JUST IN TIME

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A PROJECT ON
JUST IN TIME
IN THE SUBJECT
Advance Cost Accounting
SUBMITTED BY
Soumeet D. Sarkar
A041
M.Com. Part-I
UNDER THE GUIDANCE OF
Prof. Kedar Bhide
TO
UNIVERSITY OF MUMBAI
FOR
MASTER OF COMMERCE PROGRAMME (SEMESTER - II)
In
ADVANCE ACCOUNTANCY
YEAR: 2013-14
SVKM’S
NARSEE MONJEE COLLEGE OF COMMERCE &ECONOMICS
VILE PARLE (W), MUMBAI – 400056.

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EVALUATION CERTIFICATE
This is to certify that the undersigned have assessed and evaluated the
project on “ JUST IN TIME ” submitted by Soumeet D. Sarkar student of
M.Com. – Part - I (Semester – II) in Advance Accountancy for the academic
year 2013-14. This project is original to the best of our knowledge and has
been accepted for Internal Assessment.
Name & Signature of Internal Examiner
Name & Signature of External Examiner
PRINCIPAL
Shri. Sunil B. Mantri

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DECLARATION BY THE STUDENT
I, Soumeet D. Sarkar student of M.Com.(Part – I) in Advance Accountancy, Roll
No.: A041, hereby declare that the project titled “ JUST IN TIME ” for the
subject Advanced Cost Accounting submitted by me for Semester – II of the
academic year 2013-14, is based on actual work carried out by me under the
guidance and supervision of Prof. Kedar Bhide. I further state that this work
is original and not submitted anywhere else for any examination.
Place: Mumbai
Date:
Name & Signature of Student
Name : Soumeet D. Sarkar
Signature : _________________

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ACKNOWLEDGEMENT
This project was a great learning experience and I take this opportunity to
acknowledge all those who gave me their invaluable guidance and inspiration
provided to me during the course of this project by my guide.
I would like to thank Mr. Kedar Bhide - Professor of Advanced Cost
Accounting (MCOM – Narsee Monjee College).
I would also thank the M.Com Department of Narsee Monjee College of
Commerce & Economics who gave me this opportunity to work on this project
which provided me with a lot of insight and knowledge of my current curriculum
and industry as well as practical knowledge.
I would also like to thank the library staff of Narsee Monjee College of
Commerce & Economics for equipping me with the books, journals and
magazines for this project.

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CONTENT
Sr. No. PARTICULARS Page No.
CHAPTER I - INTRODUCTION
1.1 JIT Philosophy 7
1.2 JIT History 8
CHAPTER II - ABOUT JIT
2.1 WHAT to EXPECT? 10
2.2 BENEFITS OF JIT 11
2.3 UNDERSTANDING WASTE 12
2.4 EVILS of INVENTORY 13
2.5 JIT and QUALITY 15
2.6 PREVENTING QUALITY PROBLEMS 16
CHAPTER III - JIT CONCEPTS
3.1 UNIFORM PLANT LOAD 19
3.2 SETUP TIME REDUCTION 23
3.3 PULL SYSTEMS 28
3.4 JIT & PURCHASING 30
CHAPTER IV - CONCLUSIONS
4.1 IMPLEMENTING JIT 33
4.2 MANAGEMENT's RESPONSIBILITY 35
4.3 BIBLOGRAPHY 38

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INTRODUCTION
Just in Time (JIT) means making "only what is needed, when it is needed, and in
the amount needed." For example, to efficiently produce a large number of automobiles,
which can consist of around 30,000 parts, it is necessary to create a detailed production
plan that includes parts procurement. Supplying "what is needed, when it is needed, and
in the amount needed" according to this production plan can eliminate waste,
inconsistencies, and unreasonable requirements, resulting in improved productivity. It is a
production strategy that strives to improve a business return on investment by reducing
in-process inventory and associated carrying costs. To meet JIT objectives, the process
relies on signals or Kanban between different points, which are involved in the process,
which tell production when to make the next part. Kanban are usually 'tickets' but can
be simple visual signals, such as the presence or absence of a part on a shelf.
Implemented correctly, JIT focuses on continuous improvement and can improve a
manufacturing organization's return on investment, quality, and efficiency. To achieve
continuous improvement key areas of focus could be flow, employee involvement and
quality.
JIT relies on other elements in the inventory chain as well. For instance, its effective
application cannot be independent of other key components of a lean manufacturing
system or it can "end up with the opposite of the desired result." In recent years
manufacturers have continued to try to sharpen forecasting methods such as applying a
trailing 13-week average as a better predictor for JIT planning; however, some research
demonstrates that basing JIT on the presumption of stability is inherently flawed.
Just-In-Time (JIT) manufacturing distances itself from the competition because no large
capital outlays are required. Other methods promote complexity, large overheads,
automation, and other "state-of-the-art" technologies, while JIT advocates simplifying and
streamlining the existing manufacturing process.
Since World War II, traditional American companies have developed a way of doing
business that entails top management planning, re-planning, and more planning. Although
some planning is good, it ultimately adds no value to the end product. Customers want

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quality products at competitive prices - they couldn't care less how much planning was
required to get that product to them. By implementing JIT, much of the planning
disappears and a large portion of the remaining planning is entrusted to the shop floor
personnel.
The transition to JIT often is not easy, but it is almost always rewarding. All employees
in the company - from top management to direct labor - must have a clear
understanding of the benefits that JIT offers to them and to their company. JIT is not a
cure-all for every manufacturing problem. But, if implemented properly, JIT is a no-cost
or low-cost method for improving your manufacturing process.
PHILOSOPHY
The philosophy of JIT is simple: the storage of unused inventory is a waste of
resources. JIT inventory systems expose hidden cost of keeping inventory, and are
therefore not a simple solution for a company to adopt it. The company must follow an
array of new methods to manage the consequences of the change. The ideas in this way
of working come from many different disciplines including statistics, industrial
engineering, production management, and behavioral science. The JIT inventory
philosophy defines how inventory is viewed and how it relates to management.
Inventory is seen as incurring costs, or waste, instead of adding and storing value,
contrary to traditional accounting. This does not mean to say JIT is implemented without
an awareness that removing inventory exposes pre-existing manufacturing issues. This
way of working encourages businesses to eliminate inventory that does not compensate
for manufacturing process issues, and to constantly improve those processes to require
less inventory. Secondly, allowing any stock habituates management to stock keeping.
Management may be tempted to keep stock to hide production problems. These problems
include backups at work centers, machine reliability, process variability, lack of flexibility
of employees and equipment, and inadequate capacity.
In short, the Just-in-Time inventory system focus is having “the right material, at the
right time, at the right place, and in the exact amount”, without the safety net of
inventory. The JIT system has broad implications for implementers.

