Briefly describe the concept of JIT and its relationship to logistics

Contents Page

Executive Summary ……………………………………….... 1 The Concept Of JIT …………………………………………. 1
1. 2. 3. 4. 5. 6.

Raw Material Procurement (Suppliers) ……………….


Production Control And Planning ………………………. 2 Inbound Logistics (Transportation and Handling) ….... 3 Warehousing And Storage …………………………….... 4 Case study – Success …………………………………… 5 Would you recommend the JIT – WHY ……………….. 6

Conclusion …………………………………………………… 6 Referencing ………………………………………………….. 7


the term comes from quality management theory and the goal is to produce high quality products in the most efficient and economical way. an attempt is made to reach the goals of driving all inventory buffers toward zero and achieving the ideal lot size of one unit. The goal is to reduce delivery lead times. Manufacturing. and the JIT/lean concepts are now widely accepted and used. JIT was well-established in many Japanese factories by the early 1970's. balanced flow of materials throughout the entire production process. To accomplish this. JIT (also known as lean production or stockless production) should improve profits and return on investment by reducing inventory levels (increasing the inventory turnover rate). Businesses of all sizes are using Just In Time to tighten up production. improve staff productivity and make sure products are delivered on time. It also has been described as an approach with the objective of producing the right part in the right place at the right time. reducing variability. JIT began to be adopted in the U. rather than stockpiling. similar to that found in an assembly line. The concept of JIT Just-in-time (JIT) is defined in the APICS dictionary as “a philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity”. such as the unnecessary moving of materials. Waste results from any activity that adds cost without adding value. JIT applies primarily to repetitive manufacturing processes in which the same products and components are produced over and over again. 1 . and that a manufacturing business can work more efficiently by ordering only the materials it needs to complete an order.Executive Summary Just-in-time (JIT) is an inventory strategy implemented to improve the return on investment of a business by reducing in-process inventory and its associated carrying costs. It's based on the idea that holding too much stock or too many finished goods is a waste of money. underutilized (excess) capacity is used instead of buffer inventories to hedge against problems that may arise. reduce the amount of defects. the accumulation of excess inventory. The general idea is to establish flow processes (even when the facility uses a jobbing or batch process layout) by linking work centers so that there is an even. and became known as the Toyota Production System (TPS). reducing production and delivery lead times. In a JIT system. in the 1980's (General Electric was an early adopter). and reducing other costs (such as those associated with machine setup and equipment breakdown). cut inventory.S. improving product quality. The basic elements of JIT were developed by Toyota in the 1950's. or the use of faulty production methods that create products requiring subsequent rework.

The underlying demand was extremely stable. time.What is the potential vulnerability that could arise from market failure if the activity is outsourced? .that at times may exceed the transaction costs of having the activity directly under management’s in-house control. the manufacturing operations can be improved by reducing lot sizes and setup times.What can we do to alleviate our vulnerability by structuring arrangements with suppliers to afford appropriate controls yet provide for necessary flexibilities in demand? Conceptually. and re contracting . usually entailing production internally or through joint ownership arrangements or tight long-term contracts (explicit or implicit). to bring the orders back in line with the very stable underlying demand! However it is beneficial. and in some cases vital. Moreover. outsourcing and procurement activities can be improved and integrated into the overall JIT strategy. order entry.searching. To address these difficulties. predictable. creating manufacturing cells or pass-along lines. Finally. implementing pull scheduling and Kanban replenishment techniques. most supplier markets are imperfect and do entail some risks for both buyer and seller with respect to price. Next. first two factors can be thought as dependent each other. quality. managers should answer three key questions about any activity considered for outsourcing: . Two extremes competitive edge and strategic vulnerability .1. controlling. Raw Material Procurement (Suppliers) Benefits: The recommended implementation approach for JIT is to start at the distribution end of the business. outsourcing entails unique transaction costs . the company needs a high degree of control. avoids the problems associated with poor demand tracking and unnecessary interference of the production schedule. resulting in late changes to the order schedule. When the potential for both competitive edge and strategic vulnerability is high. Production Control And Planning Benefits: Production smoothing. or other key dimensions. Problems: Unfortunately. inventory strategies and capacity to produce a more stable. to flex or move resources to respond 2 . improving the planning processes associated with forecasts. taking account of transaction costs? .What is the potential for obtaining competitive advantage in this activity. 2. improving quality. contracting. The volatility downstream in the supply chain was in fact being artificially induced by poor customer planning. and managing bottleneck operations. and reliable master production schedule.are relatively straightforward.

