This document discusses Just-In-Time (JIT) manufacturing. It begins by introducing the concept and some key elements of JIT, including reducing waste and inventories, problem solving, quality management, and pull-based production using kanban systems. It then provides examples of how kanban cards are used to signal production needs between work centers. The document emphasizes that people and continuous improvement are essential for JIT to work. It outlines benefits such as reduced inventory and cycle times.

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Just-In-Time (JIT) Manufacturing

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TYPICAL DECISION PROBLEM –
(A Case Study of U S Filters) - Part I
U.S. Filter is a major supplier of air filters for cars & trucks to
the " big three” auto-makers in the United States. Recently they
have received notice that Ford Motor Company, a major customer,
is going to begin using a just-in-time approach to manufacturing.
After meeting with Ford, Joe Franks, the president of U.S Filter,
commented on the situation as follows-
They want us begin delivering filters four times a day in small
quantities. Presently, we send them about one truck load a week.
Are three guys crazy? The freight alone is going to cost a fortune.
Ford also wants a long-range contract with us as a sole source. I
like that idea, but the catch is that we must guarantee a 2 % price
reduction each year. How in the world can we do that with
inflation, higher wages, and the price increases of every year?

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Ford also wants to see our cost records for the filters before
negotiating prices with us. It will be a cold day before I let them go
through our cost records. They also want us to ensure perfect quality
and deliver directly to their assembly line without receiving or
inspection. That is probably a good thing for our company; we
should be producing perfect quality anyway, but how are we going to
do it?
I would certainly like to know how we are going to meet these
demands from Ford. What they are asking seems unreasonable to
me.
Q: If you are made to occupy the chair of Mr. Joe Frank,
what is your decision -
To accept the supply terms of Fords ?
Or to forego the big order?

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U S Filters – Part II
At this point, Dona Smith –V P (Mfg.) offered a comment :
If you can't beat them , join them. May be we should go to a JIT system too.
I have been doing some reading about JIT and have talked to several people, including
Ford, and it seems to me we may be able to gain the productivity improvements and
price decreases - they are asking for if we also adopt a JIT system. As a matter of fact,
we could improve our ROI substantially even with these changes. Ford will stabilize
their schedule, which will help us. We have to request Ford to arrange a co-operative
round robin “milk-run pick-up” for all suppliers in our area to help reduce costs.
We will have to also convince our other customers to go along with a stable
schedule and convince our suppliers to accept a program similar to the one Fordis
shoving down our throats, I don't think we have any choice but to go along with this
JIT approach. It seems like the wave of the future. Some of our other customers, like
Caterpillar, Cummins Engine, and General Motors are also talking about JIT, so Ford
may be only the first one to make these demands.
It will take some major changes in our company, however, to do it. We will need
to revolutionize the way we manufacture our products, much greater team work and
coordination since inventory is not available to cover up problems in the system

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Overview
 The Just-in-Time (JIT) Manufacturing Philosophy
 Prerequisites for JIT Manufacturing
 Elements of JIT Manufacturing
 Benefits of JIT Manufacturing
 Success and JIT Manufacturing
 Wrap-Up: What World-Class Producers Do

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Where is Inventory reflected ?
Liabilities
Share Capital
Reserves
Loans & Borrowings
Current Liabilities
Assets
Fixed Assets –
Land,
Bldg.,
M/c
Current Assets
Cash
Inventory ------
Gross Sale - XXXXX
Expences –
Manufacturing -
Raw Mat.
Wage Bill
Stores & Spares
Other Factory Exp.
Sales & marketing
–
Administrative Exp.
Interest
Depreciation
--------------
Gross Profit

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APICS Definition of JIT
“A philosophy of manufacturing based on planned
elimination of waste and continuous improvement
of productivity.…... ”

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APICS Definition of JIT
“The primary elements of Just-in-Time are to:
 have only the required inventory when needed,
 improve quality to zero defects,
 reduce lead times by reducing setup times,
queue lengths, and lot sizes,
 incrementally revise the operations themselves,
and
 accomplish these things at minimum cost”.

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JIT Synonyms
 IBM - Continuous Flow Manufacturing
 HP - Stockless Production
Repetitive Manufacturing System
 GE - Management by Sight
 Boeing - Lean Manufacturing
 Motorola - Short Cycle Manufacturing
 Japanese - The Toyota System

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Traditional View of Manufacturing
 Key objective : to fully utilize capacity, produce
more with fewer workers and machines.
 How? : With large queues of in-process inventory
waiting at work centers.
 Workers and machines never had to wait.
Result:
Products / Materials spent most time just waiting,
that is unacceptable in today’s time-based competition.

