ATENEO GRADUATE SCHOOL OF BUSINESS

#20 Rockwell Drive, Rockwell Center, Makati City, 1200 Philippines

Group Assignment
Just In Time

Submitted To:
Prof. Susan De Jesus

In Partial Fulfillment of
the Course Requirement in

FINACC S10 – Financial Accounting

Submitted By:

GROUP 5

ITORMA, Ian
LAMPA, Abbel
LAXA, Anton
LINGAD, Emmanuel

SY 2019-2020
What is JIT?

Just In Time (JIT) is a corporate system designed to produce output within the minimum
lead time and at the lowest total cost by continuously identifying and eliminating all forms of
waste and variance. JIT manufacturing refers to a system of manufacturing in which products are
not built until the product is ordered and paid for. Some companies that have successfully
implemented JIT include Toyota, Dell, and Harley Davidson.

Objective of JIT
1. Produce only the products the customer wants.
2. Produce products only at the rate that the customer wants them.
3. Produce with perfect quality.
4. Produce with minimum lead time.
5. Produce products with only those features customer wants.
6. Produce with no waste of labor, material or equipment – every movement must have
a purpose so that there is zero idle inventory.

JIT Concept

1. Inventory Reduction
- having more inventory than is necessary is waste.
2. Quality Improvement
- the combined and unceasing efforts of everybody in a company to make
everything about it, especially its production process, better. It is a systematic
approach to the elimination or reduction of rework, waste, and losses in the
production process.
3. Lead Time Reduction
- major benefits of reducing lead times are reduced carrying costs, streamlined
operations, and improved productivity.
 4. Continuous Improvement
- never-ending strive for perfection in everything you do.
5. Strategic Gain/Advantage
- marketplace benefits that exert a decisive influence on an organization's
likelihood of future success

Benefits of JIT

1. Low inventory levels

2. Shorter production cycle time
3. Improved product quality
4. Better labor utilization

JIT in McDonald’s

The nature of fast food industries includes high holding costs, wastage and time. Fast-
food chains such as McDonald’s use JIT inventory to serve their customers on a daily basis.
These fast food restaurants usually have everything they need on hand but for example, don’t
start assembling and making their hamburgers and sundaes until the order has been taken,
(except for a few finished products at peak times). This standardizes the process, so that every
time a customer receives an order, they are getting the same consistent experience.
With JIT, McDonald’s doesn’t begin to cook its order until a customer has placed a
specific order. McDonald’s uses sophisticated burger-making technology which enable them to
make food fast enough to wait until it’s been ordered, thus a reduction in wastage.
Factors to McDonald’s success

Improved Quality
The burgers are prepared freshly and hence the quality has improved.
Customer Service
As the burger is made only after the order is place, making special order is not an
issue.
Cost Reduction
Due to significant reduction in wastages as uncooked material has higher shelf
life.
Reduction in Waiting
Customer’s waiting time reduce11 minutes to just 1 and half minutes.

JIT helps business owners save money and reduce wastage, while still providing their
customers with the products they want and need in a timely manner. As excess inventory is
vastly decreased by ordering inventory stock on a “just when you need” basis, business owners
will not need to keep large quantities of inventory stock parts reducing all the costs associated
with this.

Parker Hannifin
Parker Aerospace is a global leader in the research, design, integration, manufacture,
certification, and lifetime service of flight control, hydraulic, fuel and inerting fluid conveyance,
thermal management, lubrication, and pneumatic systems and components for aerospace and
other high-technology markets. The company supports the world’s aircraft manufacturers,
providing a century of experience and innovation for commercial and military aircraft.

Parker has been one of the top aerospace customer of metal manufacturing here in the
Philippines; they are implementing Kanban system to their subcontractors.
Lean Inventory
Part of The Parker Lean system is that they require their subcontractors in the Philippines
to produce their orders within 1-2 weeks from the issuance of the Kanban card. They give these
subcontractors their 1 year forecast for their requirements. Parker assigns an accredited raw
material supplier where these companies should buy from. Since the 1 year forecast has already
been given to these subcontractors, these companies then take care of buying the raw material
which should be sufficient to accommodate the yearly forecast. The burden of having a huge
amount of raw material is passed on to their subcontractors. Nonetheless, in Philippine set-up,
this is beneficial as they will be able to get orders in blanket and sustain their respective
companies.

Reduced warehouse requirement

Since the transition to supermarket-like process where they only get from their
subcontractors what they needed and that the products are being brought directly to the
assembly; the warehouse requirement has been dramatically reduced which made an impact as
land prices are going up, this also free up space giving them straight line flow through the
facility.

Investing on better quality equipment, research and training

Parker’s reduced inventory and warehouse requirement soon freed up working capital
which they were able to use to buy better quality tools and equipment and invest on research and
training for their employees; this eventually resulted to higher efficiency, productivity and
competency among their employees.

It was reported on article by Chet Marchwinski in 2003 that Parker’s return of assets
increased by 78%, return of sales increased by 74%, on time delivery jumped from 85% to
95%, scrap rate fell by 51%, average days of inventory fell by 41% and productivity
increased by 15%