setting appointment times. the costs savings achieved by gaining control over inbound shipment would be offset somewhere else on the supplier side. however beside delivery. Problems: In many cases suppliers have control over shipment coming into production facilities in terms of arranging for transportation carriers. the rate had fallen to a few line stops per day. the alternative being to pre-build stock to a forecast to afford some production smoothness. the company eliminated multiple suppliers. actual material loaded into trucks and the actual pickup/ delivery times and item. similar to a bus bell-pull. Problems: Toyota had to test and train suppliers of parts in order to assure quality and delivery. In some cases. but this may harm the overall supplier relationship. Many people in Toyota confidently predicted that the initiative would be abandoned for this reason. The cross-dock/ consolidation center inbound supply chain network design is an innovative way of consolidating inbound shipment. that permitted any worker on the production line to order a line stop for a process or quality problem. If this not done. line stops had so little economic effect that Toyota installed an overhead pull-line. it may because of the problem of not having the correct information. Working with supplier to iron out some of these process flaws is the first step in gaining control over inbound shipment. Even with this. Instead. 3 . Levelled schedules. working in a collaborative mode with supplier. bring more stability and regular patterns of production. After six months. Inbound Logistics (Transportation and Handling) Benefits: The best inbound logistics programs worked on getting their hands around the visibility issues created by a cross-dock situation. When a process problem or bad parts surfaced on the production line. No inventory meant that a line could not operate from in-process inventory while a production problem was fixed. In additional. to gain control over inbound shipment is the way to fluctuating demand. 3. line stops fell to a few per week. at some risk and tying up of capital. the entire production line had to be slowed or even stopped. But by the end of the first month. they also can help to perform additional service such as sort out the materials in requested format more over to get them to deliver to the production after verifying the quantity. a potential Line Down will happen. line stops occurred almost hourly. Retailers have tried changing the freight payment terms from per-paid to collect. In the first week.

Maybe the major problem with JIT operation is that it leaves the supplier and downstream consumers open to supply shocks. Also. the benefits of JIT include: better quality products. higher productivity and lower production costs. workers don’t have to be working. Improved flows of goods in/through/out warehouse . some companies are careful to use two or more suppliers for most of theirs assemblies.having a trusting supplier relationship is important for the company because it is possible to rely on goods being there when they are needed. The hidden costs are present and they include labour union leverage. Better consistency of scheduling and consistency of employee work hours . the company is especially susceptible to an interruption in the flow. when there is a shortage of workers and a high demand for a particular product. problems developing for the flexible workforce.if there is no demand for a product at the time.4. increased expenses for suppliers. Problems: There are several problems which are connected within JIT concept. With shipments coming in sometimes several times per day. difficulties with supplying commodities using JIT. For that reason. This can save the company money by not having to pay workers for a job not completed or could have them focus on other jobs around the warehouse that would not necessarily be done on a normal day.Warehousing And Storage Benefits: Benefits that JIT concept can provide to the company are huge and very diverse.employees will work hard to meet the company goals. problems with flexible manufacturing systems (FMS). Employees who possess multi-skills are utilized more efficiently – the company can use workers in situations when they are needed. The main benefits of JIT are Reduced set up times in warehouse .employees will be able to process goods faster. 4 .the company in this case can focuses on other processes that might need improvement. Increased emphasis on supplier relationships . Supplies continue around the clock keeping workers productive and businesses focused on turnover .