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The basis of Just-In-Time (JIT) is the concept of ideal production. It centers on the
elimination of waste in the whole manufacturing environment, from raw materials through
shipping. Just-In-Time is defined as "the production of the minimum number of different
units, in the smallest possible quantities, at the latest possible time, thereby eliminating
the need for inventory. Remember, JIT does not mean to produce on time, but to
produce just in time.
HISTORY
JIT is sometimes said to have been invented by Henry Ford because of his one-at-a-time
assembly line, around 1913. This is an incorrect conclusion since Ford's system could
handle no variety and was designed for large volumes and large batch sizes of the same
parts.
JIT was invented by Taiichi Ohno of Toyota shortly after World War II. Ohno's system
was designed to handle large or small volumes of a variety of parts. Many people are
intimidated by JIT because of its association with Japan. If these people take a broader
look at JIT, they will see that it is nothing more than good, common sense
manufacturing.
Ohno and his associates came to America to study Ford’s manufacturing processes. They
determined that Ford’s system was much like the system that Japanese companies were
using, but Japanese companies could not afford waste in their systems due to the
devastation to their economy caused by World War II. While in America, Ohno learned
much about America's culture. One of his discoveries has transformed the world's
perspective on manufacturing.
Legend has it that Ohno got the idea for his manufacturing system from America's
supermarket system. Ohno learned the Kanban (pull) system from our supermarket system
in which customers pulled items from the shelves to fill their shopping carts, thereby
creating an empty space on the shelf. The empty space is a signal for the stocker to
replace that item. If an item was not bought that day, there was no need to replace it.
When item quantities become low, that is the signal for the stockers to order more

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goods from their suppliers. Customers are content to take just what they need, because
they know that the goods will be there the next time they need them.
To apply this concept to manufacturing, Ohno devised a system whereby the usage of
parts is determined by production rates. Materials are pulled through the plant by usage
or consumption of the parts in final assembly. To obtain maximum results, Ohno decided
to move the machines closer together and form manufacturing cells.
The JIT system continued to evolve, with the central thrust being the elimination of
waste. Ohno's system has become a totally flexible system in which production rates are
determined by the end user rather than the producer.

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WHAT to EXPECT?
While the prevailing view of JIT is that of an inventory control system, it is much
more. JIT is an operational philosophy which incorporates an improved inventory control
system in conjunction with other systems, such as:-
1. A set-up time improvement system.
2. A maintenance improvement system.
3. A quality improvement system.
4. A productivity improvement system.
A properly implemented JIT system should:-
1. Produce products that customers want.
2. Produce products only at the rate that customers want them.
3. Produce with perfect quality.
4. Produce instantly with zero unnecessary lead time.
5. Produce with no waste of labor, material, or equipment. Every move has a
purpose and there is no idle inventory.
An overview of JIT literature suggests that the steps or elements of the implementation
process generally (though not always) include the following:-
1. Reductions in set-up time.
2. Utilization of a formal preventive maintenance program.
3. Utilization of quality circles.
4. Utilization of cellular manufacturing techniques.
5. Cross-training of employees.
6. Quality certification of suppliers.
7. Reductions in vendor lead time.
8. Reductions in lot sizes.
9. Sole sourcing.
10. Presence of one who championed the cause of JIT within the firm.

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

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UNDERSTANDING WASTE:-
Ask almost any shop floor employee the definition of inventory and the likely answer
will be “you know all this stuff stacked up around here and all that stuff in the
warehouse”. Many employees (and some supervisors and managers) do not understand
that Work-In-Process (WIP) is also inventory. Pure and simple inventory is waste.
Another way to describe inventory is money loaned out of a company’s pocket that has
yet to be repaid.
JIT is much more than a plan for decreasing inventory, it is a manufacturing philosophy
for eliminating waste. For our purposes, waste can be defined as something other than
the essential resources of people, machines, and material needed to add value to the
product. Anything else, such as inventory, scheduling, meetings, warehousing goods,
management, and moving stock can be considered wasteful because these actions do not
directly add value to the product. All waste cannot be purged from the system, however,
we must strive toward that ideal goal. Above all it must be ever present in the attitudes
of our manufacturing system that cost without value is waste.
A typical company produces excess inventory with the idea that “we can use this stuff
when the next order comes in." Routinely these parts are forgotten when the next order
is placed. Other than initial costs of the products, they are also paying for moving the
product, warehouse space, fork trucks, warehouse personnel, tracking the products, and
moving the products again, etc. One company that we visited was constantly plagued
with the problem of misplaced inventory. They had numerous storage bins, plus
inventory was sometimes “temporarily” placed on the shop floor in different places.
More often than not, new parts would be made when the internal customer needed the
parts, because nobody knew the parts already existed. Another company we visited
wastes money on rust preventatives and the time consuming task of removing rust from
parts in storage solely for the benefit of excess inventory.

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EVILS of INVENTORY
Although inventory has long been accepted as a necessary evil we must remember that it
is still an evil. Traditional manufacturing processes build in safety stock at every station
throughout the entire system, from extra raw materials to warehouses full of completed
products. This superfluous WIP provides manufacturers with a means to endure the
problems, rather than solving the problems at the root cause. Figure below shows how
some problems can be disguised by excess inventory. The water shown in the graphic is
inventory and the rocks depict manufacturing problems. As the water level drops, more
and more rocks begin to surface.

