2024

PURCHASING AND SUPPLIER

MANAGEMENT

ASSIGNMENT 2

Submitted To: Submitted By:

Mr. Abdenour Dermouche Anges Martin
Pardeep
202207143
202302938
Due Date: April 08,2024 Mohit Kumar 202303296
Gurpreet Singh 202302582
Shubham 202203359
Introduction to JIT and Lean Manufacturing
Q.) JIT and its core principles.

This system of how to conduct business with attaining the lowest possible waste in mind, the Just-in-
Time (JIT) production method, is one of the often-implemented ones and it conducts production only
when there is a particular demand and therefore, not selling what has been produced already. In
addition, the approach is about removing every single form of waste whether they are in inventory,
production overloads, waiting time, transportation, processing, and making things defective. However,
the lean manufacturing agitation facets through the proper procedures and ongoing improvement stand
out as a display of strength. Demand and supply planners depending on information gathering are
responsible for production in the same time frame.

Q.) Explain how JIT functions as a cornerstone of lean manufacturing.

JIT system not only ensures the organization the flexibility and agility of response but also demands
effective management of inventories that lead to cost savings. JIT's aims of time wastage, enriching the
product quality, and rising production rectitude are central to the lean production theory. Customers
pleased, reduced costs and seeds of happy shareholders are other consequences to which JIT
contributes towards. In reality, JIT is a production and production-related services technology that at
each step reacts to the demand from end-users. The outcome is that companies are efficient both at the
material level and lessen the resource input. It results in a situation for buyers to get the best deal for
their hard-earned money.

JIT, as the main principle of lean manufacturing methodology, works towards the elimination of waste
through various functions like reducing the inventory to the lowest possible level needed for production,
improving processes to make them run smoothly and consequently increasing production speed and
reducing the number of time materials idle as well as implementation of a pull-based production system
which uses actual customer order as a stimulus and produces goods only required for the sole purpose
of order fulfillment

Q.) Discuss the goals of JIT within the framework of lean manufacturing.

The lean manufacturing philosophy has a new strategic aspect that closes the circle of company goals,
which is the just-in-time practices. These goals include:

Reducing Lead Times: JIT stands for Just in Time, which emphasizes that the manufacturing process
begins only when a customer’s order is received, and the product should be delivered to the customer at
the earliest point in time. The shortening of lead times results in the ability of companies to adapt their
product lines to customer preferences and market demands in a timely fashion.

Improving Product Quality: Through the means of strict reduction of inventory and tightening the
probability of defects, JIT will help JIT to improve product quality. A shift in a manufacturing enterprise to
producing only when it’s needed reduces waste and simultaneously enables more resources to be
invested in a quality control process with an inherent conclusion of higher-quality output products and
fewer defects.

Increasing Productivity: According to JIT philosophy, the purpose is the exact use of the system's
resources and eliminating all the unbiased activities that do not add value to a manufacturing process.
Through sorting out the procedures and cutting the waste, the companies then can have enough
productivity in their operations hence, they can use their resources more effectively leading to higher
output with less consumption of the resources they have in stock.

Enhancing Customer Satisfaction: MLJ becomes a major tool for companies to be able to deliver
products to customers fast and efficiently resulting in meeting customers' needs promptly. Through the
elimination of long lead times and the improvement of product quality, businesses may be able to tire
down customers and thus sink their roots with the customer base in terms of their relationships with the
customer.

Lowering Production Costs: JIT gets rid of waste streams and hedges against inefficiencies like excess
inventory, too much production, and non-existence of proper processes. Consequently, production costs
decrease. Cost reduction is one of the factors in high profitability for the competitor in the marketplace.

In general, JIT is a crucial tool for lean production, and it helps in building a culture where people are
always thinking about how to get better by reducing waste and having a customer-centric approach.
Through the organization of production with the demand and one which hinges on the delivery of value,
they can have sustainable business growth and success in our environment which is increasingly
dynamic.

Benefits of JIT Implementation

Q.) Analyze the benefits of JIT for manufacturing efficiency, including reduced inventory costs,
enhanced product quality, and improved workflow.
A Just in Time (JIT) system is a strategy that involves producing or delivering goods and materials as
needed to satisfy customer demand, reduce inventory levels and related costs by synchronizing
production with demand and guaranteeing commodities are accessible precisely when needed.

