2. Just In Time
Just in time (JIT) is a ‘pull’ system of production, so actual orders provide a
signal for when a product should be manufactured. Demand-pull enables a firm
to produce only what is required, in the correct quantity and at the correct time.
3. Features
1. Pull method of material flow
2. Consistently hight quality
3. Small lot sizes
4. Uniform workstation loads
5. Close supplier ties
6. Flexible work force
7. Preventive maintenance
4. Aims and objectives
1. To minimise inventory and costs associated with whole manufacturing
process.
2. To ensure continuous flow of product.
3. To shorten setup time by rationalisation of facilities
4. Produce hight quality of products and bring the level of rejects zero
5. To meet customer demand in timely way
6. Bring down the total cost at the lowest possible.
5. Benefits of Just in Time
• Just-in-time approach keeps stock holding costs to a minimum level.
• The just-in-time approach helps to eliminate waste.
• less working capital is required.
• the ROI (Return On Investment? of the organizations be high in general.
• As this approach works on a demand-pull basis
• JIT emphasizes the ‘right-first-time’ concept
• Higher customer satisfaction due to continuous communication with the
customer.
• By following JIT greater efficiency and High-quality products can be
derived.
• Just In Time adoption result in the elimination of overproduction.
8. Disadvantages of Just in Time
1. Risk of Running Out of Stock
2. Lack of Control Over the Time Frame
3. More Planning Required
4. Increased ordering and admin cost
5. May lose bulk buying discounts
6. Danger of lost sales
9. Backflush Manufacturing
The assumptions is thus that there is no inventory at the start of the
process. Additionally, as products are used immediately the assumption
is that there is no work in progress. This means that companies using
this method must manufacture only products with relatively short
through put times as products which remain as WIPs for long periods of
time would not be accounted for. Finally, it is assumed that there is no
inventory at the end of the process. Since no inventory is being
accounted at the beginning of the process, during or at the end, it must
be assumed that there is no stock of finished goods.
10. Problem on Recording journal entries (JIT)
Malone company adopted a JIT management system and has the
following transactions in August:
a. Purchased raw materials on account Rs. 50,000.
b. Incurred labour and overhead costs Rs. 70,000.
c. Completed 500 units with standard costs of Rs. 95 for direct
materials and Rs. 150 for conversion costs.
d. Sold on account 475 units for Rs. 300 each
11. Journal entries
1. Raw material in Process A/c Dr. 50,000
To Accounts Payable A/c 50,000
2. Conversion cost control A/c Dr. 70,000
To Direct wages and Accounts Payable A/c 70,000
3. Finished goods A/c Dr. 1,22,500
To Raw material in Process A/c 47,500
To WIP 75,000
4. Accounts receivable A/c Dr. 1,42,500
To Sales A/c 1,42,500
12. Conti…
5. Cost of goods sold A/c Dr. 1,16,375
To finished goods A/c 1,16,375
13. Precaution measures
1. Management buy-in and support at all levels of the organization are
required
2. Adequate resources should be allocated
3. Building a close, trusting relationship with reputed and time-tested
suppliers.
4. Just-in-time manufacturing cannot be adopted overnight.
14. Conti…
5. The design flow process needs to be redesigned and layouts need to
be re-formatted.
6. Lot sizes need to be minimized.
7. Work station capacity should be balanced whenever possible.
8. Preventive maintenance should be carried out
9. Set up times should be reduced wherever possible.
10. Quality enhancement programs should be adopted.
11. Reduction in lead times and frequent deliveries should be
incorporated.
12. Motion waste should be minimized.
15. Methodology in Implementation of JIT
1. Inventory Management
2. Smaller batches of production: smaller batches drives down cost
by reducing purchased, WIP and finished goods inventories.
Smaller batches of production is accomplished with use of
Kanban.
3. Production layout
4. Kanban
5. Flexible manufacturing system
6. Reducing Processing Time
17. Conti…
7. Separation of Value added functions
8. Care for uncertainties
9. Reduction of setup time
10. Simplification process
11. Material Handling systems
12. Cellular Manufacture
13. Process Capability
14. Appropriate Automation
18. Kaizen Costing
In the Japanese language the word Kaizen is derived from two Kanji, the
first ‘Kai’, meaning ‘change,’ and the second ‘zen’, meaning ‘good.’
Hence the literal meaning of the word being ‘change for the better’ i.e.
improvement. So the average Japanese would use the word Kaizen to
express improvement. Notice there is no reference to this improvement
being continuous or in small steps or being part of a philosophy or
mindset.
