Just In Time

CHAPTER

Introduction and Understanding of Just in

Time
SYNOPSIS

1. 1 Introduction
1.2 Background
1.3 Definition
1.4 Philosophy or Technique
1.5 Main Area

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Just In Time

Introduction and Understanding of just in Time

1. 1

Introduction
Just-In-time

management

or

philosophy

JIT,

is

aimed

at

eliminating manufacturing wastes by

producing only the right amount and
combination of parts at the right place
at the right time. It is also that Just in
Time

(JIT) enforces

Continuous

Improvement by continual reduction

of non-value-added inventory stocks to
lower and then further lower levels.
This is based on the fact that wastes
result from any activity that adds cost
without adding value to the product, such as transferring of inventories from one place
to another or even the mere act of storing them.
The goal of JIT, therefore, is to minimize the presence of non-value-adding
operations and non-moving inventories in the production line. This will result in
shorter throughput times, better on-time delivery performance, higher equipment
utilization, lesser space requirement, lower costs, and greater profits.
JIT was developed as a means of meeting customer demands with minimum
delays. Thus, in the olden days, JIT is used not to reduce manufacturing wastage, but
primarily to produce goods so that customer orders are met exactly when they need
the products.
JIT is also known as Lean production or Stockless production, since the key
behind a successful implementation of JIT is the reduction of inventory levels at the
various stations of the production line to the absolute minimum. This necessitates
good coordination between stations such that every station produces only the exact
volume that the next station needs. On the other hand, a station pulls in only the exact
volume that it needs from the preceding station.

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Just In Time

The JIT system consists of defining the production flow and setting up the
production floor such that the flow of materials as they get manufactured through the
line is smooth and unimpeded, thereby reducing material waiting time.
This requires that the capacities of the various workstations that the materials
pass through are very evenly matched and balanced, such that bottlenecks in the
production line are eliminated. This set-up ensures that the materials will undergo
manufacturing without queuing or stoppage.
Another important aspect of JIT is the use of a 'pull' system to move
inventories through the production line. Under such a system, the requirements of the
next station are what modulate the production of a particular station. It is therefore
necessary under JIT to define a process by which the pulling of lots from one station
to the next is facilitated.
JIT is most applicable to operations or production flows that do not change,
i.e., those that are simply repeated over and over again. An example of this would be
an automobile assembly line, wherein every car undergoes the same production
process as the one before it.
Some semiconductor companies have likewise practiced JIT successfully.
Still, there are some semiconductor companies that dont practice JIT for the simple
reason that their operations are too complex for JIT application. On the other hand,
thats precisely the challenge of JIT creation of a production set-up that is simple
enough to allow JIT.
Inventory stocks allow production process to continue even when some
problem occurs. In a way, inventory stocks act like a buffers to hide any problem that
may occur. But, with JIT, there are no buffers to hide problems and thus, occurrence
of problem can shut down the entire production process. Thus, JIT philosophy helps
organization to prominently expose problems and thus, bring a clear focus on removal
of it at source, by eliminating the cause, rather than effects, of problem.
With JIT, it is believed that the root causes of most problems are due to faulty
production process design. Hence, with JIT, nothing is taken for granted, everything is
subject to analysis.

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Just In Time

Each activity is identified as either Value-Added or Non-Value-Added. The

reduction of Non-Value-Added activities is achieved mainly through increasing
manufacturing flexibility and improved quality.
JIT is an extremely powerful tool to identify where improvements should be
made. It helps you to identify cause (not the effect) of problem and its elimination.
Failures and exceptions are treated as opportunities to improve the system. In fact, JIT
initiates failures due to problems to expose them. It is a system of trouble-shooting,
within a culture of constant analysis and improvement. It is clear, as an attitude and
approach, JIT and TQM are perfectly complimentary to each other, to expose and
correct problems at source, so as to avoid wasting resources on production of
defective products.
Just-in-time manufacturing is a process where suppliers deliver inventory to
the factory only when it's needed for assembly. Companies are beginning to turn to
Internet-based technologies to communicate with their suppliers, making the just-intime ordering and delivery process speedier and more flexible.

1.2

Background
JIT finds its origin in Japan, where it has

been in practice since the early 1970s. It was

developed and perfected by Taiichi Ohno of Toyota,
who is now referred to as the father of JIT. Before
the introduction of JIT, there were a lot of
manufacturing defects for the existing system at
that time.
This included inventory problems, product
defects, risen costs, and large lot production and
delivery delays. The inventory problems included the unused accumulated inventory
that was not only unproductive but also required a lot of efforts in storing and
managing them. Other implied problems were parts storage, equipment breakdowns
and uneven production levels. For the product defects, manufacturers knew that only
one single product defect could destroy the producers credibility. They must create a

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Just In Time

defect free process. Thus began the search for the system that could bring about a
turnaround.
The original concepts for the present day JIT philosophy is derived from the
car plant developed by Henry Ford in the early part of the century.
The ideas probably originated even earlier than this. Although many elements
of JIT manufacturing were present in Ford's assembly line in the 1930s, JIT as a
manufacturing process was not refined until the 1970's by Toyota Motors. Springing
from Japan's post World War II goal of full employment through industrialization,
Japanese manufacturers imported technology to avo0id heavy R & D expenditures
and focused on improving the production process. Their aim was to increase product
quality and reliability. Taiichi Ohno established Toyota as leaders in quality and
delivery time through the implementation of JIT. This position was gained due to a
commitment to two philosophies: elimination of waste and respect for people.
The Japanese developed what we today understand as Just-in-time, through
intensive government supported work, and intended to improve their then inferior
industries. Their programmes began by learning existing techniques from experts such
as Deming and Juran, American quality specialists.
The characteristics of Japan, restrained spaces, no natural energy sources or
mineral wealth put them under pressure and appear to have banished complacency.
Total Quality Manufacturing experts, Deming and Juran, are responsible for
pushing North American manufacturers to adopt JIT philosophies. JIT gained world
prominence as North American manufacturers modified JIT principles to fit into their
top down planning and manufacturing systems approach.

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1.3

Definition
JIT has gained considerable interest because it allows a company to produce

high quality products with reduced waste and with increased levels of productivity.
Just-in-time (JIT) is defined by T.C.E Cheng
A philosophy of manufacturing based on planned elimination of all waste and on
continuous improvement of productivity. It also has been described as an approach
with the objective of producing the right part in the right place at the right time
David Hutchins (1995) defined Just in Time as
The term used to indicate that a process is capable of instant response to demand
without the need for any overstocking either in expectation of the demand being
forthcoming or as a result of inefficiency in the process.
Taiichi Onho (1986) defined Just in Time as
Just in Time (JIT) is a manufacturing philosophy which leads to producing the
necessary units, in the necessary quantities at the necessary time with the required
quality."
Schonberger describes the JIT system as to
"produce and deliver finished goods just in time to be sold, sub-assemblies just in
time to be assembled into finished goods, and purchased materials just in time
to be transformed into fabricated parts".
Monden describes JIT as
"A production system to produce the kind of units needed, at the time needed and in
the quantities needed".

Hall states that JIT

"Is not confined to a set of techniques for improving production defined in the
narrowest way as material conversion. It is a way to visualize the physical
operations of the company from raw material to customer delivery".
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Just In Time

1.4

Philosophy or Technique
Just in Time are a philosophy and not the technique for elimination of wastes.

The JIT strategy is to have "the right product at the right place at the right time."The
Just-in-time philosophy that emerged, is a management logic based on simplicity and
continuous improvement. It may be applied to any process where it will aim to make
improvements through elimination of excess, waste and unevenness.
The Just-in-Time concept comprises methods and techniques that aim to
increase the potential for short times to delivery. Production system in which both the
movement of goods during production and deliveries from suppliers are carefully
timed so that at each step of the process the next (usually small) batch arrives for
processing just as the proceeding batch is completed
The "Just in time" (JIT.) inventory concept, also called Kanban, asserts that
just enough inventories, arriving just in time to replace that which was just used, is all
the inventory that is necessary at any given time. Excessive inventory unnecessarily
ties up money, adds warehousing costs, increases risk of damage and risks
obsolescence, and most of all, can possibly obscure opportunities for operational
improvements.
Storing inventory is still the basics of warehousing, but in todays business it
constitutes only part of the total. A modern thought on warehousing is that large
inventories are really not as necessary as once believed. To some companies storing
large quantities of inventory is detrimental to business because it ties up capital and
can also disguise poor management practices. The JIT philosophy emphasizes flow
flexibility and developing supply chains to reduce all excess and waste

1.5

Main Area
Often this ter m J IT is us ed w ith JIT interch angeab l y . It is tha t mu c h

inter connected with lean manufacturing; in fact JIT is the backbone of the lean
manufacturing. Actually the concept grew first with the Toyota system was the JIT.
Then it developed to the lean manufacturing.

