1.0 INTRODUCTION The term just-in-time
(JIT) is used to refer to a 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
preceding batch is complete-thus, the
name just-in-time. The result is a system with no idle items waiting to
be processed and no idle workers or
equipment waiting for items to process.
The just-in-time phenomenon is characteristic of lean production
system, which operates with very little
"fat" (e.g. excess inventory, extra workers, and wasted space). JIT pertains to the timing of the
flow of parts and material through the
systems, and the timing of services. Companies that employ the
JIT/lean production approach have lower
processing costs, fewer defectives, and greater
flexibility; and are able to bring new or improved products to the
market more quickly.
The JIT approach was developed at the Toyota Motor Company of
Japan by Taiichi Ohno (who eventually
became vice president of manufacturing) and
several of his colleagues. JIT regards scrap and rework as waste, and
inventory as an evil because it takes up
space and ties up resources. JIT represents a
philosophy that encompasses every aspect of the process, from design to
after the sale of a product. The
philosophy is to pursue a system that functions well with minimal levels of inventories, minimal
space, and minimal transactions. It must
be a system that is not prone to disruptions and is flexible in terms of
the product variety and range of volume
that it can handle.
The ultimate goal is to
achieve a balanced system that permits a smooth, rapid flow of
materials through the systems. Companies that use JIT have achieved a level
of quality that enables them to function
with small batch sizes and tight schedules. JIT systems have high reliability: major sources of inefficiency
and disruption have been eliminated, and
workers have been trained not only to function in the system but also to consciously improve it.
2.0 OBJECTIVES After completing this
note, you should be able to:
(i) Explain what is meant by the term just-in time (JIT)
production system.
(ii) List each of the goals
of JIT and explain its importance.
(iii) List and briefly describe the building blocks of JIT.
(iv) List the benefits of the JIT systems.
3.0 MAIN CONTENT
3.1 JIT Goals
The ultimate goal of JIT is a balanced system; that is, one that
achieves a smooth, rapid flow of
materials through the system. The idea is to make the process time as short as possible by using
resources in the best possible way. The
degree to which the overall goal is achieved depends on how well certain supporting goals are achieved. These goals
are:
1. Eliminate disruptions.
2. Make the system flexible.
3. Reduce setup times and lead times
4. Minimise inventory.
5. Eliminate waste.
Disruptions are caused by a variety of factors, such as poor
quality, equipment breakdowns, changes
to the schedule and late deliveries. These should be eliminated as much as possible. Inefficiency
and disruption have been eliminated, and
workers have been trained not only to function in the system but also to consciously improve it.
A flexible system is one that is robust enough to handle a mix of
products, often on a daily basis, and to
handle changes in the level of output while still maintaining balance and throughput
speed.
Setup times and delivery lead times prolong a process without
adding any value to the product.
Moreover, long setup times and long lead times negatively impact the flexibility of the system.
Hence, reduction of setup and lead times is
important, and is one objective of continuous improvement.
Inventory is an idle resource, taking up space and adding cost to
the system. It should be minimized or
even eliminated wherever possible. Waste
represents unproductive resources: eliminating waste can free up resources and enhance production. In the JIT
philosophy, waste includes.
• Overproduction
• Waiting time
• Unnecessary transporting
• Inventory storage
• Scrap
• Inefficient work methods
• Product defects The
existence of these wastes is an indication that improvement is possible.
Alternatively, the list of wastes identifies potential targets for
continuous improvement efforts.
3.2 Building Blocks The design and
operation of a JIT system provide the foundation for accomplishing the aforementioned goals. The
foundation is made up of four building
blocks:
1. Product design
2. Process design
3. Personnel/organizational elements
4. Manufacturing planning and control. Let us discuss these blocks in turn.
3.2.1 Product Design
Three elements of product design are key to JIT systems:
1. Standard parts
2. Modular design
3. Quality
The first two elements relate to speed and simplicity. The use of standard parts means that workers
have fewer parts to deal with, and
training times and costs are reduced. Purchasing, handling, and
checking quality are more routine and
lend themselves to continual improvement.
Another importance benefit is the ability to use standard
processing.
Modular design is an extension of standard parts. Modules are
clusters of parts treated as a single
note. This greatly reduces the number of parts to deal with, simplifying assemble, purchasing, handling,
training, and so on. Standardization has
the added benefit of reducing the number of different parts contained in the bill of materials for
various products, thereby simplifying the
bill of materials.
Disadvantage of standardization are less product variety and
resistance to change in a standard
design. These disadvantages are partly offset where different products have some common parts or
modules. Using a tactic that is
sometimes referred to as delayed differentiation; a decision concerning
which products will be produced can be
delayed while the standard portions are
produced. When it becomes apparent which products are needed, the
system can quickly respond by producing
the remaining unique portions of those
products.
Quality is the sine qua non (“without which not" ) of JIT. It
is crucial to JIT systems because poor
quality can create major disruptions.
JIT system uses a three-part approach to quality: One part is to design
quality into the product and the
production process. High quality levels can occur because JIT systems produce standardized
products that lead to standardized job
methods, workers who are very familiar with their jobs, and the use of standardized equipment. Moreover, the cost of
product design quality (i.e., building
quality in at the design stage) can be spread over many notes, yielding a low cost per note. It is also important to
choose appropriate quality levels in
terms of the final customer and of manufacturing capability: Thus,
product design and process design must
go hand in hand.
3.2.2 Process Design
Seven aspects of product are particularly important for JIT
systems:
(1) Small lot sizes
(2) Setup time reduction
(3) Manufacturing cells
(4) Limited work in process
(5) Quality improvement
(6) Production flexibility
(7) Little inventory storage.
