CHAPTER 13 JUST-IN-TIME SYSTEMS

Chapter Overview
Just-In-Time systems are composed of an integrated set of activities that use minimum levels of inventory to achieve high volume production. JIT can be thought of as big JIT and little JIT. Big JIT is a set of philosophies that seek the elimination of waste is all aspects of a firms operations. Little JIT, on the other hand, concentrates on the scheduling of inventories and resources.

Major Points of Chapter

1. JIT consist of both techniques such as Kanban cards, as well as philosophies of doing business. 2. One key part of JIT is the elimination of waste, where waste is defined as anything other than the minimum amount of equipment, materials, parts, and workers which are absolutely essential to production. 3. The seven elements associated with the elimination of waste are focused factory networks, group technology, Jidokaquality at the source, JIT production, uniform plant loading, Kanban production control system, and minimized set-up times. 4. Another guiding principle of JIT is its respect for people. The seven basic elements of this are lifetime employment, company unions, attitude towards workers, automation/robotics, bottom-round management, subcontractor networks, and quality circles. 5. JIT in the North America is not always successful. Many organizations have transferred the inventory requirements onto their suppliers instead of coordinating with them. However, certain components of JIT have been successfully applied. These include working with suppliers, reducing set-up times, encouraging worker participation, and reducing inventories and wastes. 6. Since JIT is process rather than product oriented, some components can easily be applied in services.

Review and Discussion Questions

1. Stopping waste is a vital part of JIT. Identify some sources of waste and discuss how they may be eliminated. Waste can include work in process, raw materials, and finished goods that are not being directly worked on or being shipped to the customer. Any processes or procedures not needed to complete the product or deliver the service are wastes. Material sitting in stores and queues are also sources of waste as is excess or inefficiencies. Through applications of JIT principles of streamlining flows and only performing work as it is needed, these wastes can be reduced and possibly eliminated.

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2. Discuss JIT in a job-shop layout and in a line-flow layout. JIT can be applied in a variety of organizational process flows. While pure JIT applications are often thought of as a line improvement, JIT can work in services or in job shops. In a job shop, any repetitive work can be organized and arranged as a line flow. This visibility of the process allows application of JIT. 3. Why is it important for JIT have a stable schedule? Because any changes in the final product schedule are magnified backward along the line, a stable schedule is necessary. This schedule must be frozen at some point. Also, because suppliers and vendors are delivering in small batches just as materials are needed, they need accurate information about the build schedule so they can plan their corresponding deliveries. 4. Are there any aspects of the Japanese approach that you could apply to your own current school activities? Explain. Students are well aware of the just-in-time philosophy for papers and exams. This is not the most appropriate application. The JIT approach starts from a schedule and works back to begin programs at the appropriate timethis can be very useful for avoiding academic pitfalls. Note also the emphasis on total quality control. Students should build in quality throughout the study process and not try to cram in quality of study or papers just before the due date. 5. Which objections might a marketing manager have against uniform plant loading? Uniform plant loading might upset a marketing manager who is planning a special promotional campaign for a specific product. If production did not make enough of the units during the promotional period, backorders or lost sales might result. Also because some products have different life cycles and sales patterns, this smoothing might hinder the marketing activities. 6. What are the implications for cost accounting of JIT production? Cost accounting can benefit JIT analysis, but outdated measures tied to labor rates and productivity no longer applies. Overhead is the key variable to measure under JIT. Labor is only a small part of the entire production dollar. Also labor and machinery may be idle under JIT because goods are only produced as needed. Labor and machinery variances may not reflect the JIT philosophy. 7. Which question would you want to ask the president of Toyota about his operations management? Examples include: How can you make it better? Do the workers like the system? Is it costeffective? Do you need a bright, young assistant?

