INVENTORY

MANAGEMENT
JUST IN TIME
BAGIAN 12

The Changing Business

Environment

A more competitive
environment emphasizing:

Higher quality products

Lower prices and costs
Global competition
Meeting and anticipating
customer needs

Business environment
changes in the past
twenty years

The Changing
Business Environment
New tools for
managers!

Just-In-Time
Total Quality
Management
Process Reengineering
Theory of Constraints

Just-in-Time (JIT)
Systems
Receive
customer
orders.

Complete products
just in time to
ship customers.

Schedule
production.
Receive materials
just in time for
production.

Complete parts
just in time for
assembly into products.

BENEFITS OF A JIT SYSTEM

Reduced
Reduced
inventory
inventory
costs
costs

Greater
Greater
customer
customer
satisfaction
satisfaction

Higher quality
products

Less
Less warehouse
warehouse
space
space needed
needed

More
More rapid
rapid
response
response to
to
customer
customer orders
orders

Next
Page

Benefits of a JIT
System
Reduced

Reduced
inventory
inventory
costs
costs

Click
Here

Greater
Greater
customer
customer
satisfaction
satisfaction

Higher quality
products

Less
Less warehouse
warehouse
space
space needed
needed

More
More rapid
rapid
response
response to
to
customer
customer orders
orders

TOTAL QUALITY
MANAGEMENT
Benchmarking

Where are we?

Where do we
want to go?
Plan

Do we need
to change Act
the plan?

is

Do

Check
How are we doing?

How do
we start?
Continuous
Improvement

Next
Page

PROCESS REENGINEERING
1. A business
process is
diagrammed
in detail.

2. Every step in
the business
process must
be justified.

Click
Here

Anticipated results:
1. Process is simplified.
2. Process is completed
in less time.
3. Costs are reduced.
4. Opportunities for
errors are reduced.
3. The process is
redesigned to include
only those steps that make
our product more valuable.

THEORY OF
CONSTRAINTS
A sequential process of identifying and removing constraints in a
system.

Restrictions or barriers that impede

progress toward an objective

JIT: A PHILOSOPHY AND A SET OF OPERATING

Methods
JIT: A philosophy that focuses on the undertaking of activities
immediately as need or demanded. This philosophy includes four pivotal
aspects:
Elimination of all activities that do not add value
Commitment to high level of quality
Commitment to continous improvement
Emphisis on simplification and increased visibility of all activities that
add value

JIT
Purchasi
ng
Methods

JIT
Producti
on
Methods

JIT
Distibuti
on
Methods

JIT
Retailing
Methods

JIT
Administrativ
e
Methods

Element of Technologies for JIT/CIM

JIT/CIM

Levelled
Mixed
Kanban
productio production
n
Quick
Flexible
Machine JIDOKA
dieworkforc improveme
charge
e
nt
Design-production Group
Part
cooporation
technology commonality

MRP/OPT
FMS/CAM
CAD/CAE

Automatic
next process is
Poke-yoke
Preventive
your
SPC
maintenance inspection/CAT
Customerconcept
Use of
Compact floor layout One piece flow Automated guided
hand
Dedicated material
production
Vehicle system
Push chart
flow
(AGVS)

Workplace
everyting in its place
organization discipline

LOW TECHNOLOGY OPTION

Automated
Warehouse(ASR
S)
HIGH TECHNOLOGY
OPTION

SEVEN WASTE
Waste is
The enemy of efficient production
It does not add value to
The production but only raise costs
SEVEN TYPES OF WASTE ARE:
1.Overproduction

: overproduction covers other problems

2.Waiting Time : lack of parts,watching machine running, etc

3.Transportation
handling, etc
4.Processing
5.Inventory

: long distance transportation , double

: unnecessary production process

: unnecessary stock creates problems

6.Motion : work not move

7.Defects : make it right the first time

GENERAL ACCOUNTING
MANUFACTURIN
G
DATA BASE
COMPUTER

COST ACCOUNTING
FORECASTING/ORDER
ENTRY

PP

ACCOUNT RECEIVABLE

MPS

PURCHASING

MRP II
MRP
CRP

ACCOUNT PAYABLE
SFC

PAYROLL

PRODUCTIO
N
PLANNING
MASTER
PRODUCTIO
N
SCHEDULING
MATERIAL
REQUIREMENT
PLANNING
CAPACITY
REQUIREMENTS
PLANNING
SHOP FLOOR
CONTROL