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Just In Time

JIT is one key way to get read of most of the wastes which we have already
discussed in the early chapters. JIT concepts are based on the pull demand model.
Everything is done when they are actually needed. JIT has three main areas.

1. Just in Time Purchasing

Just in time manufacturing process makes sure the seamless integration of
manufacturing floor. JIT manufacturing to really be effective purchasing patterns must
also be aligned with this. So just in time purchasing is another essential component of
just in time environment.
It is very important to reduce wastes in the factory floor. But it is useless if
your raw material stocks are high. In this case you will only be transferring the stocks
from factory floor to the RM warehouse.
In a traditional organization purchasing is done in larger volumes. These
stocks are stored and then used when required. There will be few deliveries in larger
time intervals. But in just in time purchasing, the requirement for purchasing comes
from manufacturing process. When they require raw materials, purchasing must be
triggered and then purchasing will be taken place in smaller quantities and will have
frequent deliveries.
To facilitate just in time purchasing, the supplier bases must be sorted. There
should be a narrow, manageable and reliable supplier base. There should be
convenient ways of communication between suppliers and purchasers. Paperwork
must be minimized. In short suppliers must be treated as strategic partners of your
business.
This purchasing behavior will make sure the correct quantities of high quality
supplies every time when there is a requirement. In fact the JIT purchasing gives the
real value to JIT manufacturing process.

Case Study
The Japanese by no means confine the JIT concept to in-plant production.
Purchased inventories are considered as evil as in-plant inventories.
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The Japanese tend to buy in small lots from the same few suppliers year after
year. Suppliers develop a competency that is particularly attuned to the delivery and
quality needs of the buying firm. Confidence in the supplier reduces buffer
inventories which are sometimes used up in only a few hours. Delivery frequency
from the supplier may be more than once a day. And over time, some suppliers
achieve quality levels high enough for all receiving inspections to be bypassed and for
the parts to go right to the production line rather than to a receiving dock.
Under JIT, suppliers also benefit, especially from long-term contracts and
stable relationships with the buying plant. By making parts steadily rather than in
batches, the supplier realizes inventory, quality, and scrap improvements. Defects are
identified early, and there are fewer defectives to throw out or rework. Further
inventory benefits may be gained if the supplier also initiates JIT buying from its own
suppliers.
A less obvious but potentially great benefit to the supplier is less need for
large, expensive equipment and steadier utilization of existing equipment since the
supplier may produce in the same steady daily amounts as are called for in the JIT
purchase agreement.
The benefits of JIT buying are greatest in the case of materials used every day.
For materials whose usage rates are irregular, one can go only so far toward frequent
deliveries in small amounts. But still the point is to try to go as far as possible.
In Japan it is common for a JIT purchase agreement to involve very little paper
work. The purchase order (PO) or contract may specify an overall quantity to be
delivered during a period of several months in accordance with a long-term
production schedule provided by the buying plant.
Some Japanese original equipment manufacturer (OEM) companies use
kanban instead of a production schedule to trigger deliveries. The kanban are released
from the using work center on the shop floor of the OEM Company. Deliveries are
thus matched with the work centers rate of usage and hence are closer to being justin-time than would be the case if they were based on a production schedule. The

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kanban may serve as the invoice when returned with the parts to the OEM plant. The
quantity of cards is totaled. The total is payable perhaps once a month.
Another notable feature of the Japanese system of industrial buying is
simplicity of the product specifications. The Japanese way, is to rely more on
performance specifications and less on design specifications. The idea is to let a
supplier innovate. After all, the supplier is the expert. Why not rely on the suppliers
expertise?
It is common practice for U.S suppliers to ship somewhat more or less than the
quantity called for in the purchase agreement. The Japanese buyer expects and gets an
exact quantity or very closes to it. The Japanese commonly use packages or containers
with a standard number of divided spaces or an exact cube. This makes it easy to
count out the right number.
American buyers take shipping costs and the whole freight handling system to
be a given, which tends to force large-lot buying. JIT buying, like JIT production,
considers any such obstacles to cutting lot sizes as a challenge rather than as a given.
The freight system may be attacked in various ways, and distances to suppliers must
become an important consideration in selecting them. These issues are examined
further in the next sections.
The typical U.S way of dealing with inbound freight is to leave it to the
supplier and the transportation industry. But the transportation systems, primary
concern is with optimal utilization of drivers, storage space, and trailer or rail-car
cubes. One way is to try to deal with clusters of vendors rather than widely scattered
ones, so that freight may be consolidated daily in economical full trailer loads or
carloads. Vendor clusters also afford increased use of contract shipping or companyowned trucks and use of trailers as portable warehouses. These measures improve
control over freight scheduling and make it possible to avoid the uncertainties of
dealing with break-bulk warehouses.
As deliveries become frequent, full truck loads may not be possible. Unit-load
economics may be overcome by cutting the transportation distance between supplier
and buyer plants. Proximity also means that there are numerous coordination benefits.
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Toyota, Nissan, Honda, and many other companies that seem not to be
vertically integrated actually exercise extensive control over their suppliers.
Sometimes the supplier plants are partially owned by the buying firm. But even when
that is not the case, control is exercised. Buyer representatives constantly visit the
supplier plants and come to know the suppliers capabilities and weaknesses, perhaps
even better than a U.S assembly plant typically knows its own subsidiary fabrication
plants. On the other hand, Japanese companies that are highly vertically integrated in
an ownership sense are often internally organized into small units, so that over control
does not stifle local initiative and pride.
A rule of thumb in the U.S purchasing trade is to have at least two suppliers
for a given purchased part. Japanese companies, by contrast, hope to evolve to buying
a given part from just one supplier but a good one, and preferably one that does little
business with other buyer companies. The Japanese buying firm wants to be the
dominant reason for the suppliers existence. A supplier selling, say, 60 percent of its
output to a single buying company will go to great lengths to be responsive.
Building up and staying with a base of dedicated, high-quality suppliers seems
resourceful, as compared with the musical-chairs pattern practiced in the U S.
Frequent rebidding is supposed to search out the best current price. But that opens the
door to those who quote low to get the contract and then fail to perform satisfactorily.
Also in awarding a contract to a new lower bidder, the previous supplier is taken off
his learning curve and a supplier who may have to go through a debugging period that
the first supplier already experienced. Of course, the purchasing department is
supposed to thoroughly check out a potential new suppliers capabilities before
awarding a contract. But such investigation is time-consuming and subject to error as
compared with the administrative simplicity of sticking with the old supplier.
Rebidding also fails to generate supplier loyalty, which can mean panic when a
supplier is unable to fill orders fast enough and must decide which buyer to favor

2. Just in time manufacturing

Many people think just in time manufacturing is lean manufacturing. It is not
completely true. JIT manufacturing is one of the essential components of lean. Just in
time initially used in the manufacturing context to make sure the continuous flow of
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value without having stocks in between workstations. This created the backbone of
lean manufacturing.
Every workstation is linked to the other with a customer supplier relationship.
Top of the line requirement is pulled by subsequent workstation by means of a kanban
or a pull signal. So the manufacturing is carried out only on demand, when they
required and only to the required quantity. Everything happens in a synchronized
manner to make sure the seamless integration of processes. Every workstation is a
supplier to the next workstation of the manufacturing process. And every workstation
is a customer to the workstation before that.
Just in time manufacturing make sure optimized cycle times. It also reduces
the stock holding costs. Reduction of work in progress is another important impact
JIT brings to the manufacturing process. This leads to improved quality of
manufacturing, reduced costs and cycle times. Obviously this will give the
competitive edge to any manufacturer in open markets.