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Time-Based Competition
 It is not enough to be high-quality and low-cost
producers.
 Today, the firm must also be first in getting products
and services to the customer fast.
 To compete in this new environment, the order-to-
delivery cycle must be drastically reduced.
 JIT is the weapon of choice today to reduce the
elapsed time of this cycle.

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JIT Manufacturing Philosophy
 The main objective of JIT manufacturing is to reduce
manufacturing lead times.
 This is primarily achieved by drastic reductions in
work-in-process (WIP).
 The result is a smooth, uninterrupted flow of small
lots of products throughout production.

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Successful JIT Applications
 Most successful JIT applications have been in
repetitive manufacturing,
(batches of std. products, at high speeds and volumes)
 Successful use of JIT is rare in large, highly complex
job shops where production planning and control is
extremely complicated.
 Smaller, less complex job shops have used JIT, but
operations have been changed so that they behave
somewhat like repetitive manufacturing.

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From To
Batch production Flow production
Push Scheduling Pull Scheduling
OBJECTIVES IS ONE PIECE FLOW
FLOW PRODUCTION EXPOSES WASTE

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Changes Required for JIT
 JIT requires certain changes to the factory and the
way it is managed:
 Stabilize production schedules
 Improve product quality
 Cross-train workers
 Reduce equipment breakdowns
 Develop long-term supplier relations

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Elements of JIT Manufacturing
 Eliminating waste / Reducing inventories
 Enforce problem solving and cont. improvement
 People make JIT work : Employee Empowerment
 Total Quality Management (TQM)
 Parallel processing
 Kanban production control
 JIT purchasing
 Working toward repetitive manufacturing

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Shigeo (1981)
7 Wastes & their elimination methods
Waste Type Elimination Method
1. Overproduction Reducing set-up time, Synchronizing quantities and
timing between processes, etc
2. Waiting Synchronizing workflow as much as possible,
balancing uneven loads, etc.
3. Transportation Redesigning layouts to make transport and handling
unnecessary.
4. Waste of processing
itself
Need assessment of product and process.
5. Waste of stocks Reduce set-up times, and lead times by synchronizing
workflows.
6. Waste of motion Study motion for economy and consistency.
7. Making defective
parts
Prevent defects to eliminate inspection

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Problem Solving and Continuous Improvement
 JIT is a system of enforced problem solving.
 One approach is to lower inventory gradually to
expose problems and force their solution.
 With no buffer inventories to offset production
interruptions, problems are highly visible and cannot
be ignored.
 The job of eliminating production problems is never
finished.
 Continuous improvement -- or kaizen -- is central to
the philosophy of JIT.

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Uncovering Production Problems
Quality
Problems
Material
Shortages
Machine
Breakdowns
Workload
Imbalances
Worker
Absenteeism
Out-of-Spec
Materials
Quality
Problems
In-Process
Inventory
Production
Problems
 We must lower the water level!

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People Make JIT Work
 Training and involvement of workers.
 A culture of mutual trust and teamwork
 An attitude of loyalty to the team and self-discipline.
 Another crucial element is empowerment of workers,
- giving them the authority
to solve production problems.

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TQM and JIT
 Long-term relationships with suppliers
 Certified suppliers eliminate incoming inspection
 Share design process for new products
 Simplify design/processes
 Poka-yoke
 Process capable of meeting tolerances
 Operators responsible for quality of own work

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• Operations performed in series:
Op 1 Op 2 Op 3 Op 4 Op 5 Op 6 Op 7 Op 8
• Operations performed in parallel:
Cycle Time for Each Operation = 1 Hour
Total Product Cycle Time = 1 x 5 = 5 Hours
• Operations 2 and 4 start the
same time as Operation 1
Parallel Processing
Cycle Time for Each Operation = 1 Hour
Total Product Cycle Time = 1 x 8 = 8 Hours
Op 1
Op 2
Op 3
Op 4
Op 5
Op 6 Op 7 Op 8

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JIT: A Pull System
 In a push system, such as an MRP system, we look
at the schedule/ forecast to determine what to
produce next.
 In a pull system, such as JIT, we look only at the
next stage of production and determine what is
needed there, and then we produce only that.

