work this morning, I could have left myhouse, just-in-time to catch a bus to the train station, just-in-time to catch thetrain, just-in-time to arrive at my office, just-in-time to pick up my lecture notes,just-in-time to walk into this lecture theatre to start the lecture. Conceptually thereis no problem about this; however achieving it in practice is likely to be difficult!So too in a manufacturing operation component parts could conceptually arrivejust-in-time to be picked up by a worker and used. So we would at a strokeeliminate any inventory of parts, they would simply arrive just-in-time! Similarlywe could produce finished goods just-in-time to be handed to a customer whowants them. So, at a conceptual extreme, JIT has no need for inventory or stock,either of raw materials or work in progress or finished goods.Obviously any sensible person will appreciate that achieving the conceptualextreme outlined above might well be difficult, or impossible, or extremelyexpensive, in real-life. However that extreme does illustrate that, perhaps, wecould move an existing system towards a system with more of a JIT element thanit currently contains. For example, consider a manufacturing process - whilst wemight not be able to have a JIT process in terms of handing finished goods tocustomers, so we would still need some inventory of finished goods, perhaps itmight be possible to arrange raw material deliveries so that, for example,materials needed for one days production arrive at the start of the day and areconsumed during the day - effectively reducing/eliminating raw materialinventory.Adopting a JIT system is also sometimes referred to as adopting a leanproduction system.JIT (also known as lean production or stockless production) should improveprofits and return on investment by reducing inventory levels (increasing theinventory turnover rate), reducing variability, improving product quality, reducingproduction and delivery lead times, and reducing other costs (such as thoseassociated with machine setup and equipment breakdown). In a JIT system,underutilized (excess) capacity is used instead of buffer inventories to hedgeagainst problems that may arise.JIT applies primarily to repetitive manufacturing processes in which the sameproducts and components are produced over and over again. The general ideais to establish flow processes (even when the facility uses a jobbing or batch 10
  11. 11. process layout) by linking work centers so that there is an even, balanced flow ofmaterials throughout the entire production process, similar to that found in anassembly line. To accomplish this, an attempt is made to reach the goals ofdriving all inventory buffers toward zero and achieving the ideal lot size of oneunit.JIT - Background and HistoryJIT is a Japanese management philosophy which has been applied in practicesince the early 1970s in many Japanese manufacturing organisations. It was firstdeveloped and perfected within the Toyota manufacturing plants by Taiichi Ohnoas a means of meeting consumer demands with minimum delays . Taiichi Ohnois frequently referred to as the father of JIT.Toyota was able to meet the increasing challenges for survival through anapproach that focused on people, plants and systems. Toyota realised that JITwould only be successful if every individual within the organisation was involvedand committed to it, if the plant and processes were arranged for maximumoutput and efficiency, and if quality and production programs were scheduled tomeet demands exactly.JIT manufacturing has the capacity, when properly adapted to the organisation,to strengthen the organisations competitiveness in the marketplace substantiallyby reducing wastes and improving product quality and efficiency of production.There are strong cultural aspects associated with the emergence of JIT in Japan.The Japanese work ethic involves the following concepts. Workers are highly motivated to seek constant improvement upon that which already exists. Although high standards are currently being met, there exist even higher standards to achieve. Companies focus on group effort which involves the combining of talents and sharing knowledge, problem-solving skills, ideas and the achievement of a common goal. Work itself takes precedence over leisure. It is not unusual for a Japanese employee to work 14-hour days. Employees tend to remain with one company throughout the course of their career span. This allows the opportunity for them to hone their skills and abilities at a constant rate while offering numerous benefits to the company.These benefits manifest themselves in employee loyalty, low turnover costs andfulfilment of company goals.Just-in-Time originally encapsulated the logistics aspects of the ToyotaProduction System. Our current view of what it should encapsulate incorporates 11
  12. 12. some of the principles of "leanness" because by itself and specifically detachedfrom Kanban and continuous improvement it begins to loose its meaning. Also toimplement these techniques without flexible, reliable processes and appropriateorganisation is impossible. However at this point it begins to blur with agilemanufacturing principles. This section should therefore be read in conjunctionwith these others and as a minimum JIT should include: Strategic Capacity Management for example the use of multiple small machines (rather than "efficient" expensive machines that have to be kept busy). Group Technology (Also commonly called "Cellular" manufacturing). This is based on the principle that segmented (possibly product focused) manufacture is much simpler, with less interference of material flows, than factories where similar processes are grouped together, such as heat treatment. This principle has also been applied to other processes where natural groups are formed to perform a complete process aligned to customer needs in manufacturing and other industries, and "category management" in procurement. However we have shown in some circumstances that the benefits of cellular manufacturing can be gained by creating virtual cells (without moving the plant). (See Business Process Reengineering / Organisational Redesign) Production smoothing, avoids the problems associated with poor demand tracking (See Demand Management) and unnecessary interference of the production schedule. In a recent consultancy assignment we established that whilst customer orders were highly volatile, the underlying demand was extremely stable. The volatility downstream in the supply chain was in fact being artificially induced by poor customer planning, resulting in late changes to the order schedule, to bring the orders back in line with the very stable underlying demand! However many companies experience cyclic or seasonal demand, where it is beneficial, and in some cases vital, to flex or move resources to respond to fluctuating demand, the alternative being to pre-build stock to a forecast to afford some production smoothness, at some risk and tying up of capital. A refinement of this process is, in addition, to use "Takt" times (See Previous Technique of the Week T021: "Takt Time, Measuring Throughput Time") to set rates of production. I.e. the hourly rate of demand from customers (as opposed to coarser units of time and uncorrupted by planning parameters). Leveled schedules, bring more stability and regular patterns of production (See Previous Best Practice of the Week 005: Level Scheduling). Labour balancing when used in conjunction with Takt time (Previous Best Practice of the Week 046: "Using Takt Time to Manage Your Business") highlights process / line imbalance from the cycle time of one operation to the next and indicates the need to balance the manning for each operation (and the opportunity to improve the slowest to achieve 12
  13. 13. balance). There are some dangers here in achieving balance. (See thequestion at the end of this article.) This is the guiding principle of leanmanufacturing where the problem would be permanently solved asopposed to the traditional approach of buffering the uncertainty with stock.Set-up reduction, which is based on the principle that small is beautifulas far as batch sizes are concerned and that what is required, is madethat day without inflating batch sizes. (In the article Previous Technique ofthe Week T019: Avoiding Set Ups and Reducing Changeover Times(SMED) (and thereby reducing batch sizes)) we show that there is in factmuch more to this than the set-up reduction techniques proposed byShingo. But there are a number of techniques available to do this statedby Shingo. His SMED techniques give rise to the opportunity to reducebatch sizes by up to a factor of 50. It should be remembered howeverthat this should be applied to the bottleneck first and maybe even stopthere.Standard working. Defined by the operator, not the industrial engineer, itis a prescribed sequence of production steps done by one operator andbalanced to the required rate of demand. It becomes the basis ofunderstanding the job and therefore what can be improved.Visual controls. Characteristic of JIT factories are simple visible controls,held locally where they are used to monitor key performance indicatorsand used as a spur to improvement. This is a deliberate attempt to giveeyeball control rather than the over-sophistication provided by remotecomputer systems. Examples include: Standard container sizes replacing irregular sizes such that stockholding is a simple question of counting containers rather than the parts within them. The reorder point in this case is a chalk mark on the wall rather than it being hidden in a computer system and appearing on a reorder report the following morning. The graphs of quality, productivity, safety and delivery performance updated daily and discussed at the daily stand-up meeting. A small segregation area for quality defects kept deliberately small to ensure that problems are solved quickly and rejects are not allowed to accumulate. The flip chart to write down today’s problems while they are still fresh.Minimizing inventory, Minimizing Work in Process, and synchronizingproduction by the use of replenishment systems such as Kanban. Theprinciple of Kanban operation is extremely simple but there are a numbera detailed considerations to make in design and implementation which arenot trivial including: Positioning of buffers Buffer sizing 13