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Let’s take a hypothetical look at a company that is reducing inventory. ACME
manufacturing produces roller skates for a major toy company. In one process, bearings
are pressed into the skate wheels. Frequently a wheel does not run true because the
bearings are inserted at an angle. This problem can only be detected after the wheel has
been assembled. When such a problem does occur the entire wheel assembly must be
discarded. This problem was undetected for years because the manufacturing line never
slowed down due to these defects. Extra wheels and bearings were always available to
the assembler.
After inventory was reduced, the wheel assembler had difficulty meeting demand. He no
longer had the inventory cushion to hide the quality problems. There was not enough
“extra” WIP to allow him to continually produce bad parts. Now that the quality
problem is evident, a concentrated effort must be made to solve it.

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Do not make the mistake of raising WIP to allow the line to flow smoothly. We need
the problems to surface so that we can solve them. Remember, the WIP is not the
solution to the problems it is only a means to wade through them. Inventory must first
be reduced, then you can solve the problems.
Inventory must be decreased using a systematic approach. A methodical approach is to
cut inventory by one half then solve the problems then cut half of that inventory and
solve the problems.
JIT and QUALITY
One of the great gurus of quality, Phil Crosby, says that companies often have a
misconception of quality. He says that the true definition of quality is meeting
requirements; not an intuition for aesthetics, roundness, or perfection; but something that
can be truly measured. If a Yugo (economy car of the early 1970s) meets its customer's
requirements as well as a Rolls Royce meets its customer's requirements, then it can be
argued that the Yugo is as much a quality car as a Rolls Royce.
The key to obtain quality is to obtain it from the source. The sources for quality are the
manufacturer’s and vendor’s processes, machines, and operators. Contrary to traditional
beliefs, the source of quality is not the inspection bench.
The single most substantial ingredient of JIT is quality. It is impossible for JIT to be
successful until the company has drastically improved its attitude toward quality. In the
language of the Malcolm Baldrige National Quality Award, quality is a “race with no
finish line." The ultimate aspiration is to satisfy all customers (internal and external) all
the time. The Wallace Company, a past winner of the Baldrige Award, installed a
buzzer on the shop floor that sounded anytime a customer called their customer service
hot line. Instantly all workers knew they had a dissatisfied customer.
Analogous to the familiar chicken or the egg question, it is often asked, “Which comes
first, quality or JIT?” Quality is a two way street; JIT is impossible without quality, but
quality is directly enhanced by JIT. Although quality is possible without JIT, it requires

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the use of wasteful procedures such as inspection and rework. JIT proposes the idea of
“do it right the first time” rather than inspecting in quality. In a JIT environment, each
internal customer (the next operator down the line) must be completely satisfied by the
previous operation. Any problems in quality are resolved immediately, rather than
allowing them to contaminate the system further.
To produce quality you must install quality. Quality must evolve from both sides at the
same time. To allow operators to satisfy their internal customers, quality procedures,
materials, machines, and mindset must be present. JIT is not possible without quality, but
JIT is a means by which quality is achieved.
A mathematics riddle known as the Xeno’s paradox asks if a person walks toward a
wall, each step being one half as large as the previous one, when will that person reach
the wall? The answer is "never", but that person is continuously getting closer and
closer to his or her goal. Continuous improvement in quality must be viewed in the
same way. If you set a standard at 95 percent, people figure that they are doing fine as
long as they are at or near that objective. Companies have to be motivated to advance
quality to increasingly higher and higher standards. Ultimately the goal should be
perfection.
PREVENTING QUALITY PROBLEMS
To dismantle the inspection bench mentality, we must take positive steps in prevention
of quality problems. Specific guidelines and rigorous procedures must be established. The
steps toward attaining a quality product are to first define the requirements, get the
process under control, and then keep the process under control.
Many manufacturing companies do an inadequate job of defining quality requirements. If
you are looking at a part or a process, and say “that’s good enough” then you have not
sufficiently defined your requirements. The real definition of quality is meeting both
internal and external customer requirements. Employees and vendors should have strict
guidelines that distinguish good parts (quality) from rework or rejected parts so 100
percent customer satisfaction can be reached.

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Let us look back at our ACME manufacturing example. The assembler had no specific
requirements for pressing the bearings into the wheel. He was told that the wheel must
run true. What is true? How much leeway does he have? Can the bearings be somewhat
angled or must they be exactly straight? The assembler should be supplied with strict
criteria for quality such as “each bearing should be pressed into the wheel at a
perpendicular angle plus or minus one degree”. He now knows what is expected and
what is considered good enough.
To get the process under control, you must first find the root cause of the problem.
This can be accomplished by running the gamut from simple methods such as pareto
and matrix analysis to complicated design experiments. A common problem is to attack
the symptom and not the problem. For example, if a breaker tripped at your house, you
could reset the breaker and hope for the best, replace the breaker box, or you could
check for an overloaded plug. In your manufacturing process, don’t make the mistake of
rewiring the whole house before the actual problem is diagnosed.
Everyone has worked on a problem that magically went away, although you were not
exactly sure why. It could be any one of the solutions you tried or a combination of
any two. In this case, you do not know if you have gotten to the root cause or not.
You must be able to turn the problem on and off to ultimately conclude that the
problem has been solved. If you cannot turn the problem on and off it is likely that
you have solved a symptom rather than a problem. At this point you should ask “why”
and continue to ask “why” until you find the root cause. The following the diagram
gives a proper understanding of finding the root cause of problem:-

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Here, disciplining the waitress will not solve the real problem. The root cause of this
problem is a bad promotion policy. The long-term solution is a change in that policy. If
you ask “why” enough times you will get to the root cause.
Once you have found the solution, keeping the process under control is an easier task.
Statistical Process Control (SPC) is a method of managing a process by gathering
information about it and using that information to adjust the process to prevent problems
from occurring. Using SPC is one way to keep your process under control. Poka-yoke, a
Japanese word for fail-safing, should also be applied. In the Poka-yoke theory, parts and
processes are designed so that doing the job right is easier than doing it wrong. An
example of this is to design a part that is asymmetrical so that it fits only one way,
thus eliminating mis-installation. Machines can be fitted with limit switches that will not
allow it to cycle if all processes are not completed in the correct order. These methods
should not only be used by buyer company but by selling company as well.