The followings are the benefits of the implementation of JIT:

Reduced
Inventory
Costs

Supplier Improved
Relationships: Workflow

Benefits Just in
Time (JIT)

Lower
Supplier
Operating
Relationships
Costs

Increased
Reduced Inventory Costs: The primary advantage of JIT is the huge elimination of inventory carrying
costs which is incurred while maintaining stock. Companies can produce goods only whenever they are
required, which will result in the reduction of excess stock goods in warehouses or workshop tops. This
enables the companies to cut the costs of storing, reordering, and carrying the inventory which
consequently improves the cash flow and a more reasonable allocation of resources at the time of need.

Enhanced Product Quality: JIT demands to eliminate the waste products from the production process. In
a way that material flow is defined continuously, and smaller batches are used, there is an opportunity to
point out the flaws and quality issues as soon as possible. This will in turn lead to a higher level of
product quality provided that the components are of better quality because defects can be caught during
the production process so subsequent rework is reduced and scrap is too. Besides, JIT helps to engender
the culture of perpetual enhancement which relies on employees fixing the quality problems emerging
as they arise.

Improved Workflow: JIT operates smoothly by sweeping away waste and minimizing the production lead
time. The coordination of production output with customer consumption allows enterprises to adjust
their processes based on customer needs and helps minimize the hindrances in their workflow. The
optimization of daily operations, materials management, production flow, and rapid response to client
changes and market conditions is a primary result of this. The flow of work is also enhanced significantly
which results in an increased level of flexibility in a way that the organization can quickly respond to
changes such as demand or supply chain problems

Lower Operating Costs: JIT leads to many primary costs of operations being reduced as there is an
increase in productivity levels through efficiency gains. By cutting down production time, setup, and
other costs, as well as proper resource utilization, companies can reduce overall production costs. At last,
the emphasis on a spirit of continuous improvement creates an atmosphere that is favorable to
efficiency and innovation which in turn means that costs can be reduced repeatedly later on.

Supplier Relationships: JIT promotes highly responsive working relationships to prevent potential late
supplies from the suppliers. Such a cooperative style could foster long-term mutually beneficial
relationships with suppliers and garner more robust supply chains. The vendors are authorized to deliver
premium products on the schedule finely for any disruptions and defects which will directly call the
manufacturer’s capability to match customer demand.

Increased Number of Shipments: JIT manufacturing encourages frequent, smaller shipments to match
customer demand. This can result in increased customer satisfaction and more responsive delivery
schedules.

JIT is the best alternative for most industries as it not only reduces inventory costs but also enhanced
product quality, improved workflows, minimizes operating costs, fosters stronger supplier relationships,
and therefore makes higher profitability. While JIT requires that the entire supply chain be effectively
managed and that the stakeholders are ready for constant improvement and adopting new approaches,
it will favorably affect the enterprise’s overall performance.

Q.) Provide examples of how JIT leads to a more flexible production system.
JIT (just-in-time) is a production strategy that is aimed at inventory efficiency and quality reduction, in
which goods are produced only according to customer demand. This approach leads to a more flexible
production system in several ways.

This approach leads to a more flexible production system in several ways:

Inventory Reduction: JIT systems operate henceforth with narrow stocks, and they tailback on the
inventory flow system and create a system where materials only arrive when they are needed for
production. It provides a possibility of reduction of the number of warehouses that exist and allows to
rapidly respond to changes in market demand and innovation.

Lower Lead Times: The linkage of production and demand can be achieved by setting up just-in-time
systems that quickly cut down on the leading time. These companies no longer have to wait for the
harvesting season before they can place an order to be fulfilled by a supplier. This flexibility enables
companies to respond promptly to changes in customer orders, market trends, or unexpected
disruptions in the supply chain.

Increased Responsiveness: The production process for JIT systems has flexibility as a priority item.
Narrowing down batches and speedy changeover times can be very viable options for companies when
they swiftly switch from one product line to another or respond to an altered demand within short
notice or to satisfy customer requirements.

Improved Quality Control: Supply chain management under JIT involves looking at waste and
inefficiencies in the production process and then minimizing them. In this way, JIT systems provide an
approach that emphasizes outstanding quality at all stages. This, in turn, lowers the risk of mistakes and
rework, which yields products with better overall quality and happy customers.