CAD
CAE

COMPUTER
AIDED
DESIGN

CAPP AIDED PROCESS

PLANNING
NC-MACHINES
ROBOTICS
CAM

CAQ
C

AUTOMATIC
STORAGE/RETRIEV
E
AUTOMATIC
SYSTEM
GUIDE
VIHACLE
COMPUTER AIDED
QUALITY
CONTROL

Just-in-Time Purchasing

Just-in-Time (JIT) Purchasing is the purchase of

materials or goods so they are delivered just as
needed for production or sales

JIT is popular because carrying costs are actually

much greater than estimated because warehousing,
handing, shrinkage, and investment costs have not
been correctly estimated

Materials Movement in Traditional and

JIT purchasing Environment
Traditional
Delivery

JIT Purchasing

Delivery

Materials Handling

Quality Inspection

Materials Handling

Warehouse

Materials Handling

Materials Handling

Retail/Wholesale
Floor Production
Floor

Retail/Wholesale
Floor Production
Floor

JIT Purchasing

JIT reduces the cost of placing a purchase order

because:

Long-term purchasing agreements define price and

quality terms. Individual purchase orders covered by
those agreements require no additional negotiation
regarding price or quality

Companies are using electronic links to place purchase

orders at a small fraction of traditional methods (phone
or mail)

Companies are using purchase-order cards

Relevant Costs in JIT

Purchasing

Purchasing Costs

Stockout Costs

Quality Costs

JIT Purchasing and

Supply-Chain Analysis
Supply chain describes the flow of
goods, services, and information from
the initial sources of materials and
services to the delivery of products to
consumers (both inside and outside the
firm)
Supply chain members share information
and plan/coordinate activities
Supplier evaluations are critical to JIT
purchasing implementation

Inventory Management and

Materials Requirements
Planning

Materials Requirements Planning (MRP) a pushthrough system that manufactures finished goods
for inventory on the basis of demand forecasts

MRP Information Inputs

MRP uses three information sources to

determine the necessary outputs at each
stage of production
1. Demand forecasts of final products
2. A bill of materials detailing the materials,
components, and subassemblies for each
final product
3. The quantities of materials, components,
and product inventories to determine the
necessary outputs at each stage of
production

MRP
Takes into account lead time to
purchase materials and to manufacture
components and finished products
Sets a master production schedule
specifying quantities and timing of
each item to be produced
The output of each department is
pushed through the production line
whether it is needed or not
Push Through may result in an
accumulation of inventory

e1

1
I1
t

1
L1

2
I1
t

I1

e2

1
I2
t

Manufacturing Stage
Inventory

2
L2

2
I2
t

I2

Dem
a
For
eca nd
stin
Controlle
g
r

1
I3
t

3
L3

2
I3

I3

Withdrawing
Production Instruction
Material Flow

Inventory Management and

JIT Production
JIT (Lean) Production is a demand-pull
manufacturing system that manufactures
each component in a production line as
soon as and only when needed by the next
step in the production line
Demand triggers each step of the
production process, starting with customer
demand for a finished product and working
backward
Demand pulls an order through the
production line

JIT Production Goals

1.

Meet customer demand in a timely basis,

2.

with high-quality products,

3.

at the lowest possible cost.

JIT Production Features

Production is organized in manufacturing
cells, a grouping of all the different types of
equipment used to make a given product
Workers are hired and trained to be multiskilled (cross-trained)
Defects are aggressively eliminated
Setup time is reduced
Suppliers are selected on the basis of their
ability to deliver quality materials in a
timely manner

Other Benefits of JIT

Production

Lower overhead costs

Lower inventory levels

Heightened emphasis on improving quality by

eliminating the specific causes of rework, scrap, and
waste

Shorter manufacturing lead times

JIT and Enterprise

Resource Planning
(ERP)
Systems
JIT success hinges on the speed of

information flows from customers to

manufacturers to suppliers
ERP is a system with a single database
that collects data and feeds them into
software applications supporting all of a
firms business activities
ERP gives managers, workers, customers,
and suppliers access to operating
information
ERP can be expensive, large, and unwieldy

Performance Measures
and Control in JIT
Financial performance measures such as
inventory turnover ratio
Nonfinancial performance measures of time,
inventory, and quality such as:
Manufacturing lead times
Units produced per hour
Days of inventory on hand
Setup time as a % of total manufacturing time
Number of defective units as a % of total units
produced

TAILORED PRODUCTION CONTROLS

High

Lead-Time Varlability

Low

Materials Planning

Pull
Continous
Flow

Hybrid
Push-Pull:
Batch,
Repetitive
Hybrid
Push-Pull:
Batch,
Dynamic

Push:
Custom
Engineering

Control Stage
Order Realease

JIT
4

RATE BASED
5

JIT-MRP
7

Pull or MRT

Pull
9

MRP

MRP
11

MRP

JIT-Pull
6

10

Shop flooor

Order
Scheduling

Pull or
Order
Scheduling

12

Operating
Sceduling

 TERIMA KASIH