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JIT CONCEPTS
1. Uniform Plant Load:- The diversion between traditional manufacturing philosophy
and JIT becomes apparent when discussing the concept of Uniform Plant Load.
Everyone will agree that we need to eliminate waste and strive for quality to
receive the most benefit from our manufacturing systems, but there are two views
on how to go about this. The traditional system calls for production at the
“machine rate” while JIT advocates production at the “customer requirement rate.”
The JIT concept of Uniform Plant Load states that balance between operations is
more important than speed, and ideally we should never produce faster than the
customer requirement rate.
The concept of Uniform Plant Load incorporates two radically different facets of
production. They are rate of production (cycle time) and frequency of production
(level loading). It must be remembered that neither of these concepts will achieve
maximum results until the process is under control and quality has been improved
to world-class or near world-class standards.
a) Cycle Time:- Traditional definitions of cycle time include the time it takes
a machine to cycle through its process or the time from start to
completion of a product (throughput time). Under JIT, cycle time is the
total time required for a worker to complete one cycle of operations,
including walking, load/unload, inspect, etc. Cycle time should equal the
customer requirement rate, or better stated the sales rate. We should view
the last step in the manufacturing process as when the product gets sold,
not when the product is completed. This rate is also expressed in terms of
takt time. Takt time is the total daily operating time divided by the total
daily requirement. Takt time tells you how many hours, minutes, or
seconds are required for each part.
Takt is a German word for baton. In comparing a manufacturing process
to an orchestra, the rate at which the orchestra leader moves the baton is
the rate at which the orchestra plays, just as the rate of customer
requirement is the rate of company production.

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Companies that have produced as fast as possible (machine rate) for many
years often struggle with the concept of slowing down individual machines
so as to achieve perfect balance between operations. If your customer
requirement rate is 20 parts per month, then why would you want to
produce 30 parts per month? This would lead to the evils of inventory –
the consumption of space, waste in motion, and materials that hide
problems. Conceptually, each machine should run as if a rheostat were
attached. The rheostat could be dialed up or down as needed to produce at
the exact rate required. If the requirement rate changed from month to
month then the production rate could be altered to meet these requirements.
If you set the last operation to the sales rate then each preceding operation
should feed the last operation at that rate. This system can then be
exploded backwards throughout the plant until the first operation (usually
raw materials) is reached.
If ten people are producing 20 parts per month in August, but only ten
parts are needed in September, five people should then be capable of
producing the needed ten parts so that labor costs remain constant. This
reduction can only be accomplished with a good physical plant layout and
a well-trained, flexible workforce. The logical questions at this point are:-
“Where do the five people go?”, and “Where do they come from when
production goes back to 20?” It must be made abundantly clear that the
purpose of implementing JIT is not to reduce the workforce. You can now
use this idle time to cross-train employees for even more flexibility. When
not on the production line employees can perform other tasks, attend team
meetings, do preventative maintenance, make plans to further improve the
process and so forth. Rather than producing extra parts and dealing with
inventory, you are now optimizing employee time. That leads us to the
golden rule of JIT:- Machines can be idle but people cannot.
We should not make the mistake of trying to find the perfect balance
between parts produced and manpower required. There is no perfect
balance. We must decide how many parts the line should produce that

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month, week, or day and balance to that number. Remember, the answer is
not to run the line as fast as possible, but to produce to the customer
requirement rate by deciding how fast the line must run to meet the
particular deadline and how many people are needed for this rate.
b) Level Loading:- The second facet of Uniform Plant Load is level loading.
Level loading suggests that if you sell a product every month, then make
the product every month. Ideally, if you sell a product every day, then
make the product every day. You must make your products as frequently
as your customers require them.
Let us assume that your company produces three products – alphas, betas,
and deltas from the same line. Cycle time has been implemented, therefore,
your equipment is running at the right speed. For example, we will say
that in the month of March we will need 25 percent alphas, 50 percent
betas, and 25 percent deltas. In a traditional manufacturing environment
alphas would be produced for 25 percent of the month. We would then
change over and run betas for 50 percent of the month; change over again
and run deltas for the remaining 25 percent of the month. Do your
customers buy alphas the first week, betas the next two weeks, and deltas
the last week?
The next logical step may be to produce a week’s worth every week. You
have instantly gone from setting up 3 times a month to 12 times a month.
Traditional manufacturing will be quick to note that valuable time will be
spent setting up with no time to produce. Increased number of changeovers
can be accomplished only after setup time has been reduced to allow this.
We will address the subject of setup time in the next chapter. In a
nutshell, if we are to change over four times more often, then we must
reduce setup time to 25 percent of its original time. To meet these goals
you must take a structured step-by-step approach. A lofty goal may be to
produce a day’s worth every day. It is true this is a very high standard
but Toyota is currently producing two hours’ worth every two hours.

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Setup reduction has a direct correlation to batch size. If setups are reduced
by 50 percent then batch sizes can be reduced by 50 percent. Additional
direct benefits of level loading are learning curve improvements, increased
mix flexibility, reduced inventory, shorter lead times, and quality
improvements.
Let us look at our original process of producing alphas for one week,
betas for two weeks and deltas for the remaining week. If a customer calls
in a change order for more alphas the third week of the month; a three-
week delay occurs before alphas are being produced again. If you are on a
daily or even weekly production schedule, reaction to changes in mix can
be almost immediate. Production of alphas can begin the next day or you
could change over the same day if requirement rate of betas and deltas
would allow.
As the system begins to produce at the customer requirement rate and
reduced setup times are translated into smaller batch sizes, lead times are
also reduced. When a product is being manufactured monthly, lead times
are expressed in months. Weekly manufactured parts require lead time in
terms of weeks and daily parts in terms of days. There is now no need
for extravagant scheduling and tracking systems. If the requirement rate
changes, parts can be put into the queue at the next changeover period.
As stated earlier there is a direct correlation between setup reduction and
batch sizes. The same can be said for batch sizes and potential cost of
failure. If a batch size is cut in half, the potential cost of rework or scrap
is cut in half. A streamlined manufacturing process dictates that quality
problems will be less likely and if they occur will be much easier to
detect and correct. Smoother production runs need fewer adjustments,
therefore quality becomes more predictable.
c) Learning Curve Improvements:- Learning curve improvements are achieved
when virtually every day is the same. If you are producing all of your
products at the customer requirement rate each day then the days become
more complex but each day is the same as the day before. Setups occur