Case Study
Just-in-time production is a simple concept. It is not about automation. It
requires little use of computers. In some industries, JIT can provide for tighter
controls on inventory than are attainable through U.S computer-based approaches.
Furthermore, JIT leads to significantly higher quality and productivity. JIT provides
visibility for results so that worker responsibility and commitment are improved.
Applications and benefits of JIT/TQC may be extended from the factory itself forward
into distribution and backward into the supplier end of the business.
The JIT idea is simple. Produce and deliver finished goods just in time to be
sold, subassemblies just in time to be assembled into finished goods, fabricated parts
just in time to go into subassemblies, and purchased materials just in time to be
transformed into fabricated parts. All materials must be in the processing stage, never
at rest collecting carrying charges. This hand-to-mouth mode of operation, approaches
piece-by-piece production.
The system becomes very transparent. If a worker makes only one of a given
part and passes it to the next worker immediately, the first worker will hear about it if
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soon the part does not fit at one of the next work stations. Thus, defects are discovered
quickly. The causes of defects can be nipped in the bud. Production of large lots high
in defects is avoided. Due to reduced scrap and more good parts, the time and money
spent on rework drops. So does the cost of wasted materials.
Under JIT, if a part doesnt fit at the new work station, the worker who made
the bad part will probably not find it hard to guess what he did wrong. In short, the
workers awareness of defect causation is heightened. So, the worker is strongly
motivated to improve.
Large lot sizes lead to carelessness on the part of the worker, the workers peer
group, and perhaps the labor union and management as well. They may feel, with
some justification, that a certain percentage of bad parts in a large lot cause little
harm; in a large lot there may be plenty of good items for every bad one. Just toss the
defectives aside and keep on assembling. With small JIT lot sizes, by contrast, a few
defectives parts pinch hard. The need to avoid errors is apparent, which heightens the
sense of responsibility.
Western observers have marveled at how Japanese workers come to one
anothers aid to resolve problems. We might expect such behavior in a JIT plant. It is
natural for each affected worker to want to come to the aid of the worker whose drive
belt breaks, whose machine is jammed, or who is having any of a large variety of
other common problems.
The Japanese no longer accept the buffer principle. They seem to have
understood the essence of the buffer inventory principle: The more irregularity, the
more buffer stock. Instead of adding buffer stocks at the points of irregularity,
Japanese production managers deliberately expose the work force to the
consequences. The response is that workers and foreman rally to root out the causes of
irregularity. They know that otherwise there may be work stoppages.
The Japanese principle of exposing the workers to the consequences of
production irregularities is not applied passively. In the Toyota Kanban system, for
example, each time that workers succeed in correcting the causes of recent irregularity
the managers remove still more buffer stock. The workers are never allowed to settle
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into a comfortable pattern. The pattern becomes one of continually perfecting the
production process.
A happy incidental benefit of JIT is faster market response, better forecasting,
and less administration. Less idle inventory in the system cuts overall lead time from
raw materials purchasing to shipping of finished goods. Marketing can thereby
promise deliveries faster, can effect a change in the product mix or quantity faster, and
can forecast demand better since the time horizon is shorter. In as much as JIT
systems tend to be run by workers and foremen, the administrative budget for data
processing, accounting, inspection, materials, production planning and control and so
forth is less. With fire-fighting responsibilities clearly recognized and accepted by line
workers, the executives can sit back and focus on strategy.

3. Just in time distribution

Just in time technique is dependent on continuous flow of value and
elimination waste. JIT manufacturing makes sure it produces the required goods as
and when they are required. JIT purchasing makes sure RM is in house in correct
quantities when it is required.
It is useless to produce just in time, if the customer is not going to get the
products just in time. For an example if we target to produce 12 products every hour
and if we are delivering the customers in batches of 240 we are adding two days of
lead time. So it is important to sort out the inbound and out bound logistics of the
organization to cater the requirement of the customer.
Logistics processes must be geared to handle frequent small lot deliveries. A
balance must be found in economy of scale to the customer satisfaction. Third party
involvement can be handy in this scenario. Outsourcing of logistics handling is a
possibility to focus more in your core competencies.
In fact without just in time logistic processes it is not possible to achieve many
of JIT advantages including lead time and reduced stocks.

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1.6

Element

The basic elements of JIT are:

People Involvement
Plants
System
People Involvement:

S
P
ly
s
a

Maintaining a good support and

t
n
production. This is not only reducing
the time and effort in implementation t
e
of JIT, but also minimizes the chance
m
of creating implementation problem. The attempt to maximize people's involvement
agreement from people involved in

may carry through the introduction of quality circle and total involvement concept.
Manufacturers can gain support from 4 sources.
1. Stockholders and owners of the company should maintain a good long-term
relationship among them.
2. Labour organization - all labours should be well informed about the goals of
JIT, this is crucial in gaining support from the them.
3. Management support - support from all level of management. The ideas of
continuous improvement should spread all over the factory, managers and all
shop floor labour.
4. Government support - government can show their support by extending tax
and other financial help. This can enhance the motivation, and also help in
financing the implementation of JIT

Plants: Certain requirements are needed to implement JIT

1. Plant layout - the plant layout is mainly focus on maximizing working
flexibility. It requires the use of "multi-function workers".
2. Demand-pull production - it means to produce when the order is received.
This can manage the quantity and time more appropriately.
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3. Kanban - a Japanese term for card or tag. Special inventory and process
information are written on the card. This helps tying and linking the process
more efficiently.
4. Self inspection - it is carried out by the workers at catch mistakes
immediately.
5. Continuous improvement - this concept should be adopted by every member
in the organization in order to carry out JIT. This is the most important concept
of JIT. This can allow an organization to improve its productivity, service,
operation and even customer satisfaction in an on-going basis.

System:
This refers to the technology and process that combines the different processes
and activities together. Two major types are Material Requirement Planning and
Manufacturing

Resource

Planning.MRP

is

computer

based

bottom-up

manufacturing approach. This involves two plans, production plan and master
production schedule. Production plan involves the management and planning of
resources through the available capacity. Master production schedule involves what
products to be produced in what time.

1.7

Phrase

According to Hirano, the introductory phases of JIT involve 5 steps.

Step 1: Awareness Revolution:

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It means giving up old concept of managing and adopting JIT way of thinking.
There are 10 principles for improvement:
1.
2.
3.
4.

Abolish old tradition concepts.

Assume that new method will work.
No excuses are accepted.
It is not seeking for perfection, absolutely zero-defect process, few defects is

acceptable.
5. Correct mistakes immediately.
6. Do not spend money on improvement.
7. Use your brain to solve problem.
8. Repeat to ask yourself 5 times before any decision.
9. Gather information from several people, more is better!
10. Remember that improvement has no limits.
The idea of giving up old concept was especially for the large lot production,
the lot production was felt that "having fewer changeover was better", but it was no
longer true. Whereas JIT is a one-piece flow manufacturing. To compare the two,
Hirano had this idea: Lot production: "Unneeded goods...In unneeded quantities...At
unneeded time..."JIT: "Needed goods...In needed quantities...At needed times..." The
main point here is to have an awareness of the need of throwing out old system and
adopting a new one.

Step 2: 5Ss For Workplace Improvement:

This 5Ss should be implemented
company-wide and this should be part of a
total improvement program. The 5Ss stand
for:
1. Seiri:
Proper Arrangement means
sorting what you have, identifying
the needs and throwing out those
unnecessary. One example is using
red-tags. This is a little red-bordered paper saying what the production is, how
many are accumulated and then stick these red tags onto every box of
inventory. It enhances the easiness to know the inventory status and can
reduce cost.
2. Seiton:
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Orderliness means making thing in order. Examples include keeping

shelves in order, keeping storage areas in order, keeping workplace in order,
keeping worktables in order and keeping the office in order.
3. Seiso:
Cleanliness means having a clean workplace, equipment, etc.
4. Seiketsu:
Cleanup means maintaining equipment and tools.
5. Shitsuke:
Discipline means following the rules and making them a habit.

Step 3: Flow Manufacturing:

Flow manufacturing means producing one single piece of product at a time but
multi-handling which follows the process sequence.
There are several main points concerning flow manufacturing:
1.
2.
3.
4.
5.
6.

Arrange machines in sequence.

U-shaped production line (Cellular Manufacturing).
Produce one-piece at a time.
Train workers to be multi-skilled.
Follow the cycle time.
Let the workers standing and walking

around while working.

7. Use small and dedicated machines.

Step 4: Standard Operations:

Standard Operation means to produce
quality safely and less expensively through
efficient rules and methods of arranging
people, products and machines.
The basis of standard operations is:
Cycle time It means how long it would take to
"carry out part all the way through the cell".
Following are the equations for calculating
cycle time.