  14. 14. Signaling mechanisms Prioritization of signal JUST-IN-TIME SYSTEMSJust-in-time (JIT) has the elements of a philosophy as well as various practiceelements. While the JIT philosophy is applicable to any type of organization, thepractice elements apply mainly to repetitive manufacturing operations such asthe production and assembly of automobiles or appliances.Although the term Just-in-time (JIT) can be defined narrowly as a production orinventory scheduling technique, it is more frequently defined as a very broadphilosophy that incorporates many of the concepts of communitarian capitalismthat are outlined in Chapter 1. JIT is more appropriately thought of as aphilosophy because, even though it includes a variety of techniques, it is muchmore than a collection of management practices. There is considerable supportfor the argument that successful implementation of a JIT system requires anentirely different mentality, or attitude, on the part of management and workersthan the typical attitudes underlying traditional business practices andrelationships. Although a precise, or operational definition of JIT has not beendeveloped, it basically involves the elimination of waste and excess by acquiringresources and performing activities only as they are needed by customers at thenext stage in the process. For example, inventory buffers are viewed as an evil inthat they hide problems such as defective parts, production bottlenecks, longmachine set-ups and competitive behavior within the company.A more comprehensive definition of JIT can be developed by considering themain elements that are attributed to successful JIT systems. These elements canbe separated into two broad categories including attitude and practice. While theelements of attitude can be adopted by any organization, the elements ofpractice are mainly applicable to companies involved in repetitive manufacturing.From an accounting viewpoint, these are companies that would normally use theprocess cost accumulation method.PhilosophyThe philosophy of JIT is simple - Inventory is defined to be waste. Just-in-time(JIT) inventory systems expose the hidden causes of inventory keeping and aretherefore not a simple solution that a company can adopt; there is a whole newway of working that the company must follow in order to manage itsconsequences. The ideas in this way of working come from many differentdisciplines including statistics, industrial engineering, production managementand behavioral science. In the JIT inventory philosophy there are views withrespect to how inventory is looked upon, what it says about the managementwithin the company, and the main principle behind JIT. 14
  15. 15. Inventory is seen as incurring costs, or waste, instead of adding value, contraryto traditional accounting. This does not mean to say that JIT is implementedwithout awareness that removing inventory exposes pre-existing manufacturingissues. Under this way of working, businesses are encouraged to eliminateinventory that doesn’t compensate for manufacturing issues, and then toconstantly improve processes so that less inventory can be kept. Secondly,allowing any stock habituates the management to stock keeping and it can thenbe a bit like a narcotic. Management are then tempted to keep stock there to hideproblems within the production system. These problems include backups at workcentres, machine reliability, process variability, lack of flexibility of employees andequipment, and inadequate capacity among other things.In short, the just-in-time inventory system is all about having ―the right material, atthe right time, at the right place, and in the exact amount‖ without the safety netof Inventory, the implications of which are broad for the implementors.A JIT system requires an attitude that places emphasis on the following:1. Cooperation with a value chain perspective,2. Respect for people at all levels,3. Quality at the source,4. Simplification or just enough resources,5. Continuous improvement and6. A long term perspective.A JIT system also incorporates the following practices:1. Just-in-time purchasing,2. Focused factories,3. Cellular manufacturing,4. Just-in-time production,5. Just-in-time distribution,6. Simplified accounting and7. Process oriented performance measurements. 15
  16. 16. The JIT AttitudeCooperation with a Value Chain PerspectiveA companys value chain consist of the connected set of value-creating activitiesthat are required to produce, distribute and service a product from the initialsuppliers of raw materials to the final consumer. According to Michael Porter, acompanys value chain is part of a larger value system that includes the valuechains of suppliers, distributors and buyers. Figure 8-1 illustrates the valuesystems for a single industry firm and a diversified firm. Each firm in the valuesystem has a separate value chain, but these value chains are interdependent.Buyers (other companies or individuals) depend on distributors who depend onproducers who depend on suppliers who in turn depend on other suppliers.Using Porters terminology, the value chain for a specific company starts with ageneric value chain illustrated in Figure 8-2. The companys value chain includesan infrastructure made up of physical assets and various activities that supportthe entire chain. For example, the infrastructure includes activities such asgeneral management, accounting, finance, legal services, and security. Othermajor support activities include human resource management, technologydevelopment and procurement or purchasing. A companys primary activitiesinclude inbound logistics, operations, outbound logistics, marketing & sales andcustomer service. Inbound logistics includes sub-activities such as transportation,receiving, inspection and materials handling. Operations involve many activitiesincluding research & development, product design, engineering, energy,planning, scheduling, production activities and maintenance. Outbound logisticsrefers to activities such as processing customer orders and outboundtransportation. Marketing & sales activities include advertising, and salespromotion. Finally, customer service includes such activities as customertraining, maintaining spare parts and repair service. 16
  17. 17. The value chain and value system concepts explicitly recognize theinterrelationships, or linkages, within the economic system. Recognizing andexploiting these interdependencies is important because JIT systems depend onhigh levels of cooperation by everyone connected to the value chain, i.e., bothinside and outside the company. Traditional systems concentrate on the valueadded by production activities, while the value chain perspective also includesthe value added by vendors, distributors and customer service personnel. Sincewaste and excess are not allowed in a JIT system, everyone in the value chainmust work together as a team to ensure a smooth, efficient flow of output.Advocates of the JIT philosophy point out that the competition that typicallyoccurs between workers and departments in traditional individualistic basedsystems is inconsistent with the JIT concept because it produces excess thatadds costs and hides problems. 17
  18. 18. Respect for People at all LevelsMost of the elements of a JIT system require that all of the constituencies(employees, customers, vendors and management) and individuals within thoseconstituencies have a high regard for each other. Institutionalizing the concept ofrespect for others is not just a nice thing for a company to do, it is an importantelement in the JIT competitive strategy. For example, traditional managementsystems tend to create adversarial relationships between employees andmanagement through a hierarchy of authoritarian supervisors. In a JIT system,workers are cross trained and empowered to make decisions that are restrictedto supervisors in companies with traditional management systems. Respecttends to build the trust between employees and management that is needed tosuccessfully implement programs for cross training and empowerment. Suchprograms help employees grow and bond with the company. This sequential setof outcomes produces more knowledgeable employees, fewer layers ofmanagement, lower labor turnover, higher quality and lower costs. 18