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every day, therefore there is not time to forget the setup procedure as was
the case with infrequent setups. There is no time to fall into a pattern for
weeks only to have abrupt changes that require relearning the setup and
production process for the next product. Once the employee gets into the
rhythm of daily production, the day-to-day learning curve virtually
disappears.
Uniform Plant Load allows us to produce at the exact rate and frequency
that the customer requires. Other aspects of JIT – setup reduction, machine
cells, pull systems, JIT purchasing, and scheduling - are methods used in
achieving plant balance.
2. Setup Time Reduction:- Setup time is the interval between the production of one
good part and the production of another good but dissimilar part. Setup reduction
is a prerequisite to implementing many aspects of JIT by directly or indirectly
influencing cycle time, level loading, work cells, pull systems, cost, WIP,
purchasing, floor space, quality, operator numbers, and batch sizes. Everyone will
agree that a two hour setup reduced to two minutes is a great productivity
improvement, but this saved time should not be applied to longer production runs
that increase batch sizes. An hour saved that is transferred to the production of
parts simply puts those parts in inventory, which is the exact opposite of what
we are striving for. Our objective is to apply this hour to more frequent setups,
thus giving us more flexibility to better implement JIT.
a) Getting Started:- Our mission is to reduce setup time by 75 percent on a
low-cost or no-cost basis. Some machines will require a little more setup
time and some a little less, but 75 percent reduction is our initial goal.
This may not be accomplished in a week or a month, but can be achieved
through continuous improvement.
You must first decide which setup to work on. A good rule of thumb is
to select your most complex setup. Typically this is the setup that causes
the largest bottleneck (takes the most time), and therefore offers the
opportunity for the largest time savings. After a particular setup has been

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chosen, a Setup Reduction Team must be formed. The next problem that
arises is who should be on the Setup Reduction Team.
b) Setup Reduction Teams:- Traditional management behavior seems to
indicate a belief that the managers and the engineering staff have all the
solutions. In recent years new management approaches, specifically TQM
(Total Quality Management), have disproved the myth that management
best knows how to solve all manufacturing problems. The new Setup
Reduction Team should consist of the real experts - the operators and setup
people. Contrary to traditional management’s beliefs, these people have
superior knowledge of their machines and the process. The typical Setup
Reduction Team should have three to five shop floor personnel - a
combination of operators and setup people, one to two engineers and
possibly a manager.
You will notice that the single largest component on the Setup Reduction
Team is the shop floor personnel. They probably have all the answers to
reduce setup time but until now had no avenue to impart their wisdom.
The reason more engineers are not involved with the group is that most
setup problems are not engineering problems. Engineers tend to emphasize
the mechanics of the setup, but the real reasons time is lost are lack of
preparation, lack of organization, and operator error. Such problems may
include not knowing what the next job is, setting up for the wrong job,
inability to find a fork truck driver or the fork truck is in use, inability to
find or not having the right tools, broken tools, not remembering the exact
setup procedure, not having the right bolts, or having no nuts for those
bolts. The mechanics of the setup may or may not need to be modified or,
if so, only after other improvements have been enacted.
After the team has been selected, proper training in team concepts must
take place. The team should know its mission and act on its findings, not
just study and make recommendations. Team training is a separate subject
in itself and space does not allow us to pursue the topic here. There are

25
many good texts and seminars offered in this area that will allow you to
learn team training concepts.
c) Videotaping:- If a picture is worth a thousand words, a videotape is worth
at least a million. The single best way to document and analyze a setup is
with videotape. A verbal description or written account of a setup will not
give you the detail of a video. Many non-value added steps can be
uncovered that would otherwise remain camouflaged by other means of
documentation.
Obtaining a credible videotape is often not easy. One major dilemma that
occurs is a phenomenon known as the Heisenberg principle. Simply stated
this idea is the belief that something that is being observed is changed
merely by the fact that it is being observed. If workers know that they are
being taped they will perform the setup with a much greater sense of
urgency. Outside preparations may occur that are not normally done. These
actions lead to a misrepresentation of the true time and steps involved in a
setup, thus defeating the purpose for videotaping.
Another problem that may occur is apprehension about being videotaped.
Operators may fear that management will use the tape to place blame for
productivity problems, or to teach others how to do their job, or that other
team members will ridicule their performance. The number of rumors that
can surface when a video camera appears is infinite. The best deterrent to
these problems is prevention. Operators should be briefed on the reasons
for documentation prior to any videotaping with all questions being
answered then. It should be abundantly clear that no additional actions
should be taken in the documented setup and that safety will never be
neglected to gain speed. At no time will any guards be removed, parts
fastened less securely, work be done on moving equipment, etc.
One method to obtain more “true” documentation is to do videotaping
without announcement. Place the video camera in position just prior to the
setup, thus allowing no time for special preparations. The documentation
should include the last part from the previous job coming off the machine.

