JUST -IN -TIME

Term Paper Written for the Course

MAN521: Operations Management

 ABSRACT

Business strategy must be supported by appropriate strategy such as Just-in-Time (JIT).Top Mangers in a
Production organization use Just-in-Time in producing goods and services exactly when they are
needed, The fundamental purpose of Just-in Time is to help an organization achieve its strategic
objectives of producing required amount of goods or product and to avoid the waste associated with
over production, waiting and excess inventory, three of the seven waste categories defined in the
Toyota Production System (known in North America as the lean production model).

Keywords: Business strategy, service quality improvement, Just-in-Time

INTRODUCTION

Every organization small, medium and large need to adopt a management philosophy which will give the
organization core competencies in the market and to achieve this, you need to think of how to cut your
cost or eliminate waste and improve on your quality by getting right quantity of raw materials and
producing the right quantity of products in the right place at the right time. Just in time (JIT) is a creative
strategy that improves a business return on investment by reducing inventory cost and associated
carrying costs. Any organization with inventories, retail wholesale, distribution, service, or
manufacturing can use JIT purchasing.

Any company that practices Just-In-Time System will make use of machine to produce the work from
worker who collect the materials at the end and take it up to those who ship the product other end of
product of the production. As workers at each station receive the product, take orders and perform
their duties on the product, and have it sent to next working station after they completes their work.

During continues production each station will check and screened for defect, and if there is any, the
defect will be sent back to the previous station and the line will stopped until the defect is repaired.
Waiting at the end the shipping agent will get the product and ship it to the customer. Outstandingly,
there will be no production until the company received order for the product and there are no already
finished goods waiting in the inventory.
HISTORY

Interchangeable parts Originated from USA in the year 1799 by the famous inventor of cotton gin- Eli
Whitney, when he took a contract from the U.S. Army for the manufacture of 10,000 muskets at the
unbelievably low price of $13.40 each and this was perfected to Just-in-Time (Toyota Production
System) by Taiichi Ohno of Toyota Production company Japan, in early 1970's, who is now referred to as
the father of JIT. Taiichi Ohno industrialized this philosophy as revenue of convention customer
demands with least delays. Therefore, in the 97 ’“, JIT is used not to decrease manufacturing excess,
but mainly to produce goods so that customer orders are met accurately when they need the products.

The transition from a traditional purchasing system to a JIT purchasing system can be a sluggish method
or even impossible, because of unreliable suppliers. The purchaser tries to co-operate with the vendor,
with the goal of getting lesser, more regular supplies, on time, with the quality and quantity mandatory.
Often the vendor is ready to co-operate, but is unable to satisfy these requests

Elements of JIT

To make JIT function parts and resources should be acquired as close as conceivable to the time they are
needed; using frequents deliveries in contradiction of bulk contracts.

(2).Close Relationship with Suppliers

• I a JIT e i o e t, the espo si ility fo the uality of goods lies ith the supplier.

• A lo g-term commitment between supplier and customer should therefore be established.

• If a o ga izatio has o fide e that supplie s ill deli e ate ial of % uality, o ti e, so that
there will be no rejects, returns and hence no consequent production delays, usage of materials can be
matched with delivery of materials and inventories can be kept at near zero levels.

(3) Uniform Loading

• All pa ts of the p odu tio p o ess should e ope ated at a speed hi h at hes the ate at hi h the
final product is demanded by the customer.

• P odu tio u s ill the efo e e sho te a d the e ill e s alle i e to ies of fi ished goods
because output is being matched more closely to demand (and so usage costs will be reduced).

(4) Set-up Time Reduction

• Ma hi e y set-ups are non-value-added activities which should be reduced or even eliminated.

(5) Machine Cells

• Ma hi es o o ke s should e g ouped y p odu t o o po e t i stead of y the type of ok
performed.

• P odu tio a flo f o a hine to machine without having to wait for the next stage of processing
or returning to the stores.

• Lead ti e a d o k i p og ess a e thus edu ed.

(6) Quality

• P odu tio a age e t should seek to eli i ate s ap a d defe ti e u its du i g production, and to
avoid the need for reworking of units since this stops the flow of production and leads to late deliveries
to customers.

• P odu t uality a d p odu tio uality a e i po ta t d i e s i a JIT syste .

(7) Pull system (Kanban)

• P odu ts/components are only produced when needed by the next process.

• Nothi g is p odu ed i a ti ipatio of eed, to the e ai i i e to y, o su i g esou es.

(8) Preventive Maintenance

• P odu tio syste s ust e elia le a d p o pt, ithout u fo esee delays and breakdowns.

(9) Employee Involvement

Workers within each machine cell should be trained to operate each machine within that cell and to be
able to perform routine preventive maintenance on the cell machines (ie to be multi skilled and flexible).