  19. 19. Quality at the Source (Jidoka)Quality at the source means to identify and correct problems when and wherethey occur. The Japanese refer to this concept as jidoka. In a JIT system,everyone in the company is responsible for quality and workers use statisticalcontrol charts and other techniques to monitor their own work. Everyonesattitude must include the idea that quality is my job, where quality is defined asconformance to specifications, as opposed to design quality.2Jidoka also includes automated inspection frequently referred to asautonomation. The idea is to make inspection part of the production process,rather than a separate activity, to insure that defective work is not moved on tothe next stage in the process. The goal is to stop the production line and correctthe problem at the source of the problem.Simplification or Just Enough ResourcesA goal of JIT systems is to achieve zero work in process inventory buffers so thatproducts flow continuously through the system. JIT also includes the goal of zeroending finished goods inventory. This reflects the idea that JIT is a demand pullsystem rather than a speculative push system. Customer orders drive production.The process starts with the final consumers who place demands on the salesforce, who place demands on the production facilities, who in turn placedemands on upstream activities throughout the system. Although eliminatingexcess inventory is an important part of a JIT system, the concept is muchbroader than an inventory control or production scheduling method. A JIT systemalso emphasizes simplification and zero excess (waste) in all areas of business.The objective is for the company to acquire just enough resources includingvendors, human resources, and capacity. This is a very different concept fromthe idea underlying traditional systems where excess resources are planned just-in-case (JIC) they are needed. The JIT view is that excess of any kind hidesproblems such as low quality raw materials and unreliable vendors, employeesand equipment. Remove the excess and the problems become visible.A comparison of the JIC and JIT approaches is illustrated in Figure 8-3. The shiprepresents the Company, the water represents the Companys resources and therock formation symbolizes the Companys problems. In the just-in-caseillustration on the left, the ship is perilously close to the rocks hidden below thesurface. In the just-in-time illustration on the right, the water level is lowered(excess resources removed), revealing the rocks or problems that need to besolved. 19
  20. 20. Continuous Improvement (Kaizen)The Japanese refer to continuous improvement as kaizen (pronounced kyzen).To the Japanese, kaizen means to strive relentlessly to increase quality,efficiency and effectiveness in all areas of life including personal, family, social,and work. Although this concept definition may sound somewhat individualistic,the Japanese emphasize small incremental, but cumulative holisticimprovements. The continuous improvement approach is illustrated by theShewhart-Deming plan-do-check or study-action (PDCA or PDSA) cycle thatappears in Figure 8-4. The plan step includes identifying a problem, or potentialfor improvement, and developing a plan for the problems solution. The do stepincludes a trial run of the planned solution which is evaluated in the check step.Correctly evaluating the trial run depends on an understanding of the variation inthe system. It is important not to confuse common causes with special causes ofvariation. The check step includes revisions to the plan where they appear to beneeded. The final action step represents the implementation of the plan. ThePDCA cycle involves using a variety of statistical tools and is a never endingactivity for companies that embrace the continuous improvement methodology.Some of the statistical tools are discussed below. 20
  21. 21. PDCA Statistical ToolsSome of the statistical tools used in the continuous improvement cycle include: 1.Pareto diagrams,2. Fishbone, or cause and affect diagrams,3. Histograms,4. Other graphs and charts, e.g., pie charts,5. Control charts and6. Scatter diagrams and related techniques, e.g., regression and correlationanalysis.Pareto diagrams show the causes of problems in bar chart format. The idea isto graphically display opportunities for potential improvement. For example,Figure 8-5 illustrates the reasons for down time at a particular cell. These include 21
  22. 22. A - Out of parts, B - Defective part, C - Equipment failure, D - Operator error andE - Power failure. Figure 8-5 reveals at a glance that nearly fifty percent of thedown time is caused by a shortage of parts and another thirty percent resultsfrom defective parts.Fishbone diagrams show a sketch of the relationships that may contribute to aparticular problem. For example, Figure 8-6 presents an abbreviated fishbonediagram for the downtime problem mentioned above. Shortages of parts anddefective parts are related to vendors and delivery schedules. Equipment failuresare related to the characteristics of the equipment such as age and preventivemaintenance. Operator errors, on the other hand may be caused by a lack oftraining or experience. In other cases, the characteristics of the process may beat fault. 22
  23. 23. Histograms show the distribution of a performance measurement such as thenumber of shortages, or the number of defects, over a period of time. Figure 8-7illustrates the number of material shortages per day for a particular period. Thechart reveals that the number of shortages ranges from one to fifteen per daywith eight representing the most frequent number.Other types of graphs include pie charts and line graphs. Pie charts are used toshow the various parts of a problem, process or financial measurement inproportion to the whole. Figure 8-8 illustrates the various types of product costsin proportion to total factory costs. The idea is to emphasize the areas with thegreatest potential for improvement. Line charts are very useful for showingtrends in nearly any type of measurement. For example Figure 8-9 illustrates thenumber of parts shortages over a fifty-two week period. 23
  24. 24. 24
  25. 25. Control charts and scatter diagrams are perhaps the most important statisticaltools available to aid in the PDCA continuous improvement effort. That is whythey were given considerable attention in Chapter 3. Recall that control chartsare used to determine when a process is stable and whether or not it is in control.Control charts are also used in the check step to reveal the success of the planand do steps in improving the mean outcome or in reducing the variability of theprocess. Scatter diagrams and the related regression and correlation techniquesare powerful tools for identifying cause and effect relationships. Refer back toChapter 3 for a review of these important statistical tools.A Long Term PerspectiveAlthough the effect of a small improvement may seem trivial, the concept ofcontinuous improvement becomes a powerful strategy in the long run as thecumulative benefits of hundreds, perhaps thousands of small improvements areobtained. It is somewhat analogous to an athlete training for the Olympics. Theperson trains daily to obtain small increases in fitness and skill. After years ofcumulative incremental improvements, the athlete may reach world class status.The goal for the company pursuing continuous improvement is also to achieveand maintain a world class competitive position. Thus, a long term perspective isan essential ingredient of the JIT philosophy. 25
  26. 26. THE JIT PRACTICESA brief discussion of each of the JIT practices is included in the sections below.Just-in-Time PurchasingWhen the concepts of JIT are applied to the purchasing function, all of theelements of attitude discussed above must be included. In addition, the adoptionof JIT purchasing includes the following characteristics: 1. Establishing long term agreements with vendors on delivery and price. 2. Purchasing from a smaller number of vendors than in traditional systems. 3. Certifying vendors on quality, price and schedule attainment. 4. Increasing the frequency and reducing the size of deliveries from vendors. 5. Requiring that deliveries are made to the factory floor in shop ready containers. 6. Reducing inspection of incoming materials. 7. Emphasizing zero raw materials inventory. 8. Eliminating the warehouse space for raw materials.Focused FactoriesThe term focused factories refers to small specialized manufacturing plants thatare dedicated to the production of a small number of products. This idea appliesmainly to repetitive manufacturing, but companies that produce products orservices to customer specifications can also become more focused byconcentrating on certain types of jobs.Cellular ManufacturingCellular manufacturing refers to the practice of organizing a factory intomanufacturing cells that are dedicated to the production of a single product, or afew similar products. A manufacturing cell is frequently referred to as a factorywithin a factory because all of the resources needed to produce the product arelocated within the cell. For example, instead of having many products movingthrough several departments such as cutting, grinding, heating, assembly andpacking as in Figure 8-10, the factory is organized into separate cells for eachproduct that include each type of machinery as illustrated in Figure 8-11. Placingthe various machines close together reduces the need for inventory buffers andmaterials handling. The cellular arrangement also requires fewer machineoperators since a single cross trained worker can operate several machines.Notice that most of the supervisors, workers, inventory and forklift trucks thatappear in Figure 8-10 are not included in Figure 8-11. 26