26
The timer should then be set and everything should be taped from that
point on. Tape continuously even if no work is being done on the
machine. When the first good part from the new job is finished, the
documentation is complete.
Once the videotape is complete, the Setup Reduction Team begins a
detailed analysis of the setup procedure. The primary focus of the analysis
is to reduce machine downtime. Team members generate a list of problems
to solve and possible solutions for the problems
d) The SMED System:- One proven technique for optimizing setup time is
the Single Minute Exchange of Die(SMED) system. The SMED system
was founded by Shigeo Shingo while consulting with Toyota in 1969. No
man has revolutionized setup reduction philosophy as much as Shingo. He
has won numerous productivity improvement awards in Japan, the United
States, and the world over. The basis of SMED is the performance of
setup operations in under ten minutes, i.e., in a number of minutes
expressed in a single digit. The four conceptual stages of SMED:-
 Internal setup and external setup are not distinguished.
 Internal setup and external setup are distinguished.
 Internal setup is converted to external setup.
 Streamline all aspects of the setup.
The concept behind the SMED system is distinguishing internal setup
(performed while the machine is off) from external setup (performed while
the machine is producing) and converting internal to external setup. This is
accomplished by examining the true functions of setups. Once this step has
been successfully applied, only internal activities are left. An example of
this would be to locate and organize all the bolts needed for the next
setup while the previous job is running instead of rushing around looking
for bolts after the machine is off.
After the activities of the setup have been corrected, the mechanics of the
setup need to be addressed or as Shingo states, “all aspects must be
streamlined". Two major categories in this area are clamping and adjusting.

27
Numerous texts have been written concerning quick die change, Poka-yoke
(fail-safing), fixtures, setup reduction, and similar topics. Although we will
deal with setup mechanics in general terms, further study in this area is
recommended.
e) Clamping:- Video documentation will often reveal that substantial time is
spent loosening and tightening nuts and bolts. Threads are a very
inefficient method for speed in a setup, because only the last half turn of
a bolt or nut gets the job done. The first fifteen, twenty or twenty-five
turns are a useless waste. Another problem with threads is the use of
tools. Picking up a wrench - if you can find it - is also a waste; therefore
we must look for alternative methods for clamping. Do not make the
mistake of trying to buy the solution. While it is true that hydraulic or
pneumatic clamps save much time and wasted motion, they violate our no
cost or low cost policy. Look for methods that require only one or two
motions such as cams, levers, or pins. You can explore purchasing “high-
tech” clamping systems after all other avenues have been exhausted or
continuous improvement has stagnated.
f) Adjusting:- The videotape may also show large amounts of time is being
spent to get the job to run right. Traditional thoughts have been that
adjustments are necessary, therefore no energy has been expended to
eradicate the problem. Our aim is to have quality parts produced the first
time, every time. Bad parts should never be produced due to setup. The
problem with adjustments arises because most machines are infinitely
adjustable. For example, something on a machine is measured, or tightened
down, then a part is run. Then the machine is adjusted, tightened down,
then another part is run. This continues until a good part is produced.
After analyzing the videotape you may conclude that the machine needs to
be adjusted to a few set positions. At this point the machine should be
converted to positive stops for those positions rather than endlessly
measured positions or better yet the machine can be designed to be self-
positioning.

28
Reducing setup is a crucial step toward accomplishing JIT manufacturing
goals. Setup reduction is considered a high priority because it affects so
many facets of JIT. Setup reduction is much easier than most people think
after traditional methods have been purged. It is extremely important to
adopt new perspectives that are not bound by old habits.
3. Pull Systems:- We are now ready to address pull systems, sometimes known as
kanban systems or supermarket systems. The United States is in the process of
phasing out the use of the word kanban due to its association with Japan. Kanban
is not even a universally accepted Japanese term since some plants in Japan that
compete with Toyota view it as a Toyota-coined word. For our purposes, we will
use the term pull system.
As mentioned earlier, Toyota sent representatives to the United States shortly after
World War II to analyze their production techniques. They concluded that
Americans ran their factories much the same way the Japanese ran their factories.
Every operation in the factory works independently, then forces its parts onto the
next operation. The Japanese termed this process a push system.
a) The Push System:- A push system originates with a forecast schedule.
This forecast is forced upon the previous step (assembly) in the
manufacturing process, all the while adjusting for lead times to predict
which sub-assemblies are needed and by when. The sub-assembly forecasts
are then forced upon the various component levels still maintaining lead
time, thus completing the cycle through the total manufacturing system
down to raw materials. Paperwork accompanies this system informing
operators what is needed and by when.
Each operation then begins to manufacture parts and push them on to the
next operator. That operator receives the parts, does his work and pushes
them along the line. The expectation is that all this inventory will be
pushed along and will reach the predetermined places at the right time so
as to be shipped on schedule. Schedules are then analyzed to see what
was not on time and future schedules are adjusted accordingly.

29
b) From Supermarket to Factory Floor - The Pull System:- While in
America assessing our manufacturing processes, the Japanese visited some
of our supermarkets in their spare time. What they learned and took back
to Japan has revolutionized manufacturing. A supermarket is managed very
differently from a factory. Shoppers come to a supermarket knowing that
there will always be a small stock of needed inventory. Customers feel no
pressure to buy large quantities because they know that the goods will be
available when they need them. Every night a “stocker” replenishes the
inventory that has been removed. Empty spaces on the shelves are the
stocker’s signal to produce more goods (restock). Exactly what has been
taken is what is replaced. The customers have directly told the store what
to replace by what has been purchased.
The Japanese converted this supermarket system for use in their factories.
No operation can produce goods until it has received a signal from its
customers. When the operator gets a signal from the customer, he then has
authorization to produce a certain number of parts in a specific time
period. The most effective pull signals are visual indicators such as empty
containers or empty floor space. If you have an empty container, fill it up;
if you have no container then do not produce that part. Other types of
signals are limited only by the imagination. They may include such things
as color-coded golf balls, washers, different shaped cards, flashing lights, or
kanban cards. The kanban card tells what type of part to build, what to
put the parts in, how many parts to build, where to send the parts and
how many cards of these parts are required to maintain a smooth flow.
Paper work is limited in a pull system.