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Daily Quantity Required = Monthly Quantity Needed / Working Days per month
Cycle Time = Working Hours per day / Daily Quantity Required Work sequence
Standard stock-on-hand
Use operation charts

Step 5: Multi-Process Handling:

Multi-process handling means one worker is responsible for several processes
in a cell. Some points that should be aware:
1. Clearly assign jobs to machines and workers.
2. Make a good use of U-shaped cell manufacturing.
3. Multi-skilled workers Operation should be able to perform multi-machine
handling and multi process handling.
4. Multi-machine handling - a worker should handle several machines at once;
this is also called "horizontal handling".
5. Multi-process handling - a worker should handle several different processes at
once, this is also called "vertical handling" and this is the basis for JIT
production. Uses casters extensively as author written, "Floor bolts are our
enemies! Machines must be movable."

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CHAPTER

Research Methodology
SYNOPSIS

2. 1 Primary Data
2.2 Secondary Data

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Research Methodology
Research methodology is a careful investigation for inquiring in a systematic
method and finding solution of a problem. It comprises the defining and redefining of
problem formulating hypothesis, collection and evaluating data, making detection and
reaching conclusion.

2.1

Primary Data
Primary data is one which is collected first time and original in nature. This

can be done in following ways:

Observation

Personal interview

Telephone

Questionnaire

2.2

Secondary Data
The data which is already collected by someone else. I.e. collected through

journals, magazines, newspaper and internet.

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CHAPTER

Implementation and Tool of Just in Time

SYNOPSIS

3.1 Implementation of Just in Time

3.2 How can Just in Time Implementation be Successful?
3.3 Guidelines for Successful Just in Time
3.4 Problem in Implementation of Just in Time
3.5 Factor Debilitation
3.6 Tool of Just in Time

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Implementation and Tool of Just in Time

3.1

Implementation of Just in Time

Although the just-in-time (JIT) concept is very young, perhaps 10 to 15 years

old in this country, it is so widespread in American manufacturing and service.

Perhaps this is because the idea is so simple and so appealing.
In short, the JIT strategy is to have "the right product at the right place at the
right time." It implies that in manufacturing or service, each stages of the process
produces exactly the amount that is required for the next step in the process. This
notion holds true for all steps within the system.
Suppose, for example, that all products pass through a drilling operation and
then a milling operation. With JIT, the drill produces only what the mill will need
next. It also holds for the last step that is, the system produces only what the customer
desires.
Most of the companies today seek this method of implementation:

1. Form a top-level team:

This teams responsibilities include deciding upon an organizational
structure and developing a plan to implement JIT within the company. This
plan should include the companys goals concerning production, as well as
how to establish this plan among all employees (i.e. motivation & discipline)
This plan then be used to establish the overall philosophy of the company
concerning JIT

2. To train the top management in the basic concepts of JIT:

This is the first step of the implementation process. It is very important
to educate and train the top-level management, as they are the ones who frame
policies and get things moving. This being a new idea, getting this into
practice will need full support & cooperation from these people.

3. To implement this system to every aspect of the company from

supplier to distributors:
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First of all each department should establish its goals and a specific
problem to attack. Then a team should be chosen by each department and
establish team leaders. The teams should focus on the reduction of costs and
the elimination of wastes. Data must then be collected on the teams problems.
This data should be plotted in order to find excess waste or costs. Once this is
done, measurement should be plotted in order to find excess waste or costs.
Once this is done, measurement should be made. Manipulation of this data
should show at least some apparent problems in the current system. Further
analysis should help in the implementation of JIT by showing problem areas.
In addition, the data the data could be used to show the effects of
implementing JIT into the company.

3.2

How can Just in Time Implementation be Successful?

1. Stabilize and level the MPS with uniform plant loading:

Create a uniform load on all work centres through constant daily
production (establish freeze windows to prevent changes in the production
plan for some period of time) and mixed model assembly (produce roughly the
same mix of products each day, using a repeating sequence if several products
are produced on the same line). Meet demand fluctuations through end-item
inventory rather than through fluctuations in production level.

2. Reduce or eliminate set-up times:

Aim for single digit set-up times (less than 10 minutes) or "one-touch"
set-up this can be done through better planning, process redesign, and product
redesign.

3. Reduce lot sizes (manufacturing and purchase):

Reducing set-up times allows economical production of smaller lots;
close cooperation with suppliers is necessary to achieve reductions in order lot
sizes for purchased items, since this will require more frequent deliveries.

4. Reduce lead times (production and delivery):

Production lead times can be reduced by moving work stations closer
together, applying group technology and cellular manufacturing concepts,
reducing queue length (reducing the number of jobs waiting to be processed at
a given machine), and improving the coordination and cooperation between
successive processes; delivery lead times can be reduced through close

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cooperation with suppliers, possibly by inducing suppliers to locate closer to

the factory

5. Preventive maintenance:
Use machine and worker idle time to maintain equipment and prevent
breakdowns

6. Flexible work force:

Workers should be trained to operate several machines, to perform
maintenance tasks, and to perform quality inspections. In general, the attitude
of respect for people leads to giving workers more responsibility for their own
work.

7. Require supplier quality assurance and implement a zero

defects quality program:
Errors leading to defective items must be eliminated, since there are no
buffers of excess parts. A quality at the source (jidoka) program must be
implemented to give workers the personal responsibility for the quality of the
work they do, and the authority to stop production when something goes
wrong. Techniques such as "JIT lights" (to indicate line slowdowns or
stoppages) and "tally boards" (to record and analyse causes of production
stoppages and slowdowns to facilitate correcting them later) may be used.

8. Small-lot (single unit) conveyance:

Use a control system such as a kanban (card) system to convey parts
between workstations in small quantities (ideally, one unit at a time). In its
largest sense, JIT is not the same thing as a kanban system, and a kanban
system is not required to implement JIT (some companies have instituted a JIT
program along with a MRP system), although JIT is required to implement a
kanban system and the two concepts are frequently equated with one another.

3.3

Guidelines for Successful Just in Time

1. Make the factory loadings uniform, linear, and stable. Fluctuations in

manufacturing loadings will result in bottlenecks.
2. Reduce, if not eliminate, conversion and set-up times.
3. Reduce lot sizes. This will smoothen out the flow of inventories from one
station to another, although this may necessitate more frequent deliveries or
transfers.
4. Reduce lead times by moving work stations closer together and streamlining
the production floor lay-out, applying cellular manufacturing concepts, using
technology to automate processes and improve coordination.
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5. Reduce equipment downtimes through good preventive maintenance.

6. Cross-train personnel to achieve a very flexible work force.
7. Require stringent supplier quality assurance since an operation under JIT
cannot afford to incur errors due to defects.
8. Use a control system to convey lots between workstations efficiently; the use
of a kanban system.

3.4

Problem in Implementation of Just in Time

JIT is a philosophy whose objective is to eliminate all sources of waste,

including unnecessary inventory and scrap in the production. Although JIT can
eliminate many wastes, it also has problems in the implementation.
1.
2.
3.
4.
5.
6.
7.
8.

3.5

Repetitive production.
Standard products.
Short set-up times.
Demands discipline.
Sloppy work, no late delivery.
Bad management.
Stable demand, level production.
Cooperation and trust between people

Factor Debilitation

Listed below are few of the factors that can debilitate JIT:

1. Lack of Experience and expertise:

JIT being a relatively novel concept for the Indian Industries, lack of
experience and expertise at every level of management could in turn hinder the
growth and development of the organization.

2. Shortcoming of Suppliers:
These include factors such as unpredictable quality, erratic deliver
schedules, varying quantity dispatches, machine breakdowns and quality
related losses etc

3. Little or no incentive for suppliers to adopt JIT delivery:

JIT generally does not provide any incentives such as credit facilities,
discounts on bulk purchases, etc to the suppliers to meet with the delivery
dates. It is mandatory that they provide the same.

4. Lack of commitment from buyers:

This basically means cancellation of orders by the buyer. This happens
due to termination or postponement of orders down the line.

5. Unreliable power supply:

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Power is among the basic necessity for any plant operation. Unreliable
power supply is quite a common phenomenon is a country like India. Very few
places in the country get uninterrupted power supply throughout the day. This
halts production and delivery dates
cannot be met by the supplier.

6. Labour problems such as

lockouts, strikes, etc:
Labour unrest also can be a
hindrance

in

the

JIT

system.

Labourers from labour unions and

take out strikes and can vow not to
work unless their demands are fulfilled. These obstacles are mostly expected
in developing or under developed economies like India. Thus, there it is
essential to see that such situations do not occur frequently.

7. Poor transport and infrastructure facilities:

This is a major concern for factories located in remote areas. Taking
India as an example, we cannot boast of a good transport and infrastructure
capacity for the movement of men and material. We lag behind by 10-15 yrs as
compared to the western and South-Eastern Nations. JIT is only possible when
there is an uninterrupted flow of material, which is likely to happen when
there exists coordinated and smooth transportation.