  27. 27. The advantages of arranging the factory into cells also include obtaining moreaccurate product costs. Of course there is less product diversity within a cell thanthere is in a traditional department, but the cellular arrangement has anotherfavorable influence on product costs. Some support services such as productionscheduling, engineering, maintenance and human resource management arealso decentralized which reduces the amount of indirect costs. Since thesefunctions are performed within the cell, these costs become direct costs to theproducts produced in the cell. This reduces the need for first stage costallocations for these support services and results in more accurate product costs. 27
  28. 28. Just-in-Time ProductionJIT production is closely related to the practices of designing focused factoriesand organizing production operations into manufacturing cells. However, JITproduction also includes several other elements that are listed below.1. A demand pull system including kanban production control.2. Emphasis on reducing production lead time or cycle time, i.e., time from startto finish.3. Flexibility and short setups for the different products produced in the cell.4. A policy of stopping the production line to correct defects, i.e., jidoka.5. Small or zero inventory buffers.6. Simplifying and eliminating unnecessary resources and activities, (e.g., fork lift 28
  29. 29. trucks) in addition to organizing production facilities into manufacturing cells as inFigure 8-11.7. Fail-safe devices and preventive maintenance.The concept and practice of implementing a demand pull system meansproducing only what is needed by the next operation and only at the time it isneeded. Producing more inventory than immediately needed is considered aform of waste. A kanban is a Japanese word meaning card. JIT productioncontrol is a manual system where kanbans, or cards are used to authorizeproduction and the movement of materials and products within the plant 7. Theauthorization kanbans come from demand downstream, thus inventory is pulledrather than pushed through the plant. Although the demand pull concept can beapplied to a large number of companies, the kanban type inventory controlsystem is mainly applicable in repetitive assembly manufacturing. Examplesinclude automobiles, log-loaders, washing machines and TV sets to name a few.JIT production also emphasizes continuously reducing the time required toperform the needed machine set-ups and operations, thus reducing down timeand production lead time to a minimum. Correcting defects as they occur andemphasis on small or zero WIP inventories are closely related. Zero inventorymeans that there are no inventory buffers to replace defective parts. The mainadvantages of simplification and the just-enough-resource concept are toincrease productivity, reduce costs and make problems highly visible so that theycan be corrected quickly. Fail safe devices such as warning bells, timers, electriceyes and alignment templates are also used to prevent problems from occurring.Of course, preventive maintenance is also a must when there are no inventorybuffers, since a machine breakdown can cause downtime for the entire plant.Just-in-Time DistributionJIT distribution systems have many of the same elements as JIT purchasingsystems, except the company becomes the seller (vendor) rather than thepurchaser. Some of these elements include:1. Establishing long term agreements with customers on delivery and price.2. Selling to a smaller number of customers than in traditional systems.3. Becoming certified on quality, price and schedule attainment.4. Increasing the frequency and reducing the size of deliveries to customers.5. Making deliveries to the customers factory floor in shop ready containers.The advantages to the seller in a JIT system are obtained by establishing longterm commitments with a smaller number of customers. This reduces costs anduncertainty. In the long run, JIT only works where everyone in the value systemobtains benefits. 29
  30. 30. GENERAL MOTORSAn example of the use of JIT in General Motors is given below.General Motors (GM) in the USA has (approximately) 1700 suppliers who ship to31 assembly plants scattered throughout the continental USA. These shipmentstotal about 30 million metric tons per day and GM spends about 1,000 milliondollars a year in transport costs on these shipments (1990 figures).JIT implies frequent, small, shipments. When GM moved to JIT there were simplytoo many (lightly loaded) trucks attempting to deliver to each assembly plant.GMs solution to this problem was to introduce consolidation centres at which fulltruckloads were consolidated from supplier deliveries.This obviously involved deciding how many consolidation centres to have, wherethey should be, their size (capacity) and which suppliers should ship to whichconsolidation centres (suppliers can also still ship direct to assembly plants).As of 1990 some 20% by weight of shipments go through consolidation centresand about 98% of suppliers ship at least one item through a consolidation centre.All this has been achieved without sacrificing the benefits of JIT. 30
  31. 31. Classic JIT diagramThe classic JIT diagram is as below. There the company (the boat) floats on asea of inventory, lurking beneath the sea are the rocks, the problems that arehidden by the sea of inventory. | --|-- | --------------- /======== Company /============ Sea of inventory ---------/ x xxx xxxx xxxxx xxxxxx Rocks - the problems hidden xxxxxxxxxxxxxxxx by the sea of inventoryIf we reduce the inventory level then the rocks become exposed, as below. | --|-- | --------------- x / xxx xxxx======== Company /====xxxxx===xxxxxx======== ---------/ xxxxxxxxxxxxxxxxNow the company can see the rocks (problems) and hopefully solve them beforeit runs aground!One plan to expose the problems is simply to: make a large amount of finished goods stock to keep the customers supplied try running the production system with less inventory to expose problems revert to the original levels of inventory until you have had time to fix the problems you exposed repeat the above - hence continuous improvement 31
  32. 32. KEY ELEMENTS OF JITJust-in-time is more than an inventory control system. It is a philosophy andintegrated management system based on the concept of eliminating all waste.Just-in-time production is also known as lean production. The intention of just-in-time production is to produce only what is needed, when it is needed.Waste has a very comprehensive meaning in just-in-time systems. Someexamples of waste are o Watching a machine run o Waiting for parts o Counting parts o Overproduction o Moving parts over long distances o Storing inventory o Looking for tools o Machine breakdowns o Rework 32
  33. 33. Figure -- Waste in OperationsMany techniques are used for eliminating waste in a just-in-time productionsystem. Ideas come from employees working on continuous programs ofimprovement. There are also other common elements of just-in-time that definethe philosophy and management system: o Flexible resources o Cellular layouts o Pull production system o Kanban production control o Small-lot production o Quick set-ups 33
  34. 34. o Uniform production o Quality at the source o Total productive maintenance o Supplier networksSome of these terms may be familiar to you from coverage in other chapters.Other terms are new concepts. Each of the elements will be detailed in theremaining sections of this chapter to illustrate their fit in the just-in-timephilosophy.Flexible ResourcesFlexibility is the key to eliminating waste, like excess or obsolete inventory andworker idle time. The following resources are the source of such flexibility: o Multifunctional workers -- workers able to operate multiple machines or skilled at multiple tasks. They can be easily rotated as demand changes. With workers operating several machines, an incentive is created to modify machines so that they require minimal human intervention. Modified fixtures and jigs, limit switches, and adjacent tool holders increase the productivity of workers by minimizing travel and "watch" time. o General purpose machines -- create flexibility by allowing various machining operations to be performed on a single machine. They can even be placed on wheels and moved around as various product layouts are changed. o Improved operator movements and operations -- Time and motion studies lead to new ideas of how to minimize movement and travel.Cellular LayoutsCellular layouts should be familiar to you from previous chapters. Recall thatjumbled flow patterns are a problem in process (functional) layouts where similarmachines are grouped together. Cellular layouts eliminate the jumbled flowpattern by: o Using group technology to group parts into families with similar processing requirements. o Grouping dissimilar machines in a U-shape or manufacturing cell to produce a family of parts o Laying out the cell so that work flows in one direction through the cell. o Adjusting the cycle time by changing work paths. Workers in a cell may operate several machines. The workers do not necessarily 34