30
4. JIT & Purchasing:- Purchasing cost is a critical factor for a JIT manufacturing system,
but it lags behind quality and delivery lead time in importance. Vendors must deliver
quality products on time (just in time) before a JIT system can work, regardless of cost.
JIT purchasing offers a framework for a true partnership between vendors and companies
that helps to solve the problems of cost, quality and lead time.
a. Partnerships:- Traditional relationships between companies and vendors do
not allow for partnerships to be formed. Companies send out bids for
purchased materials with the contract going to the lowest bidder. Six
months down the road another bid is let with the lowest bidder getting
that contract. If the current vendor is not the lowest bidder that vendor
may lose six months of business. Companies want vendors to cut their
profits, but vendors need to be assured of a good profit now because they
may not be here six months from now.
The new JIT partnership that we are striving for is a long term, mutually
beneficial relationship with fewer but better vendors. Mutual trust must be
developed between companies and vendors. This cannot be accomplished if
vendors change every time new bids are sent out. For this reason a
company should have few suppliers (preferably one) for each purchased
material or component. This idea of single sourcing is as troublesome to
traditional purchasing people as slower run speeds and smaller batch sizes
are to traditional manufacturing people.
Traditional purchasing people question whether the company is getting the
best price possible by using only one supplier. As a company is reducing
its vendors, it is obtaining the best price due to traditional competition.
Vendors embrace the idea of a long term relationship because it allows
their sales to remain more constant. Strict criteria concerning dependability
(quality and lead time) should be placed upon vendors by companies.
When this criteria is satisfactorily met, the vendor will become “certified”.
Ideally certified vendors deliver products just in time, every time, with 100
percent quality. A partnership is then formed between the company and the
vendor so that they can actively work together to continually lower the

31
cost of purchased material. It would be impossible to form such
relationships with several, ever changing vendors.
b. Eliminating Procurement Wastes:- Three areas of waste need to be
recognized before a company can successfully implement JIT. First is the
waste in a company’s own manufacturing process:- the moving, counting,
rework, storing, scheduling, setup times, and inspection. Secondly, waste
within the purchasing process itself should be eliminated. A third area that
is often overlooked is the manufacturing philosophy of a company’s
vendors. Since an average of 70 percent of a company’s costs come from
purchased materials, every company should aid its vendors in eliminating
waste in the vendor’s manufacturing process. However, it should be
stressed that a company must first get its own house in order (eliminate
waste) before the company can help its vendors to improve their processes.
Let’s look at a few non-value added steps (waste) in a typical component
before a value adding process happens. A purchase order does not add
value, an amendment to a purchase order does not add value, reports and
invoices do not add value, taking something off a truck and putting it in a
holding area does not add value, inspecting it does not add value, moving
it to a stockroom does not add value, taking it from a large container and
placing it in a small container does not add value, and moving it to where
it is going to be used does not add value. The way to eliminate waste is
to eliminate all steps that do not add value to the product.
The initial phase should be to delete inspection of all incoming raw
materials, parts, and components. This can be accomplished by working
with vendors to make sure they understand the process and how to solve
problems in the process. They should have a thorough understanding of the
standards that you require and have competent inspection procedures so
they can deliver 100 percent quality materials and components. The
eventual goal is for vendors to monitor rather than inspect, with all
operations done right the first time.

32
c. A Day’s Worth Every Day:- In a repetitive manufacturing environment,
the same amounts of inventory should be used up every day. Ideally
materials and components will be delivered in the afternoon, used the next
production day, and shipped the day after in the form of finished products.
Packaging in this process does not add value, therefore reusable containers
should be used to ship goods if possible. The vendor delivers goods to the
production line and picks up empty containers for the next day’s shipment.
These containers are the pull signal that tells the vendor to produce more,
thus eliminating the need for purchase orders. Eliminating packaging cuts
cost for the vendor and the company, causing the partnership between the
two to be strengthened.
Since these vendors are certified, there is no need for incoming inspection.
A central holding dock or receiving area is not needed. There is no need
for a stockroom or an inventory tracking system. There is no need for
picking up and transporting. Purchase orders have been deleted. There are
no corrugated boxes or excess paper to be ripped open and thrown away.
And finally, no incoming invoices to be processed. Although a partnership
must be built on trust, there is often no trust pertaining to money matters.
The main proof of goods received is the shipping records. If two vendor
components are needed for each product manufactured, you must deduce
that if you shipped 100 products, you owe the vendor for 200 components.
If the product was shipped, the components must have been in it.
Of course, eliminating incoming invoices only works for a repetitive
manufacturing facility, but all companies should question the way business
is being conducted now. Every process in the purchasing department should
be optimized through the use of JIT/TQM principles (teams, value-adding
analysis, cross-training, etc.). Companies must strive to form a long-term,
mutually beneficial partnership with vendors that is built on trust.
Traditional methods of purchasing will no longer apply in the new JIT
environment.

33
CONCLUSION:-
IMPLEMENTING JIT
JIT implementation must start by creating a suitable environment for JIT to flourish. A
structure must be established whereby responsibility for problem solving is appropriated
to all levels of the organization. Shop floor personnel will be asked to find solutions for
shop floor problems and so on throughout the organization. This reversal from traditional
management style to a Total Quality Management (TQM) style can only be accomplished
through Total Employee Involvement (TEI) and employee teams. TQM is a prerequisite
to JIT.
I. Forming Teams:- The first team that should be established is the quality team
sometimes called the Executive Council or Quality Steering Committee. No matter
what you call it, the objectives of the top team will be the same. The Steering
Committee will address the issues with TQM implementation (you are not ready
for JIT yet) while attending to everyday organizational issues as well. If possible,
Steering Committee members should be removed from the interruptions of
everyday organizational decisions. It is a proven fact that companies that allow
their Steering Committees to dedicate all their time to solving TQM/JIT
implementation problems have higher success rates and shorter implementation
times.
The Steering Committee will be made up of high ranking officials within the
organization. They will assign teams from the workforce to solve various
implementation problems. The employees that constitute these teams now have the
power to make decisions that directly affect productivity at their level. Team
logistics will not be discussed in this manual.
II. Developing a JIT Strategy:- Now that you understand the basics of JIT, a
specific implementation strategy must be developed. There are no cookbook
solutions for JIT implementation. Each Steering Committee has a different vision
and each company goes about implementation differently. Below are examples of
how JIT has been successfully applied in various types of organizations:-