Small incremental changes made for improving productivity and
minimizing waste, it is a continuous process.
19. Conti..
• Kaizen is to be followed by everyone every time and every where
• What does the waste refers to ?
Everybody
Everyday
Everywhere
20. Conti..
Waste refers to any activity that does not add value
Add to the time and cost only.
Example:
Transportation within factory.
Waiting time.
Overproduction (right anticipation is required for the forecasted
demand, overproduction is a waste.)
Defective
Over processing
21. Implementing Kaizen – Few Rules
1. List your own problems.
2. Grade problem to as minor, difficult and major.
3. Start with smallest minor problem.
4. Move on to next graded problem and so on.
5. Remember improvement is the part of daily routine.
6. Never accept status quo.
7. Never reject any idea before trying.
8. Eliminate tried but failed experiments.
9. Highlight problems rather than hiding
22. Procedure for Implementation
1. Form small groups from 6-10 persons
2. Give them numbers-Kaizen 1,Kaizen-2…
3. Appoint an evaluator of the group
4. Arrange weekly meetings of group (6-12 months)
5. Submit progress of improvement in writing
6. Allow each member to express
7. No disturbance when others are speaking
8. However Clarifications can be sought instantly
23. Evaluatio
n
Marks for no improvement
made
- Marks depends upon improvement
tried but
0 -
0 to
30
failed
30 to
50
- Marks for small to moderate
improvement
50 to
75
- Marks for good
improvement
> 75 - Marks for extraordinary
improvement
24. Conti..
The following factors should be given due weightage.
1. Attitude - A
2. Safety - S
3. Productivity - T
4. Energy Saving - E
5. Money Saving - M
25. Benefits of Kaizen Costing
1. Customer Satisfaction
2. Make improvements continuously
3. Acknowledge Problems openly
4. Promote openness
5. Create Work Teams
6. Cross-functional teams
7. Develop self –discipline
8. Inform every employee
9. Enable every employee
27. Lean Management
Lean management seeks to eliminate any waste of time, effort or money by
identifying each step in a business process and then revising or cutting out
steps that do not create value. The philosophy has its roots in manufacturing.
Eliminating waste and Creating work flow.
28. 7 Mudas: Waste in Lean is any activity that consumes resources but
brings no value to the end customer.
31. Comparison
Lean cost Management Traditional
Costing
Why is this important for Lean
Quick, simple, and timely Complex and
wasteful
processes
FLOW: Frequent and simple value stream
income statements create much better
control.
Clear and easy to understand Difficult for
people to
understand
EMPOWERMENT: Information people can
understand empowers those people for Lean
improvement and growth.
Provides information for
effective decisions.
Leads to bad
decisions
VALUE: Readily understandable costs lead to
better decisions and improved cash-flow and
Profits.
Supports value stream
measurements and box
scores.
Supports
measurements
that undermine
Lean endeavours
PURSUE PERFECTION: Measurements
motivate people. Value Stream costs
motivate lean improvement. Standard
variance reports are anti-Lean.
32. Conti…
Supports a value stream
(total process) approach
Supports a
departmental
view of
production
VALUE STREAMS Focus on value
streams lead to improved value, flow,
and costs. Department
focus opposes Lean
Enables value stream
control and
improvement
Narrows the
focus of financial
control and
improvement
PURSUE PERFECTION: Value Stream
cost information creates better financial
control and drives improvement.
Enables inventory
valuation.
Enables
inventory
valuation.
FLOW: Standard costs were designed to
value inventory. Lean accounting values
inventory easier and better.
Enables value-based
pricing.
Enables cost +
pricing.
VALUE: Value stream focus on
customer value leading to value pricing.
Traditional companies use cost.
33. Benefits of Lean Management
1. A Decrease in Cost
2. Improved Customer Interactions
3. Utilization of “Push and Pull”
4. Increased Quality
5. An Improvement Culture
6. Increased Employee Morale
34. Disadvantages
1. The Problem of Inventory
2. Difficult to Change Over
3. High Implementation Cost
4. The Temptation to Over-Structure
5. Cutting things too fine.
35. Tools and Techniques of Lean Management
1. Just in Time
2. Kanban
3. Zero Defects
4. Cellular Manufacturing
5. 5s Philosophy (Sort, Straighten, Sweep, Standardise, Sustain.)
6. Jidoka
7. TQM