  35. 35. operate in the same consecutive flow pattern as the product. For example, three workers operating a single cell may have the work routes as shown in Figure below:Figure -- Manufacturing Cell with Worker RoutesWorker routes and volume decreases: 35
  36. 36. FigureThe Pull SystemThe pull system of production is an important method of minimizing work-in-process inventory. In general, the pull system is a simplified method of self-regulating a system of production, while a push system is a method ofmaximizing individual production rates.Recall the line balancing problems we reviewed in a previous chapter . Whenseveral workstations are combined into a production system, some stations haveslightly more work to fill the time available, and some have slightly less. Forexample, an assembly line may have 4 work stations, with the following averagetimes to complete work: 30 sec, 25 sec, 40 sec, and 30 sec. In a push system,each worker is encouraged to complete as much work as possible. Considerwhat will happen at each workstation in the assembly line we just described. Thefirst worker will "push" his work to the next station at a slower pace than thesecond station can use it. The second workstation will have 5 seconds of idle 36
  37. 37. time between each unit. The third station, on the other hand, will not be able tokeep with all the production arriving at the station. A unit will arrive every 30seconds, but it takes 40 seconds to complete work at that station. What happensas each worker works as hard as they can? Work will build up at station 3. Beforelong, a huge amount of work-in-process is built up because each worker isworking at an individual best, not at a system pace.In a pull system, the system pace is determined by the slowest workstation inthe system. A worker cannot pass on any work to the next station until the nextstation has passed its work on to its subsequent station. In our assembly lineexample, the worker at station 2 would have to wait about 10 seconds aftercompleting a unit before passing it onto the next station. You may be thinking:what a wasted resource! In fact, it would be impossible to produce any fasterthan the slowest workstation in the system anyway. The only thing that happenswhen workers produce at their own individual pace is that work-in-process buildsup. You should see that a pull system is much better than a push systembecause it keeps the process more visible and the area neat. Work-in-processinventory hides the process problems and creates messes that cause confusion.In a pull system, workers can see when a line is highly unbalanced and makechanges to correct the problem. For example, workers might balance out ourassembly line by shifting some work activity back to station, away from station. Kanban Production Control SystemIn the example we just described, workers would be able to use a pull systemwith a minimum of difficulty because they sit next to each other and see when thenext station is empty and ready for more work. When workers are in differentareas or cannot see each other, some signaling system is needed to indicatewhen workers are ready for more work. The signaling system used is calledkanban.Kanban is the Japanese word for card. It is the "visible record" used in a pullsystem. It works as follows: a bin arrives at a workstation with work from aprevious workstation. The worker removes the work from the bin and sends thekanban back to the previous workstation when the work in the bin has beenreduced to a certain reorder point. When the kanban arrives back at the previousworkstation, it is a signal that more work can be passed on. Work is passed onwith the same kanban, and it arrives just as the next station completes the workin the previous bin. This cycle repeats over and over again. This method is asingle kanban system. A small amount of inventory is kept in the system to allowfor the transportation time between stations.A dual kanban system and different types of kanbans are illustrated in Figure. 37
  38. 38. Figure -- Types of Kanbans 38
  39. 39. It is easy to get caught up in the technical aspects of kanbans and losesight of the objective of the pull system, which is to reduce inventorylevels. Kanbans simply provide the means for signaling when work needsto flow. The kanban system should always be kept as simple as possible. Akanban system should always encourage the continual reduction of inventory.We can see how that occurs by examining the formula for determining thenumber of kanbans needs to control the production of a particular item.Determining the number of kanbans: No. of kanbans = =whereN = number of kanbans or containersd = average demand over some time periodL = lead time to produce partsS = safety stockC = container sizeSmall-lot ProductionProducing in small lots has many benefits, including o Requires less space and capital investment. o Moves processes closer together. o Makes quality problems easier to detect. o Makes processes more dependent on each other. o Prevents excess work-in-process inventory and allows quicker change to a new product when demand changes.Large lots result in batches of work-in-process inventory. Conventional wisdom injust-in-time thinking is that inventory hides problems. The thought of reducinginventory to very low levels can be worrisome, but JIT philosophy posits that it isbetter to expose problems so that they can be fixed. Figure below illustrates thisconcept. 39
  40. 40. Figure -- JIT Making Problems VisibleA goal of JIT is to reduce lead time, which is made up of four components: o Processing time -- can be reduced by reducing the number of items processed and the efficiency or speed of the machine or worker. 40
  41. 41. o Move time -- can be decreased if machines are moved closer together, the method of movement is simplified, or the need for movement is eliminated. o Waiting time can be reduced through better scheduling of materials, workers, and machines and sufficient capacity. o Setup times -- can be reduced through a variety of techniques as described next.Quick SetupsSetups are adjustments that must be made on equipment or processes eachtime an item is changed from one model to another or one product to another.Setup time can be very lengthy -- often hours long. When setups are long,manufacturers often want to produce a large number of the same item beforechanging to another. The concept of long setups does not work well with small lotproduction.Shigeo Shingo is well-known for his SMED (single-minute-exchange of dies)principles, which were developed to reduce setup times. For example, Shingoreduced the setup time on a 1,000 ton press from six hours to three minutesusing the following principles: o Separate internal setup from external setup -- internal setups must be performed while the machine is stopped; external setups may be made while the machine is running. o Convert internal setup to external setup o Streamline all aspects of setup o Perform setup activities in parallel or eliminate them entirelyGuidelines for reducing setup time include: o Preset desired settings o Use quick fasteners o Use locator pins o Prevent misalignments o Eliminate tools o Make movements easierFigure below illustrates some common techniques for reducing setup times: 41
  42. 42. Figure 42
  43. 43. Uniform Production LevelsUniform production levels help moderate the amount of inventory in the systemand avoid the use of excess overtime. Kanban systems can handle fluctuationsof 10%, but any more than that creates pressure on the system to create excessinventory. Production is leveled by the use of better forecasting techniques andthe use of mixed model sequencing.Mixed model sequencing was illustrated earlier, but it will be reviewed here onceagain.Example:If Toyota receives a monthly demand estimate of 1200 small cars, 2,400 midsizecars, and 2,400 luxury cars, how should the models be produced in order tosmooth production as much as possible? Model Monthly Daily Demand Demand Small 1200 40 Midsize 2400 80 Luxury 2400 80Solution:First, convert monthly demand to a daily schedule by dividing by thenumber of days in a month. The result is a daily production schedule of 40,80, and 80 of each model, respectively, per day.Models should be sequenced by finding the ratio of each model volume tothe smallest model volume. The ratios of midsize and luxury cars to smallcars are both 2 to 1. Two midsize and luxury cars should be produced foreach small car.A sequence of L-M-S-M-L repeated 40 times per day maintains the propermix of models. 43