GOALS OF JIT

The crucial goal of JIT IS a balanced system. Attains a smooth, rapid flow of materials through the
system. The JIT approach involves a unceasing promise to the chase of excellence in all phases of
manufacturing systems and design. The aims of JIT are to produce the required items, at the required
quality and in the required quantities, at the precise time they are required. In particular, JIT aims to
achieve the following:

(i) Reduction in inventories

JIT purchasing seeks to match the usage of materials with the delivery of materials from external
suppliers. This means that material inventories can be kept at near-zero levels. For JIT purchasing to be
successful this requires the organization to have confidence that the supplier will deliver on time and
that the supplier will deliver materials of 100% quality, that there will be no rejects, returns and hence
no consequent production delays. The reliability of suppliers is of utmost importance and hence the
company must build up close relationships with their suppliers. This can be achieved by doing more
business with fewer suppliers and placing long-term orders so that the supplier is assured of sales and
can produce to meet the required demand. Such factors will enable inventory levels to be kept as near
to zero as possible and help to produce Aggrawal's claimed benefit.

(ii) Increase in labor productivity

In a JIT production environment, production processes must be shortened and simplified. Each product
family is made in a work cell based on flow line principles. The variety and complexity of work carried
out in these work cells is increased (compared with more traditional processes), necessitating a group of
dissimilar machines working within each work cell. Workers must therefore be more flexible and
adaptable, the cellular approach enabling each operative to operate several machines. Operatives are
trained to operate all machines on the line and undertake routine preventative maintenance. It is
factors such as these that result in an increase in labor productivity in a JIT environment.

(iii) Reduction of necessary plant space

With JIT production, factory layouts must change to reduce movement of workers and products.
Traditionally machines were grouped by function. All the drilling machines were together, all the
grinding machines were together and so on. A part therefore had to travel long distances, moving from
one part of the factory to the other, often stopping along the way in a storage area. All these are non-
value-added activities which have to be reduced or eliminated. Material movements between
operations are therefore minimized by eliminating space between work stations and grouping dissimilar
machines into manufacturing cells on the basis of product groups. Storage space is reduced due to the
reasons set out in (i) above. Plant space is therefore kept to a minimum.

(iv) Reduction in quality rejection rate

Production management within a JIT environment seeks to both eliminate scrap and defective units
during production and avoid the need for reworking of units. Defects stop the production line, thus
creating rework and possibly resulting in a failure to meet delivery dates. Quality, on the other hand,
reduces costs. This level of quality is assured by designing products and processes, introducing quality
awareness programs and statistical checks on output quality, providing continual worker training and
implementing vendor quality assurance programs to ensure that the correct product is made to the
appropriate quality level on the first pass through production.

HOW TO TRANSIT TO JIT

The transition from a traditional purchasing system to a JIT purchasing system can be a slow process or
even unattainable, because of unreliable suppliers. The purchaser tries to co-operate with the vendor,
with the goal of receiving smaller, more frequent deliveries, on time, with the quality and quantity
required. Often the vendor is ready to co-operate, but is unable to fulfill these requirements. Provides
simple models and methods to aid purchasers in this transition state. Gives simple approximate
formulas for the minimum safety stock necessary to ensure the required service level of supply.
Considers the case of random delays in shipments, random yield and uncertain demand, which are

typical characteristics during the transition period. This safety stock depends on the order quantity and
the number of shipments. Provides a simple method to find the order quantity, the number of
shipments and safety stock, which minimize the joint total cost of the vendor and purchaser and ensure
the required level of supply.

OBSTACLES TO CONVERSION

 Management may not be committed

 workers/management may not be cooperative
 suppliers may resist

Cons

The primary disadvantage to JIT is its relative complexity. Management must rethink the entire work
flow of the company, from initial intake of raw materials to final output of finished product. Supply-
chain relationships require retooling that involves multiple suppliers, closer locations, or companies that
can supply materials with little advance notice. Companies ordering smaller amounts of goods may
encounter difficulty meeting minimum orders, requiring a different contract or a way to break up a large
order over time or among several smaller manufacturers. All goods must meet quality requirements to
avoid shutdown due to defects. Staff must understand more of the entire process and shift to where
they are needed as work flow ebbs and surges to meet customer demand swings. This overhaul requires
a sizable commitment of time and money initially, plus a change in mindset and a commitment to stay
the course in implementing JIT, at the risk of the system's never gaining traction within the corporate
culture.

Pros

Both companies free the workforce to focus on primary tasks, from making goods to interacting with
customers rather than stocking merchandise. Manufacturers can train employees to work at different
stages of the assembly line or at different workstations, to meet shifts in demand. A better-trained,
more flexible workforce focusing on quality production can mean faster set-up or customization of
workstations and lower defect rates, which lower costs and increase customer satisfaction

Effect of Just-In-Time Purchasing Relationships

Just-in-time (JIT) purchasing relationships with suppliers involves close collaboration on product
development and specifications, and on both product and information flows. Effects of JIT
purchasing relationships are pervasive. First, organizational design changes as JIT purchasing
increases, and the firm becomes more formalized in performance measurement, more
integrated, and more specialized. Decentralization occurs in line-operating decisions but not
scheduling. Second, performance is enhanced, with weeks of inbound inventory decreasing and
both financial and market performance increasing. However, the configuration of the purchasing
function does not change.
The function of purchasing is to provide a firm with component parts and raw materials and
purchasing also must ensure that high-quality products are provided on time, at a reasonable
price.

