JUST IN TIME

PRODUCTION
By Tanvi Bhatia
Swaranjeet Choudhary
Sonal
Shailesh

PRODUCTION MANAGEMENT AND

ITS IMPORTANCE

Definition-Production Management is the application of management principles to

the production function in a factory which involves directing& controlling
production in the process of transformation of raw materials to finished goods

Importance-Why Production management?

The basis of Production management is the reduction of production cost as

Globalization has changed the Equation of Competition where Market price Production cost=Profit

Other functions are

Planning & Controlling

Maintaining Quality at its optimum level

Administration co-ordination and efficient use of manpower

CONCEPT OF ZERO INVENTORY(IMPORTANT

ZERO OF MANAGEMENT)

A System in which a company keeps no or very little inventory in storage by simply

ordering exactly what it needs to sell and receiving it in a timely manner

This concept is also known as Made to order Concept

ADVANTAGES

Reduction in space required

Reduction in inventory carrying cost

Better Management

Elimination of waste

Reduction in damages

JUST IN TIME PRODUCTION OR LEAN

PRODUCTION

Just in time production refers to the production of goods to meet customer demand
exactly in time with demanded quantity and with optimum quality.

In simple words JIT is more of a demand pull system rather than a production pull
system wherein emphasis is more on satisfying customer demand at a minimum lead
time.

It is also known as Lean Manufacturing or Lean Production system

JUST IN TIME PRODUCTION

ORIGINS OF JIT

Although there were many predecessors, JIT production system was first implemented
by Toyota as a strategy for competitive advantage in Japan post World War-II

Toyota introduced JIT using a system known as Kanban which is also known as
TPS(Toyota Production System) or a pull system

Kanban was introduced into two parts

Production instruction Kanban

Parts retrieval Kanban

KEY FEATURES OF JIT

JIT runs on a demand pull basis rather than a production pull basis.

The activity of each workstation is authorised by the demand of downstream

work stations, thus parts move through the production system based on end
unit demand, focussing on maintaining a constant flow of parts

Setup and manufacturing lead time are minimised

More Emphasis is given on minimizing the lead time for delivery

JIT rejects mass production

JIT goes hand in hand with total Quality

JIT concentrates on eliminating wastes and expired products.

PROCESS FLOW DIAGRAM OF JIT

STEPS TO IMPLEMENT JIT

Determine a design flow process

Derive a quality control process

Stabilize schedule

Establish a Kanban pull system

Work with vendors

Further reduce inventory in other areas

Improve Product design

ADVANTAGES OF JIT

JIT keeps stock holding costs to bare minimum thus reducing the carrying cost of the
inventory

JIT eliminates wastes and out of date expired products do not enter into the equation.

Only essential stocks are obtained, hence less working capital is required to finance
procurement. A minimum re-order level is set and goods are procured only if that mark
is reached

Better ROI

Inspection cost and cost of rework is minimized

Better Quality and higher efficiency

Better relationships are fostered along the production chain.

Overproduction is eliminated

High customer satisfaction

DISADVANTAGES OF JIT

JIT system is very difficult to implement when the demands are fluctuating

JIT requires extremely good co-ordination between retailers and suppliers which is
practically very difficult

Stock out chances are very high

JIT is subjected to supply shocks

Very little room for mistakes as minimal stock is kept for reworking faulty product

Requires advance technology and Hi-tech software

A small rise or fall in demand may totally disrupt the production chain, hence estimated
demand has to be very accurate

JIT is very difficult to implement in Turnkey projects industry as there is always a

bulk requirement of capex materials

E.g. A famous case study wherein a sudden shutdown of Oil refineries after Katrina
Storm totally disrupted the supply chain

ELIMINATION OF LOOPHOLES IN
JIT

Demand estimate should be very accurate. Historical data and strong innovative
technology should be employed to estimate demand

Effective manpower should be employed

A strong control over downstream and upstream supply chain should be maintained

An effective material procurement team must be employed

A strong QC team must be maintained.

Higher management should keep a close look at the entire Production chain.

CONCLUSION

JIT concentrates on maintaining zero inventory, reduces cost of production and hence
forms a effective tool in PM

JIT has certain disadvantages and cannot be implemented in all industries

Better manpower and an effective management team will help to eliminate the
loopholes in JIT