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Kanban Production Control
 At the core of JIT manufacturing at Toyota is
Kanban, an amazingly simple system of planning and
controlling production.
 Kanban, in Japanese, means card or marquee.
 Kanban is the means of signaling to the upstream
workstation that the downstream workstation is ready
for the upstream workstation to produce another
batch of parts.

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Kanbans and Other Signals
 There are two types of Kanban cards:
 a conveyance card (C-Kanban)
 a production card (P-Kanban)
 Signals come in many forms other than cards,
including:
 an empty crate
 an empty designated location on the floor

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Conveyance Kanban
Conveyance Kanban Card
Part number to produce: M471-36 Part description: Valve Housing
Lot size needed: 40 Container type: RED Crate
Card number: 2 of 5 Retrieval storage location: NW53D
From work center: 22 To work center: 35

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Production Kanban
Production Kanban Card
Part number to produce: M471-36 Part description: Valve Housing
Lot size needed: 40 Container type: RED crate
Card number: 4 of 5 Completed storage location: NW53D
From work center: 22 To work center: 35
Materials required:
Material no. 744B Storage location: NW48C
Part no. B238-5 Storage location: NW47B

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How Kanban Operates
When a worker at downstream Work Center #2 needs a
container of parts, she does the following:
 She takes the C-Kanban from the container she just
emptied.
 She finds a full container of the needed part in
storage.
 She places the C-Kanban in the full container and
removes the P-Kanban from the full container and
places it on a post at Work Center #1.
 She takes the full container of parts with its C-
Kanban back to Work Center #2.

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Containers in a Kanban System
 Kanban is based on the simple idea of replacement of
containers of parts, one at a time.
 Containers are reserved for specific parts, are
purposely kept small, and always contain the same
standard number of parts for each part number.
 At Toyota the containers must not hold more than
about 10% of a day’s requirements.
 There is a minimum of two containers for each part
number, one at the upstream “producing” work center
and one at the downstream “using” work center.

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N = Total number of containers between 2 stations
U = Usage rate of downstream operation
T = Average elapsed time for container to make
entire cycle
P = Policy variable indicating efficiency... 0 - 1
C = Capacity (number of parts) of standard container
N
UT P
C

( )1
Calculating the Number of Containers
between Work Centers

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Example: Number of Containers
There are two adjacent work centers, one of
which is fed parts from the other. The production
rate of the using work center is 165 parts per hour.
Each standard Kanban container holds 24 parts.
It takes an average of 0.6 hour for a container to
make the entire cycle from the time it leaves the
upstream center until it is returned, filled with parts,
and leaves again. The efficiency of the system is
observed to be 0.2.
How many containers are needed?

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Example: Number of Containers
 Number of Containers, N
N = UT(1 + P) / C
= 165(0.6)(1 + 0.2) / 24
= 99(1.2) / 24
= 118.8 / 24
= 4.95 or 5 containers

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Essential Elements of JIT Purchasing
 Cooperative and long-term relationship between
customer and supplier.
 Supplier selection based not only on price, but also
delivery schedules, product quality, and mutual trust.
 Suppliers are usually located near the buyer’s factory.
 Shipments are delivered directly to the customer’s
production line.
 Parts are delivered in small, standard-size containers
with a minimum of paperwork and in exact quantities.
 Delivered material is of near-perfect quality.

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Working Toward Repetitive Manufacturing
 Reduce setup times and lot sizes to reduce inventories
 Change factory layout to allow streamlined flows
 Convert process-focused layout to cellular
manufacturing (CM) centers
 Install flexible manufacturing systems (FMS)
 …..more

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Working Toward Repetitive Manufacturing
 Standardize parts designs
 Train workers for several jobs
 Implement preventive maintenance (PM) programs
 Install effective quality control programs
 Develop an effective subcontractor network

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Benefits of JIT
 Inventory levels are drastically reduced:
 frees up working capital for other projects
 less space is needed
 customer responsiveness increases
 Total product cycle time drops
 Product quality is improved
 Scrap and rework costs go down
 Forces managers to fix problems and eliminate waste
.... or it won’t work!

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Wrap-Up: World-Class Practice
 Focus on time-based competition to capture market
share
 JIT method to reduce order-to-delivery cycle
 Prerequisites required to successfully implement JIT:
 behave like repetitive manufacturing
 stable schedules