3.6

Tool of Just in Time

1. Kanban: an Integrated JIT System

Kanban stands for Kancard, Ban signal. It was originally developed at Toyota
in the 1950s as a way of managing material flow on the assembly line. This is simple
parts-movement system that depends on cards and boxes to take parts from one
workstation to another on a production line.
The essence of the Kanban concept is that a supplier or the warehouse should
only deliver components to the production line as and when needed, so that there is no
storage in the production area. In this system, workstations located along production
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lines only produce or deliver desired components when they receive a card and an
empty container. Kanban is a production system, which draws many of its elements
from two primary sources, industrial re-engineering, and work force. Industrial
reengineering along with Kanban consists of Elements such as:
1. Modular/cell production. Products-oriented layout of processes and machine
layout.
2. U-shaped production / processing lines.
3. Total Preventive Maintenance
4. Mass production of mixed models
Advantages of Kanban Process:
1.
2.
3.
4.
5.
6.
7.
8.
9.

It is a simple and understandable process.

Provides quick and precise information.
Provides quick response to changes.
Low costs associated with the transfer of information.
Limit of over-capacity in processes.
Avoids over production.
Minimize waste.
Control can be maintained.
Delegates responsibility to line workers.

2. Group Technology (GT)

This is a modular manufacturing system, which involves organizing
machineries so that related products can be manufactured in a continuous flow. Here,
products flow smoothly from start to finish; parts do not wait for move.
This can be contrasted to a typical production system, where machines are
grouped by function and products move from one function to another and back again.
This results in long waiting times between procedures.
Characteristics of GT
1.
2.
3.
4.
5.

Number of new parts is less

Any new part required are designed to suit the manufacturing system.
Manufacturing standards are set for each part family.
Set up time is reduced. However number of settings per period does increase.
Varity of processes to be handled by workman giving him increased job

satisfaction.
6. It provides flexible manufacturing systems and computer aided manufacturing.
Benefits of GT

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1. Reduction in work in process

2. Reduction in over all stocks of material
3. Reduction in through put time
4. Reduction in overdue orders
5. Reduced data processing
6. Increase in output per employee
7. Increase in sales
8. Simplification of material flow system.
9. Improvement of production and planning control
10. Improvement in material handling

3. SMED (Single digit Minute Exchange Die)

SMED, stands for Single-Minute Exchange of Die, is a technique for
performing setup operations in number of minutes expressed in a single digit. Mr.
Shingo revolutionized the SMED method since 1950 in Japan.

E.g. Bottling industries sometimes spend more than 20% of their planned
production time on changeovers. These setup and changeover times can be reduced
significantly when the changeover SMED system is applied.

4. JIDOKA (Automation)
JIDOKA is the concept of adding an element of human judgment to automated
equipment. So that the equipment can identify unacceptable items and the automated
process becomes more reliable.

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JIDOKA means not allowing problems to pass from one workstation to the
next. Such that the production of a defective part is detected immediately and machine
responds by stopping and requesting help.
E.g. in Toyota power loom the shuttlecocks would stick and create defects in the
cloth being produced. The Toyota loom incorporated a simple stopper that was
activated by a sticking shuttlecock. The operator could stop machine when the shuttle
would stick.
Objective of JIDOKA
1. Ensuring 100% quality.
2. Preventing equipment breakdowns.
3. Using manpower efficiently.

5. Total

Productive

Maintenance (TPM)
In any factory it is necessary to run
all the equipments on continuous basis to get maximum output. It is found that
generally that does not happen. There is loss if any tool or machine is not in use. Due
to any reason like material not available or the machine is not working. In order to
avoid such losses TPM is implemented. For this purpose following steps should be
taken.
1. All the reason for the loss of equipment should be avoided.
2. Preventive Maintenance program is to be made.
3. Operator should be given training to maintain his equipment when required.
4. Autonomous maintenance by the operator along with the small group activity
is to be done.

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6. Pokayoke (Mistake Proofing)

Pokayoke invented by Shigeo Shingo in the 1960s. The term Pokayoke
comes from the Japanese words Poka (mistake) and yoke (prevent).People are
human and cannot be expected to do everything like a machine, exactly the same each
time.

The basic principles of Pokayoke advocate developing tools, techniques and

processes such that it is impossible or very difficult for people to make mistakes. E.g.
a plate that must be screwed down in one orientation only could have the screw holes
in non-symmetrical positions so that it can only be screwed in the right orientation.
Following are the principles of improvement
1.
2.
3.
4.
5.
6.

Build quality in processes.

All errors and defects can be eliminated.
Stop doing wrong and start doing right.
Dont think of excuses. Think about how to do right.
60% chance of success is good enough.
Mistakes and defects can be reduced to zero when everyone works together to

eliminate.
7. Ten heads are better than one.

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CHAPTER

Benefit and Drawback of Just in Time

SYNOPSIS

4.1 Benefit
4.2 Drawback

Benefit and Drawback of Just in Time

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4.1 Benefit
JIT benefits could be grouped into the following categories;

1. Product Cost:
This is greatly reduced of manufacturing cycle time, reduction of
scraps, inventories, space requirement, and material handling and eliminations
of non-value adding operations.
2. Quality:
It has greatly improved due to fast detection and correction of defects,
use of automatic stop devices, higher quality of purchased parts, worker
centred quality control and statistical process control. Total preventive
maintenance and lower inventory levels also help in quality improvements.
3. Design:
Due to fast response to engineering change, alternative designs can be
quickly brought on the shop floor.

4. Productivity:
Order magnitude productivity improvements are obtained due to the
use of flexible workforce, reduced rework, reduced inspection, reduced part
delay and reduced throughout time. Workers acquire multiple skills and
become highly productive.
The other benefits are:
5. Reduced levels of in-process inventories, purchased, and finished goods.
6. Reduced space requirements.
7. Increased product quality and reduced scrap and rework.
8. Reduced lead times.
9. Greater flexibility in changing the production mix.
10. Worker participation in problem solving.
11. Pressure to build good relationships with vendors.

4.2 Drawback
Regardless of the great benefits of JIT, it has its drawbacks.
JIT has the following major drawbacks:
1. Culture Differences:

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The organizational cultures vary from firm to firm. There are some
cultures that tie to JIT success but it is difficult for an organization to change
its cultures within a short time.
2. Traditional Approach:
The traditional approach in manufacturing is to store up a large amount
of inventory in the means of backing up during bad time. Those companies
rely on safety stocks may have a problem with the use of JIT.
3. Difference in implementation of JIT:
Because JIT was originally established in Japanese, it is somehow
different for implementing in western countries. The benefits may vary.
4. Loss of individual autonomy:
This is mainly due to the shorter cycle times which add pressures and
stress on the workers.
5. Loss of team autonomy:
This is the result of decreasing buffer inventories which lead to a lower
flexibility of the workers to solve problem individually.
6. Loss of method autonomy:
It means the workers must act some way when problems occur, this
does not allow them to have their own method to solve a problem.
7. Varied
JIT success is varied from industry to industry. Some industries are
benefit more from JIT while others do not.
8. Employee commitment:
Employees must commit to JIT, to enhance the quality as their ultimate
goal, and to see JIT as a way to compete rather than method used by managers
to increase their workload.
9. Relationship:
Relationship between management and employees is important .A
mutual trust must be built between management and employees in order to
have effective decision making.
10. Employee commitment:
Employees must commit to JIT, to enhance the quality as their ultimate
goal, and to see JIT as a way to compete rather than method used by managers
to increase their workload.

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11. Production level JIT works best for medium to high range of production
volume.
12. Employee skill JIT requires workers to be multi-skilled and flexible to change.
13. Compensation should be set on time-based wages. This allows the workers to
concentrate on building what the customers wants.

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CHAPTER

Focus and Objective

SYNOPSIS

5.1 Focus
5.2 Objective

Focus and Objective

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5.1

Focus
Mainly JIT focuses to eliminate the waste or the non-value added. Thus there

are several types of wastes categorisedThe following "seven wastes" identify

resources which are commonly wasted. They were identified by Toyota's Chief
Engineer, Taiichi Ohno as part of the Toyota Production System:

1. Transportation:
Each time a product is moved it stands the risk of being damaged, lost,
delayed, etc. as well as being a cost for no added value. Transportation does
not make any transformation to the product that the consumer is supposed to
pay for.