monitor and intervene appropriately as shipments vary from planned performance. optimization. rail. is often combined with logistics management to provide an integrated solution. decreases expedite deliveries to the manufacturing plant. increased network visibility. Transportation Management. This plan and the associated electronic communication utilities provide the core capability to automate. 5 . enabled by world-class technology. optimize. This synchronization provides a common electronic communication utility to all parties in the sequence of events. to deliver quantifiable value to its clients. also known as Materials Flow Management. storage). order management.Success Ryder-Ascent Logistics is a provider of supply chain and transportation solutions and the market leader in WOLDEWIDE. shippers. and shipment modes. regarding a product shipment with the product release information that initiates a shipment. Case study . Ryder’s online tools allow their clients and their trading partners to view consolidated data from disparate IT systems including ERP. which includes inbound and reverse logistics. and logistics providers—are provided common information through web . optimizes use of manufacturing space for production (vs. transportation and delivery. storage. thereby enhancing transportation management capabilities. The Ryder Logistics Release synchronizes logistics information. payment firms. provides exception documentation and analysis for continuous improvement. Warehouse Management. Demand Planning and MRP’s. This logistics plan is updated throughout the life of the shipment and all participants in the shipment—carriers.5. Ryder applies operational expertise to an integrated set of transportation and warehousing processes. ocean or ground. Legacy. A success Just – In – Time Inbound Manufacturing Product Flow. receivers. This novel product also produces a logistics plan for material flow that is shared among all the supply chain participants in a shipment’s lifecycle. that comprise a shipment. air. enables pre-planned shipments. in the right quantity and to the right manufacturing and/or assembling facility. configuration. Ryder’s Supply Chain Solution encompasses the design. execution and monitoring. The objective of Inbound Manufacturing Product Flow is to create a seamless flow of materials delivered at the right time.native information utilities and software applications. The benefits included levels products/materials flow from suppliers to manufacturers. delivery and execution of the optimal Supply Chain for every client.

but if the company can manage with these difficulties it is possible to achieve high levels of workflow. It means that the JIT concept cannot must solve existing problems in other organization processes. And in the bottom line. greater performance and throughput. through the hierarchy of employees and all workflow processes. Conclusion After all. It is true that implementation and development of JIT is a long-lasting and expensive process. Surely. higher quality.6. All parts of the value chain and everything in the enterprise must be healthy for realization of competitive business processes. The JIT concept is only one part in the value chain that brings the satisfaction to the customers.Would you recommend the JIT – WHY In my opinion. If the company wants strong and long-lasting value chain all the links within the chain must be prepared to overpass all existing problems. improving the work environment and simplifying processes and with the benefits of reduced operating costs. 6 . increased flexibility and innovativeness. the management and employees must have on their mind that this concept can help the organization to solve many problems in logistics. the primary goal for the company is customer's satisfaction and if company can not reach perfection in this area then all the processes are worthless. One of the most important links inside that value chain is definitely logistics. but very important. Synergy is the only thing that can improve business results. one the most famous and most important logistics concept is the Just-In-Time concept. I will recommend the JIT because it is a collection of concepts and techniques for improving productivity. improved delivery. Everything in enterprises is needed to be healthy. During the 20th century several approaches of implementation of logistics were developed. The most important thing for the company is to have good organized resource allocation. A process aimed at increasing value-added and eliminating waste. Logistics is concerned with the physical distribution and storage of products and services. Also. the JIT concept is just one link in the whole chain. I think that if the company wants to have a JIT concept it does not mean that everything must be done very fast.

htm information about Benefits Production Control And Planning (Accessed 11 Sep 2008) information about Executive Summary.html information about The concept of JIT (Accessed 9 Sep 2008) (Accessed 11 Sep 2008) http://www.smthacker.html information about The Would you recommend the JIT – WHY (Accessed 9 Sep 2008) http://www.rwth-aachen.pdf – WHY (Accessed 8 Sep 2008) information information about The concept of JIT about Benefits and Problem Warehousing And Problem Production Control and Planning (Accessed 8 Sep 2008) information about Case study – Success (Accessed 8 Sep 2008) http://www.is4profit.Referencing • • • • • • http://en. Would you recommend the information about Benefits and Problem of Raw Material Procurement ( Suppliers ) (Accessed 10 Sep 2008) http://www.pdf information about Benefit and problem Inbound Logistics (Transportation and Handling) (Accessed 9 Sep 2008) 7 .uk/ conclusion • • •

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