34
 Company 1 concentrated on finding the bottleneck in its manufacturing
process and worked to eliminate it through reducing setup times, forming
machine cells, removing non-value added steps, or whatever means
required. After each bottleneck had been eliminated, the company found the
next largest bottleneck and eliminated it, and so on, throughout the entire
organization. Employees are still finding bottlenecks (albeit much smaller
ones), and will continue to do so through the process of continuous
improvement.
 Company 2 implemented JIT at its final operation and progressed in
reverse order throughout the plant until reaching incoming raw materials.
The idea behind this strategy is that as you implement JIT, you eliminate
the need for excess inventory for the succeeding process or processes down
the line. Suppose a plant has nine operations to perform before a part is
shipped. If you optimize step nine first, parts can be pulled from step
eight to step nine after eight has been optimized. When you reach step
five, parts will flow from five to nine in a true JIT fashion.
 Company 3 started by removing as many non-value adding steps from the
manufacturing process as possible without moving any machines. Employee
teams solved as many problems as they could while leaving machines in
the traditional configuration. Machines were then relocated into cells and
the teams went back to work to eliminate waste in the new configuration.
The teams will now continually move machines and optimize the process.
 Opposite to Company 3, Company 4’s Steering Committee moved
machines into cells to improve product flow. Employee teams were then
tasked with removing as much waste from the process in the current
configuration. When teams recommended, machines were moved again.
Company 4 moved machines frequently while company 3 rarely moved
machines.
 Company 5 used what we will call the shotgun approach. Teams were
tasked with implementing JIT as fast as possible with no visible structured
approach. Machines were moved and inventory reduced and then it was up

35
to the teams to implement JIT. Problems were solved on a priority basis
as determined by the Steering Committee. A word of warning:- this
approach cannot happen if quality will not allow smaller inventories. On
the positive side, employees were assured of management’s commitment
because the conversion to JIT happened fast.
 Similar to Company 2, Company 6 initiated JIT one cell at a time, but
not at the last operation. Pilot projects were selected by the Steering
Committee on the basis of success probability. Since the pilot project set
the tone for the entire JIT effort, a project was chosen that would get the
best results. Company 6 continued to add projects until the entire
organization was converted to JIT.
These six companies used six comparable but different approaches to achieve the same
results. You may choose a method similar to one of these, a combination of these, or a
completely different method to implement JIT. How you accomplish JIT is not as
important as when you do it.
MANAGEMENT's RESPONSIBILITY
The pre-dominant reason for JIT failure is lack of commitment by top management. JIT
must be launched where there is absolutely no skepticism about management’s long term
commitment to JIT success. Employees recall management’s past track record on “flavor
of the month plans” that died quietly with little or no fanfare. The first time
management compromises quality in favor of quantity it will devastate the morale of the
shop floor personnel. They sense that management’s main emphasis is money for
products shipped, not customer satisfaction, thus relegating JIT to a quiet death.
JIT must have a champion for its cause within every organization. Ideally, this advocate
would be the highest ranking person who applies to your situation, i.e., the CEO at the
corporate level, the division manager at the division level or the plant manager at the
plant level. Typically, the consciousness of JIT penetrates the organization somewhere
below this top level of management. For the greatest chance of success, JIT should be
presented to the top manager as soon as possible. By initially teaming up with the top
manager, he or she will perceive ownership of the JIT concept, thus he or she will have

36
a stronger commitment to JIT. If the top management does not embrace the concept of
JIT, but rather it develops at the middle management level, the chance for failure
increases.
There are two key elements that are management's responsibility:- motivation and
education. Management must use these elements to overcome the reluctance to change by
the employees and the natural fear that accompanies change. Each level of the
organization has different fears about JIT so each level requires a different motivational
approach. Management must understand the apprehensions of people at every level and
what actions can be taken to gain their trust and commitment to join the JIT venture.
I. Motivation:- Top managers should already be motivated by what they see as
JIT’s ability to produce more efficiently. Upper and middle managers often feel
they are caught between a rock and a hard place. Top management is angry
because JIT is not progressing fast enough and the shop floor employees are mad
because they cannot perform the JIT miracles that middle management expects of
them. Middle managers have worked hard to gain the status that they now have
and feel threatened by the new JIT style. The means to conquer these fears is
trust. Middle management can be motivated by knowing that top management is
100 percent dedicated to JIT, and that top management is aware of the problems
and will help solve these problems. Finding these solutions often is not easy, but
can be accomplished by a motivated management staff working closely with top
management.
Until now shop floor personnel have made no decisions, therefore have taken no
risk of making the wrong decision. Management must motivate these people by
assuring them that making a wrong decision is permissible as long as they learn
from it. Shop floor personnel also have major concerns about job security. Top
management should calm these fears through a no-layoff guarantee. Management
should also form a partnership with all employees to earn their trust and motivate
them by communicating to them that the whole organization must change, not just
the shop floor personnel.

37
II. Training:- Management must convey to all employees why the organization is
being restructured. If the company is in trouble, management should be honest
with the employees. All employees should be trained in the reasons for and
methods of JIT. Employees are more receptive to JIT if they understand how pull
systems, setup reduction, reduced inventory, plant loading, shorter lead times,
better quality, etc., can lead to a larger market share, higher sales, and increased
customer satisfaction. Management should devise a structured approach for training
all employees in the principles of JIT. An employee in purchasing may not need
to know how to reduce setup time on a particular machine but must know why
this time must be reduced.
Management must also participate in training. Other than a complete understanding
of JIT principles, managers will need training in “modern” management
techniques, such as Total Quality Management (TQM). Managers must develop the
total quality mindset that will allow them to lead the organization into JIT.
III. Leadership:- Management must realize that actions speak louder than words. Any
conflict between management’s words and management’s actions will be noticed
by employees. If management feels that training is important but misses a training
session in favor of a “higher priority,” it has sent a negative message to the
employees. Top management must demonstrate its commitment to JIT through
long hours and hard work. Management’s actions should build employee trust, and
trust is the most important element of any plan.

38
BIBLOGRAPHY:-
1. www.wikipidea.org
2. www.toyota.com
3. www.icai.org
4. The Just-In-Time Breakthrough by E.J.Hay.
5. A Revolution In Manufacturing: The SMED System by Shigeo
Shingo.
6. JIT Factory Revolution by Hiroyuki Hirano.

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