2. Inventory:
Inventory, be it in the form of raw materials, work-in-progress (WIP),
or finished goods, represents a capital outlay that has not yet produced an
income either by the producer or for the consumer. Any of these three items
not being actively processed to add value is waste.

3. Motion:
As compared to Transportation, Motion refers to the producer, worker
or equipment. This has significance to damage, wear and safety. It also
includes the fixed assets and expenses incurred in the production.

4. Waiting:
Whenever goods are not in transport or being processed, they are
waiting. In traditional processes, a large part of an individual product's life is
spent waiting to be worked on.

5. Over-processing:
Over-processing occurs any time more work is done on a piece than
what is required by the customer. This also includes using tools that are more
precise, complex, or expensive than absolutely required.

6. Over-production:

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Overproduction occurs when more products is produced than is

required at that time by your customers. One common practice that leads to
this muda is the production of large batches, as oftentimes consumer needs
change over the long times large batches require. Overproduction is
considered the worst muda because it hides and/or generates all the others.
Overproduction leads to excess inventory, which then requires the expenditure
of resources on storage space and preservation, activities that do not benefit
the customer.

7. Defects:
Whenever defects occur, extra costs are incurred reworking the part,
rescheduling production, etc.

5.2

Objective
The prime goal of JIT is the achievement of zero inventories, minimal work in

progress not just within the confine of a single organization, but ultimately throughout
the entire supply chain.

There are three main objectives.

1. Increasing the organizations ability to complete with others and remain
competitive over the long run. The competitiveness of the firm is increased by
the use of JIT manufacturing process as they can develop a more optimal
process for their firms.
2. Increasing efficiency within the production process. Efficiency is obtained
through the increase of productivity and decrease of cost.
3. Reducing wasted materials, time and effort. It can help to reduce the costs.

Other objectives of JIT:

4. Identify and response to consumers needs.
Customers needs and wants seem to be the major focus for business
now; this objective will help the firm on what is demanded from customers,
and what is required of production.
5. Optimal quality/ cost relationship.
The organization should focus on zero defect production process.
Although it seems to be unrealistic, in the long run, it will eliminate a huge a
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huge amount of resources and efforts in inspecting, reworking & the

production of defected goods.
6. Plant design for maximizing efficiency.
The design of plant is essential in terms of manufacturing efficiency
and utility of resources.
7. Develop a reliable relationship between the suppliers.
A good and long long-term relationship between organization and its
suppliers helps to manage a more efficient process in inventory management,
material management and delivery system. It will also assure that the supply
is stable and available when needed.
8. Adopt the work for continuous improvement.
Commit a long- term continuous improvement throughout the organization. It
will help the organization to remain competitive in the long run.
9. Reduce unwanted wastes.
Wastes that do not add value to the products itself should be
eliminated. JIT helps significantly in reducing wastes
JIT can help an organization to remain competitive by offering consumers
higher quality of products than their competitors, which is very important in the
survival of the market place

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CHAPTER

Just in Time in Business

SYNOPSIS

6.1 Just in Time Push v/s. Pull

6.2 Why should you use Just in Time?
6.3 Is Just in Time Right for your Business

Just in Time in Business

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6.1

Just in Time push v/s. pull

One of the fundamental aspects of JIT is the change from the push system to

the pull one. The push system is so called because the previously planned
manufactured lots 'push' the production
In contrast, in the pull system (from 'pull', or decentralized information) each
process or customer takes the product or the parts from the previous process as and
when they are needed. In this way, a work or service centre only works when the next
process communicates to it the need to do so.
This system uses Kanban in order to function. Kanban is the authorization to
produce or adjust stock, at the same time providing control and information.
It is used to regulate the level of stocks and the speed of production by
lowering or raising either the number or the size of Kanbans. If there is no Kanban,
the system comes to a standstill. It facilitates visual control and reduces bureaucracy.
It establishes a maximum, which is the highest stock possible, and it is calculated on
the basis of the requirements of the situation. The Kanban involves the stock; the
objective is to reduce it to the optimum point possible
This type of management has an effect on the balance of the
production variations and on flexibility. JIT requires the flow of operations to be as
uniform as possible, so that it can be both constant and stable. Mechanisms have to
be used which reduce variations in the short term in order to achieve
synchronization of the production process. The leveling out of the production is based
on manufacturing varieties of products which are then adjusted to the demand, rather
than producing large series. Great flexibility is needed both in the equipment used,
which must have a number of different uses and permit the production of short series
efficiently, and the manpower, which should be able to perform several tasks and have
experience in a variety of operations.

Tradition Process (Push)

Just in Time Process (Pull)

The push system is so called because In

the

pull

system

(from

pull,

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the previously planned manufactured lots or

push the production.

decentralized

information)

each

process or customer takes the product or

the parts from the previous process as
and when they are needed. In this way, a
work or service centre only works when
the next process communicates to it the
need to do so.

The

customers come and take away The customers start the process: as they

their orders, but the warehouse sends take away the goods the warehouse
the orders according to the planning sends new orders to the plant. If the
of materials

clients do not act, neither does the

warehouse

Materials planning establishes the stocks The work positions do not hold stock;
for each work position, and each one they depend on each other to continue
works independently of the others

with the production

Lower Purchasing Speed

An increase in demand from the customers The customer activates the process. If the
produces a drop in stocks. It might lead to a demands increases, the whole process speeds
shortfall situation

up, beginning with the supplier

The suppliers and the warehouse maintain their The work positions adjust their speed to
normal rhythm
production

of

work,

following

the the

new demand, avoiding running out of

plan independently of the pull of supplies

the demand

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Stoppage of a Work Position

If there is a stoppage in one of the positions A stoppage in one of the work positions
the others continue their work at full speed, means the other positions are not given work,
accumulating stock. The chain continues and so the process is halted and stocks are not
the problem grows

increased. The whole

chain stops and

priority is given to repairing the position and

putting it to work again

Supply Problem

The Purchasing department puts on pressure The system might be halted while the plant
to solve the problem and grants part of the collaborates with the supplier to solve the
contract to another supplier

problem

One supplier suffers problems and his stock When a problem arises, the supplier informs
piles up. The other increases his supplies to the production chain and production is halted.
avoid running out of stocks

The customers are supplied from the security

stock

6.2

Why should you use Just in Time?

JIT Improves Organizational Efficiency

Just in Time Inventory Control eliminates waste and

improves quality

, and in the

process, improves all rounds organizational efficiency .JIT improves organizational

efficiency in five major ways:
1. The Just in Time method entails sourcing the required raw material or item
for processing on demand, and scheduling the work based on order or
demand for the product. This synchronization of supply with production, and
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production with demand improves the flow of goods and reduces the need
for storage facilities.
2. JITs focus on eliminating waste from the production process lead to
redesign of the workspace to ensure a smooth flow of goods or processes,
eliminating redundant tasks and minimizing transportation of the product
across the workspace.
3. The traditional manufacturing process call for batch manufacturing or
manufacturing of a particular component or model in a lot before moving
on to another batch or lot. JIT makes it possible to manufacture even
single pieces or components without any delays.
4. JITs system of

kanban

or specific instructions for each worker eliminates all

scope for mistakes in the work floor.

5. The relentless effort to eliminate waste and achieve zero-defects improves
productivity, cuts down manufacturing time, and improves product quality

JIT Reduce Costs

Among the major benefits of JIT system is the elimination of raw material,
inventory and product storage costs.
1. The traditional notion is to consider raw materials or inventory of finished
goods as an asset. The JIT method turns this concept upside down and
considers stock as waste or dead investment incurring opportunity costs.
2. The JIT system sources raw materials close to the manufacturing time, and
ships out the product to the customer immediately without storage, leading to
substantial savings resultant from not storing raw materials or stocking up
finished goods. Deploying funds tied up in raw materials and inventories to
generate additional revenue do wonders to the finances of the organization.
3. JITs thrust on elimination of waste from the production process and
improving product quality reduces damaged goods and saves on Human
Resources costs considerably. All these cost savings translate to a lower
manufacturing price for the product.
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JIT Improves Supplier Relationships

The success of JIT depends on the ability of the supplier to produce raw
materials on demand. The benefits of JIT extend to improved relationship with the
suppliers on many counts:
1. JIT develops a system of effective communication with the supplier,
specifying the exact product required in exact quantity and the specific time
of

delivery.