Supplier Collaboration: JIT systems are prone to the necessity of tight relationships with the suppliers for
the delivery of components on time. With this support complementary mechanism, the level of
communication and trust is improved which converts into resilience and flexibility in responding to the
changes in supply and demand especially in the supply chain disruptions.

Continuous Improvement: JIT systems rely on the continuous improvement philosophy which presumes
everybody at any level in the organization to be creatively thinking and coming up with ways of
eliminating the unnecessary and enhancing the streamlining of the process. This authenticating culture
of constant improvement helps to develop adaptability and innovation in the production system.

Cost Savings: The JIT approach requires its initial setup in terms of investments in technology and
training, but eventually, it should bring long-term benefits like diminishing carrying costs of inventory,
downsized storage expenses, reduced waste, and enhanced overall efficiencies. Those cost savings
present companies with more potential for continuity by diverting financial resources to other business
aspects.

Example: Case Studies

Many businesses have implemented JIT systems; however, we shall examine how Toyota and Dell offer
valuable lessons and key takeaways from their successful implementations of JIT principles: Many
businesses have implemented JIT systems; however, we shall examine how Toyota and Dell offer valuable
lessons and key takeaways from their successful implementations of JIT principles:

Toyota

Toyota’s emphasis on the waste reduction of its TPS and in that way it still stands as a lesson for all.
Waste elimination is the key to the process of becoming profitable, eradicating it from its roots–features
such as excess inventory and inefficiency. The habitual tool has also shown the meaning of building
strong relations with suppliers, but this is the most critical part of the success of Toyota itself. Working
together with trustworthy partners not only ensured timely and but also provided reliable products for
customers. Their dedication to the principle of Kaizen (continuous improvement) is an outstanding
source of learning which will be helpful while taking up the JIT system. Toyota put this saying into action
by getting employees at all levels to find and fix problems at the same time which led to continual
changes. JIT as a core element of their system combined responsiveness with delivery speed:
adjustments in production schedules and/or inventory levels were used as a means to adapt in case of
unpredicted changes in customer demands. Pursuing the same goal, Toyota set a fervent standard of
quality across the production process, inspecting within and outside of factory gates to prevent defects
and gain customer satisfaction.

In the long run, the JIT systems aim at constructing an agile and fast-reaction-designed production chain,
where the companies are capable to adapt rapidly to the moving target of market conditions, public
expectations, and operational difficulties.

Challenges and Limitations of JIT

Q. Identify the main challenges and limitations associated with implementing JIT in manufacturing.

1. Reduced Space Needed:

Advantage: JIT attempts to dramatically reduce warehouse or storage facilities since it deals primarily
with the transfer of raw materials directly to the last processing steps and, ultimately, to the customer.

Disadvantage: Nevertheless, this same issue becomes a hindrance when any organization utilizes quite a
lot of storage space for its inventory control.

2. Smaller Investments:

Advantage: JIT strictly fits in small-scale production facilities whose financial power is only limited.
Coholder bought only stock materials when needed so it could protect the balance in the firm.

Disadvantage: However, we must also try to achieve the best and most accurate demand forecasting to
avoid material shortages, and these shortages can adversely affect production.

3. Waste Elimination/Reduction:

Advantage: Just-in-time stock turnover is the quickest way to get rid of stock in a state of damage or
obsolescence during goods keeping in storage.

Disadvantage: Nevertheless, if estimates aren't right, the business may find itself out of stock, thus
disrupting production continuity.
4. Risk of Running Out of Stock:

The main principle of the JIT technique is stocking less to meet the demand based on the forecast
statement. This may lead to the situation being that the prognosis will do stockouts and end up affecting
the clients.

5. Large Inventories:

The Just-in-Time strategy is aimed at keeping an optimum and minimal inventory; however, mastering
the balance is not easy. There are insufficient inventory leads to disruption of production, but other
excess inventory ties up capital as well as a storage system.

6. Long Production Times:

JIT depends on short haulage and on-time arrangements. If the production process doesn’t meet the
schedule, this can cause a hectic movement throughout occurring entire process, taking away the timely
delivery of the end product.