  44. 44. Quality at the SourceQuality must be extremely high in a JIT system because there is little inventory tobuffer against quality mistakes. A JIT system should have a zero defect policythat seeks to identify quality problems at their source. Workers, not inspectorsshould be responsible for quality. Worker responsibility for quality requires thefollowing components: o Jidoka - the authority to stop the production line. o Andon lights - to signal quality problems on the line. o Undercapacity scheduling - allows for planning, problem-solving, and maintenance o Visual control - makes problems visible (Figure ) o Poka Yoke - devices, processes, and designs to prevents defects o Kaizen - Continuous improvement which requires total employment involvement The essence of JIT is the willingness of workers to o spot quality problems o halt production when necessary o generate ideas for improvement o analyze problems o perform different functions 44
  45. 45. Figure 45
  46. 46. Total Productive MaintenanceTwo basic types of maintenance are o Breakdown maintenance -- repairs to make failed machine operational o Preventive maintenance -- system of periodic inspection and maintenance to keep machines operatingTotal productive maintenance (TPM) seeks a higher degree of maintenance thanpreventive maintenance. Total productive maintenance combines the practice ofpreventive maintenance with the concepts of total quality -- employeeinvolvement, decisions based on data, zero defects, and a strategic focus. TPMrequires management to o Design products that can be easily produced on existing machines. o Design machines for easier operations, changeover, and maintenance. o Train and retrain workers to operate machines. o Purchase machines that maximize productive potential o Design preventive maintenance plan spanning life of machineSupplier NetworksJust-in-time purchasing and supply has developed rapidly. Trends in supplierpolicies include: o Locate near to the customer o Use small, side loaded trucks and ship mixed loads o Consider establishing small warehouses near to the customer or consolidating warehouses with other suppliers o Use standardized containers and make deliveries according to a precise delivery schedule o Become a certified supplier and accept payment at regular intervals rather than upon delivery 46
  47. 47. 5 STEPS IN THE INTRODUCTORY PHASE OF JITIntroduction Phase for Just in TimeAccording to Hirano, the introductory phases of JIT involve 5 steps: 47
  48. 48. 48
  49. 49. Step 1: Awareness RevolutionIt means giving up old concept of managing and adopting JIT way of thinking.There are 10 principles for improvement:1. Abolish old tradition concepts.2. Assume that new method will work.3. No excuses are accepted.4. It is not seeking for perfection, absolutely zero-defect process, few defects isacceptable.5. Correct mistakes immediately.6. Do not spend money on improvement.7. Use you brain to solve problem.8. Repeat to ask yourself 5 times before any decision.9. Gather information from several people, more is better!10. Remember that improvement has no limits.The idea of giving up old concept was especially for the large lot production, thelot production was felt that "having fewer changeover was better", but it was nolonger true. Whereas JIT is a one-piece flow manufacturing. To compare the two,Hirano had this idea:Lot production: "Unneeded goods...In unneeded quantities...At unneededtimes..." JIT: "Needed goods...In needed quantities...At needed times..."The main point here is to have an awareness of the need of throwing out oldsystem and adopting a new one. 49
  50. 50. Step 2: 5S’s For Workplace Improvement 50
  51. 51. The 5S’sSeiri - Proper ArrangementSeiton - OrderlinessSeiso - CleanlinessSeiketsu - CleanupShitsuke - DisciplineThis 5S’s should be implemented company-wide and this should be part of a totalimprovement program.Seiri - Proper Arrangement means sorting what you have, identifying the needsand throwing out those unnecessary.One example is using red-tags. This is a little red-bordered paper saying whatthe production is, how many are accumulated and then stick these red tags ontoevery box of inventory . It enhances the easiness to know the inventory statusand can reduce cost.Seiton - Orderliness means making thing in order. Examples include keepingshelves in order, keeping storage areas in order, keeping workplace in order,keeping worktables in order and keeping the office in order.Seiso - Cleanliness means having a clean workplace, equipment, etc.Seiketsu - Cleanup mean maintaining equipment and tools.Shitsuke - Discipline means following the rules and making them a habit 51
  52. 52. Step 3: Flow ManufacturingFlow manufacturing means producing one single piece of product at a time butmulti-handling which follows the process sequence. 52
  53. 53. There are several main points concerning flow manufacturing:1. Arrange machines in sequence.2. U-shaped production line (Cellular Manufacturing).3. Produce one-piece at a time.4. Train workers to be multi-skilled.5. Follow the cycle time.6. Let the workers standing and walking around while working.7. Use small and dedicated machines. 53
  54. 54. Step 4: Standard OperationsStandard Operation means to produce quality safely and less expensivelythrough efficient rules and methods of arranging people, products and machines.The basis of standard operations is: 1. Cycle time It means how long it would take to "carry out part all the way through the cell". Following are the equations for calculating cycle time.Daily Quantity Required = Monthly Quantity Needed / Working Days permonthCycle Time = Working Hours per day / Daily Quantity Required 2. Work sequence 3. Stan dard stoc k- on- han d 4. Use oper atio n char ts 54
  55. 55. Step 5: Multi-Process HandlingMulti-process handling means one worker is responsible for several processes ina cell. 55
  56. 56. Some points that you should be aware of:· Clearly assign jobs to machines and workers.· Make a good use of U-shaped cell manufacturing.· Multi-skilled workers· Operation should be able to perform multi-machine handling and multi processhandling.Multi-machine handling - a worker should handle several machines at once,this is also called "horizontal handling".Multi-process handling - a worker should handle several different processes atonce, this is also called "vertical handling" and this is the basis for JIT production.· Uses casters extensively as author written, "Floor bolts are our enemies!Machines must be movable."The above 5 steps are the basis for introducing JIT. Only after these arecompleted can JIT be implemented.Benefits of JITThe benefits of JIT are similar to those of advanced manufacturing technology,but they are achieved through reduction of waste and productive management ofhuman resources. In essence, JIT achieves the four strategic objectives ofmanufacturing simultaneously -- low cost, high quality, high flexibility, and quickdelivery. These overall benefits come from o Reduced inventory o Reduced space requirements o Shorter lead time o Increased productivity o Better relations with suppliers o Simplified scheduling and control activities o Increased capacity o Better use of human resources o More product variety 56
  57. 57. JIT IMPLEMENTATIONJust-in-time production began in Japan in the 1970’s and spread to the U. S. inthe 1980’s. We can make these general observations about JIT: o JIT is used to finely tune an operating system. o JIT is somewhat different in U. S. than in Japan and goes by several names, including stockless production, material-as-needed, continuous-flow, zero inventory production system, and lean production. o JIT is still evolving and meshing in new ways with advanced technology o JIT isn’t for everyone -- mass production is still best for very high volume production; job shops are still necessary for highly specialized products.SuppliersSuppliers can be crucial to JIT successSupplier gets: long-term, guaranteed, contract a good price steady demand minimal paperwork (e.g. use electronic means to order - such as email or Web or electronic data interchange, EDI)In return the supplier agrees to quality components (e.g. zero defects) guaranteed delivery times a "partnership" with its customer contingency plans to cope with disruptions, common disruptions might be: o the effect of bad weather o a truck drivers strike blocking roads/ports o a flu outbreak reducing the suppliers workforceSupplier selection criteria: close to production plant (else potential transportation delays) good industrial relations ("involvement", "value", "dignity", "ownership"), no strike deals 57
  58. 58. you believe that the supplier can met their promises with respect to the list of factors given above that that they are agreeing toWith suppliers satisfying these criteria you can reduce the total number ofsuppliers, indeed it seems logical so to do. If you had five suppliers meeting allthese criteria why do you need five? Obviously you might decide to have morethan one supplier for safety reasons. Even the best run supplier can suffer afactory fire or an earthquake, but probably no more than two or three suppliers.As an illustration of this in 1997 Toyota was affected by a fire at a supplier ofbrake parts that cost the company an estimated $195 million and 70,000 units ofproduction. The fire was at a plant that was the sole supplier of brake parts for allbut two Toyota models and forced the company to shut its 18 assembly plants inJapan for a number of days. As a result Toyota embarked on a review ofcomponents that were sourced from a single supplier.Having a single supplier may be attractive in cost terms, but one does need tobalance the risk (albeit a low probability risk - perhaps a fire every 100-250 yearssay) against the cost savings. 58