This

eliminates

all

scope

of

misunderstandings

or

miscommunication.
2. The success of JIT requires reliable suppliers and organizations takes the
initiative to upgrade supplier competencies and establish a long-term
relationship with the supplier to ensure compatibility and standardized
products
3. The exact nature of order and the long-term proactive relationship with
suppliers eliminate the need for inspection of received goods

JIT Allows Customization and Increase Customer Satisfaction

Just in Time Inventory adjusts production to demand, making possible
fulfillment of custom orders without any extra effort or extra time, and leading to
increased customer satisfaction.
A practical example in this aspect relates to McDonald's. The application of
JIT principles has helped McDonalds cater to the order of any special type of burger
with equal ease and in the same time as any other burger. Without JIT, the workforce
would be geared to deliver fast moving burgers fast, but a peak-hour order of a rare
item on the menu, or a special order would throw the kitchen out of gear.

JIT Develops Human Resources

Implementation of JIT requires workforce flexibility and a highly skilled and
committed workforce. The advantages of Just in Time Inventory extend to the
companys Human Resources in the following ways:
1. Investment in training to develop existing skill and broaden skill sets

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2. More effective usage of employees with multiple skills

3. Increased motivation through job rotation
4. Better productivity

6.3

Is Just in Time Right for your Business

Just in Time usually works best if your business produces a medium to high

volume of a relatively high value product. (Its origins are in car manufacturing).
Ideally your company should have short setup times on machines, and a commitment
to quality assurance.
To see if Just in Time might be applicable to some or all of your business,
work through the following steps.
Examine your business model

Are major customers driving an initiative towards more automated ordering

and supply?

Could you extract more value from your suppliers by communicating directly
with their systems?

Could you win more customers or foster increased customer loyalty by

extending your business processes into supply partner organisations?
If you answered "Yes" to any of these questions, your business could benefit

from employing JIT techniques in your ordering, planning and dispatch.

Identify key stages in the business

Can you identify the key interfaces between your business and your
suppliers/customers?

Are ordering, delivery or transportation failures costing you time and money?

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Can you quantify the cost of failure/delay at any given interface between you
and your suppliers/customers?

Have you calculated the cost of managing your supply chain and could you
reduce the cost by automating the processes?
If you answered "Yes" to any of these questions you are ready to look at the

next section below on inventory. If you answered "No" to any of these questions you
should review your processes further.

Minimise inventory

Do you know how much inventory you hold at any one time?

Do you know how much inventory you need to hold at any one time?

Would you benefit from implementing systems that communicate this

information automatically to supply chain partners?
If you answered "Yes" to these questions, you are ready to look at the next

section below on demand planning. Weigh up the benefits of minimising inventory

against the costs of investing in JIT technology.

Analyse demand peaks

Does production proceed at a rate dictated by your customers rather than your
supply chain partners?

Do you know in advance when demand peaks will occur?

Do your supply chain partners know in advance when your demand peaks will
affect their business?

Can you quantify the cost of delays at peak periods?

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If you answered "No" to any of these questions, you should consider using
automated JIT techniques in ordering, supply and production to streamline your
supply chain.

Review your working practices

Is the sequence of steps required to take a product from point of sale to point
of delivery a standard one, repeatable at a pre-defined quality level?

Do your business partners' systems give you automated access to

component/material histories, quality procedures or safety certifications?

Can you trace what you produce (including its constituent parts) back to
source and prove that you meet the appropriate commercial or regulatory
standards?
If you answered "No" to any of these questions, consider how you could

increase efficiency and improve customer satisfaction by automating the interfaces

with your supply chain.

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CHAPTER

Case Study
SYNOPSIS

7.1 McDonalds, a guide to the benefits of JIT

7.2 Dell Computers in Low Inventory

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Case Study
7.1

McDonalds, a guide to the benefits of JIT

Just-in-Time (JIT) inventory is the big thing right now in operations. This,

along with lean operations and six-sigma are the buzz words being talked most about.
But what exactly is the deal with JIT operations?
First of all, JIT is a form of providing supplies for customers, as the name
suggests, just in time. JIT model involves not even being in possession of the raw
materials needed to fulfill an order until that order is placed and yet being capable of
filling orders in a short period of time.
McDonald's doesn't begin to cook (well, I should probably say reheat and
assemble what may or may not be actual food) its orders until a customer has placed a
specific order.
What used to be the case was McDonald's would pre-cook a batch of
hamburgers and let them sit under heat lamps. They would keep them for as long as
possible and eventually discard what couldn't be sold. The only way to get a fresh
hamburger under the old system was to make a special order. Now, due to more
sophisticated burger-making technology (including a record-breaking bun toaster),
McDonald's is able to make food fast enough to wait until it's been ordered.
What McDonald's do is, provide a customer with their order as fast as possible
while having the finished product sitting in inventory for as short as possible.
What are the benefits for McDonald's?
The major benefits for McDonald's are better food at a lower cost. Lets stop
here for a second to drive home a very important point: Whenever you can implement
something that allows you to raise quality AND lower costs, you should definitely
look into implementing that practice. Unless illegal, immoral, socially irresponsible,
or likely to drive down demand (which is unlikely considering quality is being

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improved), you are probably going to want to implement this practice. Back to
McDonald's.
McDonald's has found something that allows them to improve quality and
lower costs. Let's take a look at how it does both.
Improved Quality
I think benefits of a better tasting burger should be fairly apparent. Unless of
course you prefer aged burgers, the fresher burger is going to be higher quality if
made fresh just for you.
The less obvious benefit is the higher quality customer service that arises from
the JIT burger assembly. When McDonald's waits for you to order the burger, they do
a few things to improve customer service. First of all, when you place a special order,
it doesn't send McDonald's into a panic that causes huge delays.
Now that McDonald's is in the practice of waiting until you order a burger
until they make it, they don't freak out when they have to make a special order fresh
just for you. This higher quality customer service is subject to McDonald's ability to
actually produce faster. Without this ability, McDonald's ordering costs would be skyhigh because the costs associated with ordering would be the loss of customers tired
of ordering fast food that really isn't fast.
Second, JIT allows McDonald's to adapt to demand a little bit better.
Seemingly, lower inventory levels would cause McDonald's bigger problems in a
higher demand because they wouldn't have their safety stock. However, because they
can produce burgers in a record time, they don't have to worry about their pre-made
burger inventories running out in the middle of an exceptionally busy shift.
Lower Costs
The holding costs for burger parts are fairly high because of their spoilage
costs. Frozen ground chicken that's good today might not be so good in a few
months. Once cooked, the same ground chickens spoilage rate shoots through the
roof. Instead of having a shelf life of months or weeks, the burger needs to be sold
within 15 minutes or so. The holding costs go from roughly 20% per week to 100%
per hour.
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In other words, under McDonald's old system, they produced at a level that
gave them high inventories so that food would be available fast, which is the main
benefit of fast food. Unfortunately, food that was unsold after a short period of time
was scrapped. Food that was sold was forced to be sold at a higher price in order to
absorb the scrap costs of unsold food. Ultimately this meant higher costs for
McDonald's.
For McDonald's, the benefits of JIT are fairly clear.
Why Economic Order quantity Savings
A large benefit of JIT is that it reduces the total cost of ordering and holding
inventory. Let's quickly recap three firms that have achieved this and how they did so.
McDonald's High holding costs is the nature of the fast food industry. JIT
system allowed it to exploit the savings that were realized by holding fewer
inventories.
High holding costs and low ordering costs are the factors that drive
JIT. Generally, it's the ability to lower ordering costs that make it a feasible
solution. McDonald's is slave to the high holding costs. It was just the nature of their
industry. The solution for them was that while they couldn't lower holding costs, they
could lower ordering costs. McDonald's has very high holding costs in comparison to
their ordering costs. Ultimately, this, coupled with the ability to lower safety stock, is
when JIT is effective. EOQ determines how much you should order and there are two
factors that drive economic order quantities down: low ordering costs and high
holding costs. Depending on the product and the industry, one or both of these
qualities may exist in your operations. If they do, JIT may be right for you. Without
the ability to make ordering costs low as a percentage of holding costs then there is no
need for JIT. In fact, the increased frequency in ordering will result in cost increases.
Safety stock Reductions
The other aspect of JIT is the drastic reduction in safety stock. The two
reasons safety stock exists: variability in demand and variability in lead times from
suppliers (in McDonald's case, the supplier is the internal production process).