7. High Defect Rates:

JIT emphasizes quality control. Nevertheless, in case of any defects, they interrupt the workflow and can
require additional labor to be done, which can lead to effectiveness loss.

8. Production Obsolescence:

The JIT industry generally considers customer behavior and predictable demand patterns. Organizations
may go in vain by seeing the fruits of their hard work rudely battered by their market become obsolete
and the product outdated.

9. Inability to Meet Delivery Schedules:

JIT basis on the delivery schedule from suppliers occurs in good times. Firstly, supply chain disturbances
often become the factor causing production schedules to fall behind as well as customer dissatisfaction.

10. High Initial Costs (Ironically):

JIT from the perspective of JIT implies decreasing the costs, but it's setting up and maintenance can be
very costly in the beginning. Companies should invest in employee education, innovative technology, and
process reengineering.

11. Human Error Risk:

JIT on the other hand requires accuracy and coordination. Any slips up in scheduling, production, or
inventory management a thing of make a heavy effect.

In the last, JIT is a means of saving resources after it is combined with accurate forecasting, a reliable
supply chain, and great dealer's concern about details.

Q. Discuss strategies that companies might use to overcome these challenges.

1. Accurate Demand Forecasting:

Correspondingly, companies need intelligent demand forecasting. Close collaboration with the sales,
marketing, and supply chain teams, to acquire reliable data on the customers' demand pattern.
Historical data, current trends, and predictive analytics can all be used to increase the accuracy of
the forecast.

2. Supplier Partnerships and Communication:

Build strong connections with upstream suppliers. Timely update of communication minimizes
delays and therefore any interruptions in the projects. Look for long-term relationships or
partnerships with suppliers to make one’s supply chains more stable.

3. Safety Stock and Buffer Zones:

For JIT aims at the reduction of inventory, smaller quantities to make up for the Safety stock or buffer
zone can reduce the risk. It behaves as a buffer, which prevents demand surge that cannot be served
in due course and any supply breaks.

4. Flexible Production Systems:

Use of flexible manufacturing systems that permit production modifications such as product changes
to increase throughput. Modular lines of production lines, multi-functional skilled labor, and
advanced methods of processing facilitate adaption to various consumer preferences.

5. Quality Control and Continuous Improvement:

JIT emphasizes quality. Companies, therefore, should allocate resources to in-depth and efficient
quality control programs, employee training, and error prevention methods. Incorporate well-
established Total Quality Management (TQM) principles, to eliminate defects.

6. Technology Adoption:

Use technology to track in real-time, and manage inventory, and supply chain information in a
transparent manner. RFID, barcodes, and software which are advanced will enrich the JIT
methodology.

7. Collaborative Supply Chain Management:

 Cooperate with suppliers, logistics partners, as well as retailers. Provide data for visibility and
minimize the lead time by optimizing transport costs while improving the overall efficiency.

8. Risk Mitigation Strategies:

Risk identification (for example: natural disasters, geopolitical events, and so on) should be a part of
the strategies that are in place. This is inclusive of having contingency plans. Diversify educators on a
regional basis to decrease the chance that a single region will meet all the requirements.

9. Employee Training and Empowerment:

Instruction of employees on the JIT approach, teamwork, and problem-solving will ensure the
competency necessary for successful production. Disempower them to know they are the ones who
have to make decisions that are JIT-focused. Teams having members from varied professions can
handle challenges actuarily.

10. Lean Culture and Kaizen:

Steering the culture of lean towards eliminating any conditions of waste and more so, reducing
waste is a core value in the company's lifestyle. Kaizen events help to maintain the constant
improvement is improvement of the job process. Engage different employees in process optimization
from the frontline to the back office.

11. Collaboration Across Departments:

Remove orders between the departments (for example, manufacturing, procuring, transportation).
Collaboration across departments guarantees alignment that’s slicker and easier to execute within
JIT.

12. Gradual Implementation and Pilot Projects:

Rather than a shock, the transition should be JIT driven by denomination and morale. First of the
thing to do is the implementation of the pilot projects to prove the conceptual design's viability,
identify obstacles, and gain from the first experience.

Become aware that JIT's success is based on a preventive approach which is the summation of people,
processes, and technology. Organizations, however, have to be able to develop their unique practical
approaches within their preferred environment and industry.
 References

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