  59. 59. WHAT’S YOUR EXCUSE FOR NOT USING JIT?Just-in-time production, or JIT, has probably received more attention in a shorttime than any other new manufacturing technique. The main reason is that JITgets the credit for much of Japan’s manufacturing success.Despite the extensive publicity and interest, few companies have implementedJIT in their manufacturing operations. If JIT provides all the benefits claimed forit, why have so few factories adopted it?JIT’s widespread publicity has been a mixed blessing. The popular press, andeven some technical articles, focus on the easily observable differences frombatch production systems but ignore some of the more important but subtlefeatures of JIT. Writers rarely get very far past the lower inventory costsattributable to JIT and seldom describe how the technique can improve the entiremanufacturing process. Managers who have read only a little on JIT rarelyunderstand how it can help their operations. Usually they focus on the fact that,in the end, JIT increases a company’s ROI.More important than the reduction of inventory and greater ROI are theimprovements in manufacturing that result from operating with low inventories.JIT removes the security blanket of high inventory and thus exposes relatedoperating problems. These are problems that need to be faced and solved—andtherein JIT can be seen to create hurdles of its own.Converting to JIT means a big change—in the culture of a company as well as inits manufacturing operations. Established routines and rules become obsolete.Where backup inventories were once considered to be insurance againstunexpected shortages or delays, they are now viewed as evidence of lack-lusterplanning or controls, even of laziness. Large production batches can no longerbe viewed as beneficial because they help amortize setup costs. JIT forces theelimination of the waste inherent in long setups.Few manufacturing organizations are very flexible, either in their operations or inthe minds of their creators. A typical operation is like a huge steamship, for whicha rapid change in course is difficult. Most factories have been making similarproducts using similar processes for many years; their managers are comfortablewith what they know. In this environment, change comes slowly. This inflexibilitycombined with misperceptions of JIT keep a lot of executives from using JIT.They excuse themselves by saying: ―I know JIT has done a lot for others, but ourplant, and our processes, even our people, are different. In our situation, JITwon’t work.‖Since misperceptions create a roadblock to implementation of this valuablemanagement technique, let’s look at them first. 59
  60. 60. Just-In-Time ProblemsSince just-in-time’s development, many companies have found it beneficial whileothers have been unable to successfully implement the basic philosophy. JIT isnot for every company as many have found out the hard way. With today’shighly competitive business world, JIT continues to have many problemsadapting to the every changing environment. Listed below are several instanceswhen just-in-time approaches can and/or have failed.Supplier Obstacles The ability of JIT companies to find suppliers that conform to their needs isvery important. Since just-in-time’s emphasis is on smaller quantities and morefrequent deliveries, many small suppliers are forced to except moretransportation costs to retain large clients. On the other hand, many JITcompanies experience higher costs due to the same need for increasedshipments and smaller quantities. For instance, many supermarkets receivediscounts if they exceed certain weight requirements of a load. Companies mustweigh the opportunity costs of inventory and additional transportation costs. Another problem found with suppliers is that they are not always reliable.Many companies can be enticed away from their regular supplier expecting tofind lower costs elsewhere. Once the company changes to the new supplier, theprices are slowly raised, as the client becomes dependent. The company inquestion then has no other alternative in the short-run but to pay the higherprices. One such example is OPEC, Organization of the Petroleum ExportingCountries, which has constantly raised prices on countries as well as businessesworldwide. JIT industries requiring large amounts of petroleum have no otheralternative, but to pay the higher prices or slow production. Other reliability examples include the railroad strike of 1992. General Motors,a heavily reliant JIT company, had no choice but shut down several factories dueto lack of raw materials. On the first day, over 75,000 workers were involved andGM would have had a total production shutdown if the strike had not beenimmediately solvedOther 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 products is made to meet actual orders – however, JIT is a very responsive method of production. 60
  61. 61. TOYOTA PRODUCTION SYSTEM (TPS/JIT) Taiichi Ohno, an employee of Japan’s Toyota Motor Company, envisioned anew way of inventory management. The Toyota Production System (TPS or JIT)was a new and exciting prospect. Toyota plunged headfirst into this new conceptintegrating Ohno’s three main just-in-time principles. 1. ―Reduced lot sizes, leading to production flexibility. 2. Controlling parts required in production to enable them to be provided when and where they are needed for specific tasks. 3. Arranging production equipment in the order that people work and value is added instead of grouping by equipment function.‖Immediately, Toyota realized that just-in-time policies needed to be integratedinto other parts of their automotive operations. These new improvementsincluded employee participation, autonomation, supplier participation, kanban,and waste reduction/elimination. Employee cooperation was essential in the implementation of the ToyotaProduction System. JIT was based upon the assumption that employees couldbe empowered. This theory takes into account that employees follow WilliamOuchi’s ―Theory Z‖ motivational scheme. The morale and loyalty of theJapanese worker made this a very easy adaptation. ―Characteristics ofJapanese companies include high employee commitment, motivation, andproductivity.‖ The empowerment of workers includes the ability and authority ofmaking quick rational decisions. Every employee throughout the process has thepower to stop production to assure quality, otherwise known as autonomation or―Jidoka.‖ These employees usually do not specialize ensuring the ability of jobrotation and knowledge of the system in general. Workers and managementalike share failure in this process since they are seen as equals. Typically,Japanese workers are rewarded for their devotion to the company by havingpositions for life. Another important aspect of the newly designed TPS, is the relationshipbetween the company and its supplier. Japanese companies reduced thenumber of suppliers, but those that it kept became partners in quality. These 61
  62. 62. supportive supplier relations share information, technology, and needs.Companies must find suppliers that are willing to deliver smaller quantities whileassuring pristine quality. All deliveries are made directly to the to the point of useat the exact time of need. Kanban, a Japanese word meaning ―signal‖ or ―visible record,‖ is a method ofinventory supply and communication directly related to the supplier relationship.It uses visual devices to control flows of materials between work stations andsupplier or limited inventory. This technique allows production to ―pull‖ supplieswhen needed. Fixed quantity bins are established to signal replenishment, andthese small quantities can be quickly replaced and reordered from the supplier.The primary achievement of Kanban is the direct communication betweenproduction workers and suppliers. Such contact with knowledgeable employeesallows for another opportunity for information transfer. The most important of all the processes involved in just-in-time is the reductionand/or elimination of waste! Toyota’s president, Shoichiro Toyoda, states thatwaste is ―anything other than the minimum amount of equipment, materials,parts, space, and worker’s time, which are absolutely essential to add value tothe product.‖7 Waste management links all aspects of the JIT process.1. ―Overproduction - involves excessive use of manufacturingresources.2. Waiting time – requires space, adds no value.3. Unnecessary transporting – increases handling, increases work-in-processinventory.4. Inventory – causes idle resources, hides quality problems and productioninefficiencies.5.Processing waste – makes unnecessary production steps, scrap.6. Inefficient work methods – indicates poor layout and material movementpatterns, increases work-in-process inventory. 7.Product defects – requires rework costs and possible sales loss due tocustomer dissatisfaction.‖ 62