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It is because of this variability that safety stock exists in the first place. What
JIT does is tries to reduce the lead times and variation in lead times in order to help
reduce safety stock. McDonald's accomplished this by creating a system that allowed
a faster burger production (remember, McDonald's lead times are internal) by
standardizing production.
In order to accomplish the tasks of shortening lead times and reducing their
variances, a considerable amount of work needs to be done with suppliers/internal
operations. For some firms this is worth the trouble, for others, it is not.
Conclusively, there are two major parts to JIT inventory operations: lowering
the ratio between ordering costs and holding costs and shortening lead times. What
results is a firm with such high holding costs that ordering very small batches very
frequently is the most profitable solution. This eliminates average inventory above the
safety stock level. Then, if lead times and lead time variability can be decreased,
safety stock can be decreased. The result is inventory coming in as it needs to come
in. In other words, it comes in just in time.
Conclusion
Efficient stock management is essential to any business. It enables the
business to operate in a responsible way. Because McDonald's has taken much of the
hard work out of stock management, Restaurant Managers are able to spend more
time focusing on delivering McDonald's high standards of Quality, Service and
Cleanliness. Customers are happy because they can be sure the item they want is on
the menu that day.
The system also minimizes waste. Efficient use of materials means that
societys resources are being used well with very few waste products. For example,
fewer materials end up as waste in landfill sites. This leads to a reduction in costs.
Due to lower costs, McDonald's can pass the benefits on to customers, providing
better service and lower prices. The reduction of waste provides a win-win situation
for McDonald's, its customers and wider society.
McDonald's avoid running out of stock. As a result, customers can always
receive what they order. The system eliminates inexperience in the ordering. The
system enables a new Restaurant Manager to ensure the order is right first time.
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Time saved in ordering as the system calculates how much is required. Orders
are based on the current stocks. The Restaurant Manager simply inputs the current
stock levels.
Less waste means food costs are reduced. This cost saving is then passed on in
better value for money for customers. The amount of stock ordered for promotions is
more accurate, being based on past performance. There is a reduction in the need for
emergency deliveries, saving money.
Stock levels are always at optimum level, helping to ensure sales and the
freshest product. Stock can be reduced automatically at the end of a promotion,
avoiding too much stock.

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7.2

Dell Computers in Low Inventory

When managers discuss low inventory levels, Dell is invariably discussed.

Hell, even I've mentioned Dell on this site. So why all the commotion? Has their low
inventory REALLY helped out that much? In short, yes. This article is primarily going
to discuss how much it helped. This article will not discuss how they achieved such
high inventory turns using a state of the art just in time inventory system.
Reasoning behind need for lower inventory
The first thing that needs to be discussed is why low inventory has such a
great effect on Dell's overall performance. The reason is quite simple: computers
depreciate at a very high rate. Sitting in inventory, a computer loses a ton of value.
As Dell's CEO, Kevin Rollins, put it in an interview with Fast Company:
"The longer you keep it the faster it deteriorates you can literally see the stuff
rot," he says."Because of their short product lifecycles, computer components
depreciate anywhere from a half to a full point a week. Cutting inventory is not just a
nice thing to do. It's a financial imperative."
We're going to assume that the depreciation is a full point per week (1%/week)
and use that to determine how much money high inventory turns can save Dell.
This means that for every 7 days a computer sits in Dell's warehouses, the
computer loses 1% of its value. Ok, now that we know how much Dell loses for each
day, let's take a look at some of Dell's data over the past 10 years that I pulled from
www.themanufacturer.com

What I got from this was the inventory turns. An inventory turn, as this
website successfully describes it, is "cost of goods sold from the income statement
divided by value of inventory from the balance sheet". Typically, this is turned into a
value showing how many days worth of inventory a firm has by dividing inventory
turnover by 365. I divided the inventory turnover by 52 in order to show how many
weeks worth of inventory Dell holds.

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Here are the results:

Dells Inventory Turnover Data

Year

Inventory Turnover

Week's Inventory

1992

4.79

10.856

1993

5.16

10.078

1994

9.4

5.532

1995

9.8

5.306

1996

24.2

2.149

1997

41.7

1.247

1998

52.40

0.992

1999

52.40

0.992

2000

51.4

1.012

2001

63.50

0.819

Key point to notice here is that Dell was carrying over 10 weeks worth of
inventory in 1993. By 2001, Dell was carrying less than 1 week's worth of inventory.
This essentially means that inventory used to sit around for 11 weeks and now it sits
around for less than 1 week.
So what does this mean for Dell?
Remember, computers lose 1 percent of their value per week. This isn't like
the canned food industry where managers can let their supplies sit around for months
before anyone bats an eye. Computers arent canned goods, and as Kevin Rollins of
Dell put it, computers rot. The longer a computer sits around, the less it is worth.
That said, due to depreciation alone, in 1993 Dell was losing roughly 10% per
computer just by allowing computers to sit around before they were sold. In 2001,

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Dell was losing less than a percent. Based on holding costs alone, Dell reduced costs
by nearly 9%.
Since 2001, Dell has continued to lower inventory. Looking at their
reports

latest annual

, day's inventory has dropped by approximately a day.

Hopefully this article provided you with a practical example that demonstrates

the positive effects lower inventory can have on a firm's overall costs. For more
information regarding lawyers in the Texas area, check out
accident attorney

Dallas Fort Worth trucking

. For more basic information regarding holding costs, please read

Simplified Look at the Pros and Cons of Inventory.

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CHAPTER

Conculsion

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Conclusion
Just-In-Time is a manufacturing philosophy which leads to producing the
required items, at the required quality and in the right quantities at the precise time as
they are required. It is an approach to achieving excellence in elimination of waste.
In this case waste can be thought of as all things that dont add value to the
product. Overproduction, Inventory, defect products, transport and waiting time are
some examples of what can be waste according to JIT. Just-In-Time manufacturing is
a system of enforced problem solving. Managers have the choice between putting a
huge effort in finding and solving causes of production problems, or they can learn to
live with an intolerable level of interruptions in production. As everybody knows, the
situation in which one has to put huge efforts is highly undesirable, and therefore the
system is called enforced. Quality within JIT manufacturing is necessary, because
without a quality program in JIT, the JIT will fail. Here we think about quality at the
source and the Plan, Do, Check, Action with its statistical process control.
Furthermore, techniques are also very important. The JIT technique is a pull
system rather than a pull system, based on not producing things until they are needed.
The well known Kanban card is used as a signal to produce. Moreover, integration
also plays a key role in JIT systems. JIT integration can be found in four points of the
manufacturing firm. The Accounting side, Engineering side, Customer side and
Supplier side. At the accounting side, JIT has concern for WIP, utilization and
overhead allocation and at the engineering side of JIT focuses on simultaneously and
participative design of products and processes.
Just-In-Time has its influence in ordering, scheduling and producing sides of a
manufacturing firm. JIT production contains the well known Kanban System. This
influence in the manufacturing firm is depending on employees, suppliers or
customers. Therefore a large element of training is put toward the JIT to reach certain
goals. One of these goals is mutual trust and teamwork. This is an important factor in
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the JIT principle. When managers and workers see each other as equal, committed to
the organization and its success, they are more willing to co-operate with each other in
order to find the problems and solve these problems. Moreover, a firm which
empowers its workers gives the workers the authority to solve problems on their own.
When this is done, workers have the authority to stop production and to solve
problems, instead of first waiting for guidance from a supervisor. The objective of
worker empowerment is having workers involved in the problem as it occurs. In all,
JIT is an important operational system for manufacturing and supplying companies to
adopt and implement. Technically, procedurally and managerially it requires attention
to data, information and communication. But if looked at through the eyes of the
corporation that has implemented the JIT system, the positive outcomes that arise
from the use of the system are far greater than those that are not. The JIT system
really is a state of the art idea that is beginning to catch on in a tremendous way all
over the world.

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Bibliography
Book
1.

Just-in-Time Manufacturing , Hiroyuki Hirano, Publisher CRC Press 2nd

edition

2.

Production and operation , S.Anil Kumar and N.Suresh, Publisher

New Age International Publishers 2nd edition pg 103 to 104

3.

Operational Management , Dr Ram Naresh Roy, Publisher New Age

International Publishers pg 160 to 187

4.

JIT Factory Revolution , Hiroyuki Hirano, Publisher Norman Bodek

5.

Production and Quality Management , Shashikant.D.Apale , Publisher

Vipul Prakash pg 218 to 234

Website
1.
2.
3.
4.
5.
6.
7.
8.

http://www.leanmanufacturingconcepts.com
http://www.scribd.com
http://openmultimedia.ie.edu
http://www.vedpuriswar.org
http://www.brighthub.com
http://www.is4profit.com
http://www.bms.co.in
http://just-in-time2005.tripod.com

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