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8. Explain how cards are used in a Kanban system. Cards in a kanban system represent a visual work order. As material is moved from the line to the customer, the last operator in the process goes to the next workstation up the line and pulls a bin of work for further processing. This employee removes a card from the bin and leaves it at the previous station. This card represents a work order for this station to make or process more products. This sequence continues in a backward fashion through the line and back to the suppliers. 9. In which ways, if any, are the following systems analogous to Kanban: returning empty bottles to the supermarket and picking up filled one; running a hot dog stand at lunchtime; withdrawing money from a checking account; collecting eggs at a chicken ranch? All the systems represent work orders when the empty containers are returned. The empty bottles at the supermarket will be picked up by the soda bottler and represent a need to clean and refill the bottles and return them to customers. A hot dog stand at lunchtime has hungry customers as work orders to process. The customers in line represent needs for the hot dogs. Withdrawing money from a checking account serves as a receipt and also a tickler to the individual to deposit more money in the account at the next pay period. The chicken producing the egg signals the worker to pick up and package the egg for shipment. 10. How does the old saying, Theres no such thing as a free lunch, pertain to the Japanese elimination of inventory? It had been assumed that inventory was necessary to run an efficient production system. The Japanese seem to have been able to do the same thing without inventory. They are not doing this for free. Because they must schedule under-capacity to make sure that they can always meet the schedule. Thus, they trading inventory for capacity. 11. Explain the relationship between quality and productivity under JIT philosophy. Under JIT, quality and productivity are key and equal partners. As quality improves, so does productivity, as only good units are assembled. No work is wasted on preparing inferior quality items. Both are necessary in the JIT philosophy. 12. What are the differences between implementing JIT in a manufacturing facility and implementing it in a service operation? Since JIT deals with processes, there are many similarities. However, service operations generally have the customer involved in part of the process and, therefore, each transaction is slightly different. Consequently, this variation would be one of the major differences. 13. Identify some of the ways JIT can be applied to service operations. Duclos, Siha, and Lummas suggest the following framework for JIT in services: Synchronization and balance of information and workflow, total visibility of all components and processes, continuous improvement of the process, holistic approach to the elimination of waste, flexibility in the use of resources, and respect for people.

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Case: Cheng Products Company
1. All of them, for the following reasons: MRPthe monthly demand is stable enough to be considered repetitive, which means that a pull system is more appropriate than MRP. Three new inspectorsunneeded if workers are working properly. A rework lineunheard of with a JIT system. It should never be needed. High-rise storageunder JIT, parts should move to the next work station as soon as they are needed. In fact, they shouldnt be made until the need is signaled. 2. The top speed of the workers is leading to the necessity of 3 more inspectors and a separate rework line. It would seem to be time to try another approach, such as a JIT system. Present lot size of from 100 to 300 means that they are making form two to five months supply at a time. Somewhere, then, there must be wasted room for from 200 units (10 skids) to 600 unites (30 skids). Further, they are starting with the whole months inventory in buffers at the beginning of the month. From receiving to shipping there are 9 skids and two tables. At 20 unites per skid, on the average full, there is 2/3 months production in workin-process at all times. Before switching to a full JIT system Cheng must convince their manufacturing client to take delivery in smaller lots than they are presently accepting. This should be to their advantage, since it looks like they may be taking supplies in large numbers. Cheng can deliver on a JIT basis, since the plant is a few miles down the road. Arrangements will have to be made to match the Cheng schedule to the production schedule of the computer firm. According to the case, the scrap rate is 10 percent per operation. At this rate, for the 5 or 6 operations carried out, they are losing about 40 percent of the raw material input before the finish of processing. This indicates that only 24 percent of the 40 percent of the manufacturing cost is being used in finished products. A JIT system should be able to reduce the scrap cost to close to zero, which should increase profits by at least the 16 percent being saved. If we consider a JIT system, we will shift from runs of 100-300 to making 2 or 3 of each type per day. Right now there are 12 workers shown on the line, so there are about 96 man-hours available per day. Three units of each type will require about 66 hours. The implementation of JIT should cut out the need for the 30 minutes of inspection per unit, which should make another 4 hours of production time available. Looking at the floor arrangement and the existing partitions, it may be hard to accomplish much in the way or relocation. Note that machines 3 and 4 are the same. It may be better to alternate units and do both operations 2 and 3 on the same machine and alternate products. In this way a machine team can be set up and at least one worker eliminated and different pattern for the Z product absorbed by the work team.

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The skids will be eliminated, and one unit will be moved at a time. The size of the work area suggests that Kanban cards will not be needed between assembly stages. They will be needed to go from the first machining station back to get items from receiving and to get items from the sub-assembly area to the assembly area. 3.

4. a. Negotiate with the computer company to accept parts on a JIT basis. b. Cut down the number of suppliers moving from 80 towards single sourcing and JIT deliveries c. Train workers to act as their own inspectors. d. Train workers in machine departments to work as a manufacturing cell, switch to that arrangement. e. Train and switch assembly department to operate as a cell, make the switch. f. Train and switch paint booth and oven to be a cell. Consider including packing in this cell.

g. Cut down sub-assembly area, replace use of this space. h. Scrap the skids. i. j. Schedule meetings to discuss the changeover. Make the change.

k. Count the money saved; smile when quality rises dramatically.

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