  63. 63. Toyota Production System Japanese car makers: Toyota, Mitsubishi, Honda and Nissan, have begun showing concept passenger vehicles with in-wheel electric motors that afford a compact mono-box design, small on the outside, spacious on the inside.Toyota Production System (TPS) is an explanation of the Toyota philosophytoward production.The production system developed by Toyota Motor Corporation to provide bestquality, lowest cost, and shortest lead time through the elimination of waste.TPS is comprised of two pillars, Just-in-Time and jidoka. TPS is maintained andimproved through iterations of standardized work and kaizen, following PDCA, orthe scientific method.Americans spent $150 billion last year on foreign oil. Plug-in, flex-fuel hybrid andbattery-electric cars would save American drivers hundreds of billions of dollarsat the pump, reduce global warming greenhouse gas emissions and end USdependence on declining global oil reserves.DCX has stepped forward and announced PHEV production is underway. Toyotahas yet to step up to the plate in terms of greater stewardship, which couldimprove everyone’s quality of life while increasing Toyota profitability. Meanwhile,as more and more reports appear that warn about peak oil and global warming,oil companies are reporting profit as much as $23 billion in just one quarter.*Note: An example of the admirable Toyota engineering premiered at the TokyoMotor Show and will appear at the New York Motor show next week. Asfulsomely illustrated by Watt Head, this innovative design includes in-wheelelectric motors, a drive-by-wire system, and universal design unseen before inmost passenger cars. The electric drive is ―beneath the vehicle floor‖ and ―in ornear the wheels, allowing available cabin space to extend nearly the entire lengthof the vehicle.‖ This makes ―for a comfortable roomy interior while keeping theexterior size compact‖ with the further advantage of a low center of gravity. 63
  64. 64. The Toyota Fine T also displays excellent aerodynamics. Besides adding a plug,another advantages Japanese car makers have eschewed so far is the use ofcomposite materials.TPS is comprised of two pillars, Just-in-Time and jidoka, and is often illustratedwith the "house" shown below. TPS is maintained and improved throughiterations of standardized work and kaizen, following PDCA, or the scientificmethod.Development of TPS is credited to Taiichi Ohno, Toyotas chief of production inpost-WWII period.Beginning in machining operation and spreading from there, Ohno led thedevelopment of TPS at Toyota throughout the 1950s and 1960s and thedissemination to the supply base through the 1960s and 1970s.Outside Japan, dissemination began in ernest with the creation of the Toyota-General Motors joint venture - NUMMI - in California in 1984.The concepts of Just-in-Time (JIT) and jidoka both have their roots in the pre-warperiod. Sakichi Toyoda, founder of the Toyota group of companies, invented theconcept of Jidoka in the early 20th Century by incorporating a device on hisautomatic looms that would stop the loom from operation whenever a threadbroke. 64
  65. 65. This enabled great improvements in quality and freed people up to do more valuecreating work than simply monitoring machines for quality. Eventually, this simpleconcept found its way into every machine, every production line, and everyToyota operation.Kiichiro Toyoda, son of Sakichi and founder of the Toyota automobile business,developed the concept of Just-in-Time in the 1930s. He decreed that Toyotaoperations would contain no excess inventory and that Toyota would strive towork in partnership with suppliers to level production.Under Ohnos leadership, JIT developed into a unique system of material andinformation flows to control overproduction.Widespread recognition of TPS as the model production system grew rapidly withthe publication in 1990 of "The machine that changed the world", the result of fiveyears of research led by the Massachusetts Institute of Technology.The MIT researchers found that TPA was so much more effective and efficientthan traditional, mass production that it represented a completely new paradigmand coined the term "Lean Production" to indicate this radically differentapproach to production. 65
  66. 66. Once Toyota applied all aspects of the just-in-time process, they realized thatchange would constantly be needed. Therefore, the concept of ―Kaizen,‖continuous improvement, was put into the process as well. For almost a decade,Toyota and its suppliers were alone in the use of the Toyota Production System.By the late 1970’s, other Japanese automobile manufacturers began to takeToyota’s ideas and put them to practical use. Mazada, Honda, and Nissan alladopted the concept of just-in-time to continue to compete with arch rival Toyota. As one decade ended and a new one began, TPS/JIT slowly began to gainacceptance in the business world. In the mid 1980’s automobile manufactures inthe United States and Europe benchmarked the JIT philosophy becauseJapanese companies began immerging as market share contenders. The ―BigThree‖ U.S. automakers, General Motors, Ford, and Chrysler had to act quicklyto remain competitive. A St. Louis logistics-consulting firm, in 1990, estimatedthat 18% of all U.S. products had some relation to the JIT system. Thispercentage increased to 23% in 1992, and it was expected to grow passed 28%by 1995. Only time will tell if JIT will advance to the expected 39% in the year2000!Auto AnalysisKanban/ Just-in-Time at ToyotaWhen we talk about Kanban/ Just-In-Time, you maybe have a question whichcompany set a very good example to fulfill this approach. The answer isJapanese company ------Toyota. Not only did Toyota take advantage of Kanban/Just-In-Time, but it also get a very good benefit to operate its company.Kanban/just-In-Time helps companies solving many Manufacturing problems.Kanban derives it name from the manufacturing systems and processesimplemented at Toyota Motor Manufacturing that are so effective at producing atlow cost, high quality, and short cycle times. As a consequence, these systemsare highly flexible and responsive to customer requirements. Toyota capabilitiesare listed below. Kanban /Just-In-Time impact on whole Toyota productionapproach as following:(a) Standardized work Manufacturing Cells Manufacturing Lines Facility Layout Technology Development Simulation of processes and systems 66
  67. 67. (b) Quality Improvement In Process Inspection Experimental Design Process Development(c) Continuous ImprovementExample:Toyota manufacturing processes route the product around the plant to variouswork centers where work is staged to be processed. Implementing manufacturingcells typically increases net income dramatically and reduces cycle time over50%. The cost of design and implementation is usually recovered within the firstyear from inventory savings. In this paper, we present the benefits of bringing theprocesses to the product and discuss the value of simulation as a tool to designand predict cell performance prior to implementation; therefore, reducing financialand technical risk to the company. On September 10, 1997, Mr. Hoskins presented on "Improve Profits and ReduceCycle Time with Manufacturing Cells and Simulation" for the National TechnologyUniversity series on Kanban just-In-Time Manufacturing of this series. OnOctober 27 - 28, 1996 Jerry Hoskins, President presented a paper titled"Developing a Lean Implementation Roadmap" at the SME KanbanManufacturing Conference in Dearborn, Michigan. The intent of this paper is toprovide information to companies on where to start with a Kanbanimplementation based on where one is currently manufacturing operation. Histheory help our many manufactures implement all the elements of KanbanManufacturing directed at elimination of manufacturing waste as defined by theToyota Production System. These systems are more flexible, responsive, andprofitable than traditional manufacturing systems. And, its theory also help ourmany participate determine where best to start with a Kanban implementationwhich usually involves an assessment of current operations. Once plan isdeveloped we design the system to be implemented which may involve layout,cells, JIT, process technology, and process simulation. 67
  68. 68. CONCLUSION JIT can only be achieved by a combination of strategic capacityconsiderations, strategic supply chain management and detailed ways to makework flow using pull systems such as Kanban. This can only be achieved by aholistic view such as is given by Business Process Reengineering, followed by afocused approach to continuous improvement. To sum up, we should make fully use of Kanban in order to improve theperformance of a production line which is under controlled by Kanban. Generallyspeaking, Kanban is combined with base stock or immediately improvement tocreate a hybrid production control system. Simulation results based on a Toyotafactory show that this policy meets throughput targets with significantly lowerinventories than Kanban alone. As a result, Toyota research considers a lineproduction system which purchases raw materials from a supplier, processesthem into finished products and delivers them to a buyer just in time. This studyfocuses on finding the optimal number of raw material orders, finished goodsdeliveries and Kanbans between work stations for a time-proportionate demandof finished goods. 68
  69. 69. BIBLIOGRAPHYwww.bsu.eduwww.witiger.comwww.japan-101.comwww.toyota.co.jp 69