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“Just in Time is the production and inventory control system in which we purchase materials and produced units at that time only when it needed and demanded by the customers.” By using this concept, normally in inventory control and manufacturing system, units are produced and materials are purchased only at the time when customers needed and demand. Under the ideal concept of JIT, materials should be purchased enough that needed in each day, therefore at the completion of the day organization would not have any stocks still in process and all goods that finished at the end of the day should be shipped to customers. So “Just in time” means materials should receive only at the time when it needed at production and similarly goods should be completed at the time when customers demanded and to be shipped to customers. In the environment of JIT, “Pull approach” is used to control the flows of stocks. Pull system means “materials being produced only when it requested and move to the location at the time when it is needed”. In pull system we uses signals that deliver request from one station to other station. It can be explained with this example. In assembling stage, assembling department sent request to the preceding work station, to fulfill the customers order we have a need of exact amount of materials and parts over the next few hours to give the finishing look to the product and the preceding work station sent exact amount of demanded items. The same signal is sent back to all the work stations so that they maintain their stocks levels and there will be no over stocking and deficiency. But in the conventional manufacturing systems “Push approach” was used. According to this approach when one work station finished its work. It sends its work to the next station regardless that receiving station is ready to receive or not. Result is stockpiling of uncompleted goods that increase cost as well as inefficiency in operations. So in just in time system we reduced stock level up to minimum level and in few cases up to zero. Just in time approach is used in both merchandise and manufacturing organizations. Companies that normally maintain three types of inventories are
• • •
Raw material Work in process Finished goods
Just in time approach much effect such above operations. Traditionally manufacturing organization that maintained large quantity of such stocks, purpose is that to run operations smoothly with out any disturbance, if any change occurs in environments, basically they faced lot of unanticipated problems. In case of late delivery of raw material from supplier, existing stock was used to continue the process. In case of break down or any other reasons work stations are unable to operate, work in process in was maintained. Similarly to manage future unanticipated fluctuations in demand, finished good inventories were maintained. But the experts argue that when any origination maintain such type of inventories they have to bear extra cost of warehouses, electricity and security and these are all waste. And according to the JIT definition purpose of the JIT to eliminate such type of waste.
Diversity across Functions:
Just in time in production department:
We know that JIT is the “Pull” system of production. its means production will be started only when it is required in accurate quantity and in exact time. its means companies must kept minimum level or up to zero level of raw materials, work in process, finished goods and components. This will be done in production process through a planned scheduling and movement of resources. Now a days highly technically and easy to use software’s are used in production planning in each stage, and normally information is exchange between supplier and customers through EDI (electronic data interchange) which ensure that each and every detail is correct. For example: A truck manufacturing company placed order and receive correct number and type of tires which it demand for the production of one day requirements. And the supplier should be careful to deliver required product at very right time. This is the example of JIT’s implementation in production. There are several benefits of JIT when it is implemented in production department. These are following… • To keep minimum level of stock, results in less space is required for storage which saves rent and other costs. To maintain minimum level of inventories, less capital is bound in investment and no stock will be out of date. To keep minimum level of inventories, less time is required on checking.
The Effect of JIT on management accounting:
JIT is simply focus on record keeping. According to this many techniques are proposed by the authors that eliminate some useless transactions. For example: Backflush accounting system for cost that eliminates transactions related to the movement of raw material into work in process. This cost accounting system record stocks only when it is finished and in some cases when it is sold. This will eliminate cost of keeping the record of inventories ay work in process.
Benefits usage for JIT in accounting department:
There will be less investment in the cost of inventories purchase. There will be less handling and carrying cost. Less spaces is required to hold the inventories, mean less rental cost. By using the JIT approach, our mostly work will be on computer, result is less paper work.
Diversity across industries:
JIT in Toyota Production System:
Toyota production system is also using JIT approach. Production control system in Toyota manufacturing has been established on the base of making the vehicles quickly on the base of consumers order and deliver to end consumers as much as possible. There are two concept are use in Toyota manufacturing system. One is “jidoka” which means equipments will stop working when any problem locate. The second one is “just in Time” in which one work station will process only when it will receive request from the next station. On the base of the JIT Toyota manufacturing system produce better quality vehicles at the time when customer demanded and according to the customer requirement.
JIT in Ford’s Motor: Just-in-time (JIT) production methods were popularized by the excellent results achieved by Japanese industry. When in 1970 Japanese were got share again from American. In 1980s, Toyota’s highly effective JIT production system had a particular appeal to Americans who were trying to understand Japanese production methods.
JIT approach is used in Ford’s motor company and the purpose is to minimize cost and efficient operations so that products will be delivered at right time at right place
Another advantage of this approach is that purchasing and production can be accomplished on a small scale and no earlier than necessary.
when it is needed.
Diversity across the Countries:
Pre-requisites of just in time:
• • Factory loading should be smooth, linear, uniform and stable.any variation in these process result bottleneck. To reduce time requires converting raw material in to WIP ans WIP in to finish good as well as set-up times.
• • • •
To get the more frequent delivery from one work station to other station, the lot size must be small. To choose such supplier whose are much closer to your company that will reduce your Lead Time. To use different cellular connection that makes more accurate your dealings. Through time to time maintenance reduce equipments break down.
Advantages found from Case studies:
JIT at Arnold Palmer Hospital: Orlando’s Arnold Palmer Hospital was founded in 1989 specializes in the treatment of women and children. Before the implication of JIT its inventories cost is to much high up to $ 30 million per year and thousand of SKU (stock keeping units). Benefits after the JIT implication:
Usage of dispensing machines: Now medicine / drugs are distributed through dispensing machines which electronically track usage of the patient and bill related charges to particular patient. Coordination with supplier: Mckesson general Medicine is the biggest supplier of medicine of the Palmer Hospital. About ¼ medicine of the Hospital came from this supplier. By the coordination with the supplier and Hospital management, hospital stars daily purchases from McKesson, result is central supply average daily inventory reduces from 400,000 to 114000 since JIT. Success in custom surgical packs: about 50000 packs are used in each year and total cost is $1.5 million. Through the JIT approach Hospital management hired its employees with surgical staff to identify that stock is according to standard or not.such integrated system has reduced inventory level to one day. Use of Electronic data interchange (EDI): Pull strategy is used in JIT which pull daily surgical demand from the doctors. Then Hospital order McKesson through the EDI between the 1.00 to 2.00 pm daily. At 4.00 am the next morning McKesson delivers packs and Hospital Personal arrives at 7.00 am shelves stocks.
JIT in Mutual Insurance Company of Iowa:
Mutual Insurance Company of Iowa has an insurance facility located in Des Moines. this office is responsible for the processing of the claims. This office receive daily 2500 forms for processing of claim, but unfortunately few of them are processing in a day and claim processing time has increase from 10 days to 10 weeks…
Benefits after the JIT:
Both claim processing managers and employees are to be trained for the JIT principle. According to the principle responsibilities for quality control activities are moved to each employee, means each employee will responsible for the quality. Data entry skills also taught to both managers and employees for the accuracy of the data that will reduce clerical errors.
Office facilities should be changed for the implementation of the JIT at MICI. In old processing system of claim, claim process was so long,but in the JIT system claims process will move only 3 process that are
1. customer claim entry 2. accounting 3. Customer claims approval.
By using the JIT approach, no of worker for each claim is two-four, and all the 180 worker are just working claim processing.
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