JIT Manufacturing Planning & Control

Material Requirements Planning (MRP) and Just-in-Time (JIT) system are directed toward
planning and controlling the important characteristics of material flow: how much of what
materials flow and when. Since the material flow is at the heart of the manufacturing firm, MRP
and JHT are the powerful management tools that could determine the success or failure of an
entire manufacturing system. One of the strongest debates in manufacturing has been centered
on the performance comparison and compatibility of JIT production system to the existing MRP.

Examples of companies that uses JIT strategy

 L'O eal=L’O eal, the o ld’s la gest toilet ies a d os eti s g oup, i itiated as to
reduce the set-up times on the line which produces hair colorant from 2.5 hours to only
8 minutes. These new change-over times mean that the company can now justify even
prior to change in set-up times, batch sizes was 30,000 Units; now batches as small as
2000 to 3000 units can be produced cost effectively (Slack and Chambers, Harland and
Harrison, and Johnston , 1998).

 Toyota motor = Cat h up ith A e i a i th ee yea s, othe ise the auto o ile
i dust y of Japa ill ot su i e . Afte d o ld a , Toyota Moto Co pa y’s Chief
Engineer, Taiichi Ohno began to examine the American industry and found that
American manufacturers made great use of economic order quantities, the concept of
lot and batch, before switching to another job, Ohno decided that waste that happened
in America would have to be decreased if he were to develop a technique for Japan, as
hat he des i e as a o aste so he p oposed de easi g aste y aki g it e e
ite s o ly o e th ough p odu tio he they a e de a ded, Jidoka hi h is the
Japanese concept or quality program where inspection for problems would occur and
stop the process until they were repaired, thereby reducing waste. Jidoka was a great
system in order to prevent cost of quality by stopping at early stage of defects, and not
only that, the system is also educates the entire employees from top to down in
production line in identifying the cause and solutions. (Ettlie, 1990)
 Case Study: Toyota car manufacturer

"Just-in-Time" means making "only what is needed, when it is needed, and in the amount needed." For
example, to efficiently produce a large number of automobiles, which can consist of around 30,000
parts, it is necessary to create a detailed production plan that includes parts procurement. Supplying
"what is needed, when it is needed, and in the amount needed" according to this production plan can
eliminate waste, inconsistencies, and unreasonable requirements, resulting in improved productivity.

Kanban System

In the TPS (Toyota Production System), a unique production control method called the "kanban system"
plays an integral role. The kanban system has also been called the "Supermarket method" because the
idea behind it was borrowed from supermarkets. Such mass merchandizing stores use product control
cards upon which product-related information, such as a product's name, code and storage location, are
entered. Because Toyota employed kanban signs for use in their production processes, the method
came to be called the "kanban system." At Toyota, when a process refers to a preceding process to
retrieve parts, it uses a kanban to communicate which parts have been used

Why use a supermarket concept?

A supermarket stocks the items needed by its customers when they are needed in the quantity needed,
and has all of these items available for sale at any given time.

Taiichi Ohno (a former Toyota vice president), who promoted the idea of Just-in-Time, applied this
concept, equating the supermarket and the customer with the preceding process and the next process,
respectively. By having the next process (the customer) go to the preceding process (the supermarket)
to retrieve the necessary parts when they are needed and in the amount needed, it was possible to
improve upon the existing inefficient production system. No longer were the preceding processes
making excess parts and delivering them to the next process.

Conclusion

Japa ’s auto i dust y ea t JIT to ope ate ithi a ultu e of o ti uous i p o e e t, as o e ay to

eliminate waste. JIT may be a good way to introduce continuous improvement or quality management,
but it is very difficult to implement as a stand-alone process. Managers in charge of ordering or
purchasing may need to familiarize themselves with alternative shipping methods such as less-than-
truckload (LTL) carriers who consolidate loads and routes to fill a trailer. This may even require
coordinating with other companies operating within the area, as in an industrial park. Personnel
managers need to communicate with staff, stressing the importance of JIT to providing quality products
and services and reducing costs, as well as convincing staff of the benefits in rounding out skill sets by
taking on different tasks.
Conventional wisdom holds that inventory provides a buffer to ensure smooth operation against supply
chain disruptions, from delivery delays through individual workstation breakdowns to unanticipated
consumer demand. However, a carefully planned and systematically executed JIT system can eliminate
waste and encourage higher-quality output. Workers take ownership as they comprehend that nothing
goes to waste and that they control the process—there is no cushion or margin of error to fall back on.
All workers, tools and processes work with one purpose: gaining and keeping customers. Anything or
anyone not contributing to that purpose can be whittled away

REFERENCES

Peter Dijstelbloem. Just in Time Maintenance Culture Lessons from the past

Steven M.Bragg. Just-in-Time Accounting Decrease Costs and Increase Efficiency,3rd Edition

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time.html