Just in Time Production

Emergence of JIT

Evolved in Japan after World War II, as a result of their diminishing market share in the auto industry.

Toyota Motor Company- first to implement fully functioning and successful JIT system, in 1970’s.

Japanese Manufacturers looked for a way togain the most efficient use of limited resources. They worked on "optimal cost/quality relationship.

JIT Means …

Keeping work flows moving Eliminating inventories Reducing travel distances Eliminating defects and scrap Maximizing usage of space

JIT Demand-Pull Logic

Customers

Sub

Sub

Fab

Fab

Fab

Fab

Vendor

Vendor

Vendor

Vendor

Final Assembly

Here the customer starts the process, pulling an inventory item from Final Assembly…

Then sub-assembly work is pulled forward by that demand…

The process continues throughout the entire production process and supply chain

6 Three Elements of JIT

7 Three Elements of JIT…

JIT manufacturing focuses on production system to achieve value-added manufacturing

TQM is an integrated effort designed to improve quality performance at every level

Respect for people rests on the philosophy that human resources are an essential part of JIT philosophy

8 Flexible Resources

Moveable, general purpose equipment: Portable equipment with plug in power/air Drills, lathes, printer-fax-copiers, etc. Capable of being setup to do many different things with

minimal setup time Multifunctional workers:

Workers assume considerable responsibility Cross-trained to perform several different duties Trained to also be problem solvers

9 Respect for People

The Role of Employees: Genuine and meaningful respect for associates Willingness to develop cross-functional skills Bottom-round management – consensus management by committees or

teams Quality circles – small volunteer teams that solve quality problems

10 Respect for People

Lifetime Employment:

Everyone feels secure/is empowered

Everyone is responsible for quality: understand both internal and external customer needs

11 Respect for People

The Role of Management: Responsible for culture of mutual trust Serve as coaches & facilitators

Responsible for developing workers Provide multi-functional training Facilitate teamwork

Support culture with appropriate incentive system including non-monetary

12 Respect for People

Supplier Relationships Single-source suppliers

Can supply entire family of parts Build long-term relationships with small

number of suppliers Fewer contracts Cost and information sharing Work together to certify processes

Traditional Systems Compared to JIT

Priorities

Traditionally Accept all customer orders Provide a large number of options from which customers may order

JIT low cost/high quality within limited market

Engineering

Traditional design custom

outputs JIT

design standard outputs

incremental improvements

design for manufacturability (DFM)

Capacity Traditional

excess capacity designed into system just-in-case problem arises highly utilized inflexible

JIT minimize waste of having extra capacity flexible capacity moderately utilized

Transformation System

Traditional job shop materials handling equipment lots of space to store inventory

JIT mostly used in repetitive production situations job shops often converted to cellular manufacturing

Workforce Traditional

competitive attitude between workers and managers status symbols and privileges much of the employees’ time is nonworking time: looking for

parts, moving materials, setting up machines, getting instructions, and so on. When actually working, they tend to work fast.

JIT broadly skilled flexible workers who can uncover and solve

problems workteams cooperative attitudes

Inventories

Traditional used to buffer

operations large WIP buffers

JIT inventory is seen as

an evil small WIP buffers

Suppliers

Traditional suppliers treated as

adversaries multiple sourcing

JIT supplier considered

part of team single-sourcing

agreements supplier certification

programs

Planning and Control

Traditional focus is on planning planning complex and computerized

JIT focus is on control procedures kept simple and visual rather than planning and forecasting for an uncertain future, the firm

attempts to respond to what actually happens in real time with flexible, quick operations.

Quality

Traditional inspect goods at critical points scrap rates tracked

JIT goal is zero defects workers themselves inspect parts

Maintenance

Traditional corrective maintenance, repairing a machine when it breaks

down done by experts who do nothing but repair broken equipment equipment run fast

JIT preventive maintenance, conducting maintenance before the

machine is expected to fail, or at regular intervals. done by equipment operators equipment run slow (minimizes their chance of breakdown

while maximizing their output)

Companies adopted JIT

• Dell do not have to tie up capital in stock which means they can invest it in other areas of the business, such as R&D or promotion, to increase sales.

• Dell require less space for stock which means they save money on storage facilities which will increase their profit margins.

• Dell have a high dependence on their suppliers and should the suppliers fail them, it is Dell’s reputation and sales which would suffer if they were unable to meet demand from their customers.

• Dell may be unable to benefit from bulk-buy discounts which leaves them with an option of increasing the price to the customer or reducing their own profit margin.

Benefits of JIT

Cost savings: inventory reductions, reduced scrap, fewer defects, fewer changes due to both customers and engineering, less space, decreased labor hours, les rework.

Revenue increases: better service and quality to the customer.

Investment savings: less space, reduced inventory, increased the volume of work produced in the same facility.

Workforce improvements: more satisfied, better trained employees.

Uncovering problems: greater visibility to problems that JIT allows, if management is willing to capitalize on the opportunity to fix these problems.

Disadvantages of JIT Danger of disrupted production due to non-arrival of

supplies

Danger of lost sales

High dependence on suppliers

Less time for quality control on arrival of materials

Increased ordering and admin costs

May lose bulk-buying discounts