Small lot sizes in both the production process and deliveries from
suppliers yield a number of benefits
that enable JIT systems to operate effectively: First, with small lots moving through the systems,
in-process inventory is considerably
less that it is with large lots. This reduces carrying costs, space requirements, and clutter in the workplace.
Second, inspection and rework costs are
less when problems with quality occur, because there are fewer items in a lot to inspect and rework. Small lots also permit greater flexibility in
scheduling.
This flexibility enables
JIT systems to respond more quickly to changing customer demands for
output: JIT systems can produce just
what is needed, when it is needed. Small
lots and changing product mixes require frequent setups. Unless these are quick and relatively inexpensive, the
time and cost to accomplish them is
prohibitive. Often, workers are trained to do their own setups.
Moreover, programs to reduce setup time and
cost are used to achieve the desired results;
a deliberate effort is required, and workers are usually a valuable part
of the process.
One characteristic of many JIT systems is multiple manufacturing
cells. The cells contain the machine and
tools needed to process families of parts having similar processing requirements. In essence
the cells are highly specialized and
efficient production centres. Among the important benefits of
manufacturing cells are reduced
changeover times, high utilization of equipment, and ease of cross-training operators. The combination of
high cell efficiency and small lot sizes
results in very little work-in-process inventory.
JIT systems sometimes minimize defects through the use of
autonomation (note the extra syllable
‘no’ in the middle of the word). This refers to the automatic detection of defects during production. It
can be used with machines or manual
operations. It consists of two mechanisms: one for detecting defects
when they occur and another for stopping
production to correct the cause of the defects.
Thus, the halting of production force immediate attention to the
problem, after which an investigation of
the problem is conducted, and corrective action is taken to resolve the problem.
Because JIT systems have very little in-process inventory,
equipment breakdowns can be extremely
disruptive. To minimize breakdowns, companies
use preventive maintenance programs, which emphasize maintaining equipment in good operating condition and
replacing parts that have a tendency to
fail before they fail. Workers are often responsible for maintaining their
own equipment.
Guidelines for
increasing production flexibility are as follows:
1. Reduce downtime due to changeovers by redoing changeovers
time
2. Use preventive maintenance on key equipment to reduce
breakdowns and downtime.
3. Cross-train workers so they can help when bottlenecks occur or
other workers are absent. Train workers
to handle equipment adjustments and
minor repairs.
4. Use many small notes of capacity: many small cells make it
easier than a few notes of large
capacity to shift capacity temporally and to add or subtract capacity.
5. Use off-line buffers. Store infrequently used safety stock away
from the production area to decrease
congestion and to avoid continually turning
it over.
6. Reserve capacity for important customers.
One way to minimize inventory storage in a JIT system is to have
deliveries from suppliers go directly to
the production floor, which completely eliminates the need to store incoming parts and
materials. At the other end of the process,
completed notes are shipped out as soon as they are ready, which
minimize storage of finished goods.
Coupled with low work-in-process inventory; these features result in systems that operate with
very little inventory.
Among the advantages of lower inventory are less carrying cost,
less space needed, less tendency to rely
on buffers, less rework if defects occur, and less need to "work off' current inventory
before implementing design improvements.
But carrying fewer inventories also has some risks. The primary one is that if problems arise, there is no
safety net. Another is that opportunities
may be lost if the system is unable to respond quickly enough.
3.2.3 Personnel
Organizational Elements
There are five elements of personnel and organizational that are
particularly important for JIT
systems:
1. Workers as assets.
2. Cross-trained workers
3. Continuous improvement
4. Cost accounting
5. Leadership project management.
Worker as Assets:- A fundamental tenet of the JIT philosophy is
that workers are assets.
Well-trained and motivated workers are the heart of a JIT system. They are given more authority to make
decisions than their counterparts in
more tradition systems, but they are also expected to do more.
Cross-Trained Worker:- Worker are cross-trained to perform several
parts of a process and operate
a variety of machines. This adds to system flexibility because workers are able to help one another
when bottlenecks occur or when a
co-worker is absent.
Continuous Improvement:- Workers in a JIT system have greater
responsibly for quality than
worker in traditional systems, and expected to be involved in problem solving and continuous improvement.
JIT workers typically receive extensive
training in statistical process control, quality improvement, and problem solving. Problem solving is a cornerstone of any JIT
interest are problems that interrupt, or
have the potential to interrupt, the smooth flow of work through the
system. A central theme of a true
just-in-time approach is to work toward continual improvement of the system-reducing
inventories, reducing setup cost and time,
improving quality; increasing the output rate, and generally cutting
waste and inefficiency. Toward that end,
problem solving becomes a way of life a
"culture" that must be assimilated into the thinking of
management and workers alike. It becomes
a never ending quest for improving operations as all members of the organization strive to improve the
system.
Cost Accounting:- Another feature of some JIT systems is the
method of allocating overhead.
Traditional accounting methods sometimes distort overhead allocation because they allocate it
on the basis of direct labour hours.
However, that approach does not always accurately reflect the
consumption of overhead by different
jobs. One alternative method of
allocating overhead is activity-based costing.
This method is designed to
more closely reflect the actual amount of overhead consumed by particular job or activity.
Activity-based costing first identifies
traceable costs and then assigns those costs to various types of
activities such as machine setups,
inspection, machine hours, direct labour hours, and movement of material. Specific jobs are then
assigned overhead based on the
percentage of activities they consume.
Leadership/Project Management:- Another feature of JIT systems
relates to leadership. Managers are
expected to be leaders and facilitators, not order givers. Two-way communication between workers
and managers is encouraged. Project managers are often given full
authority over all phases of a project.
They remain with the project from beginning to end; in the more
traditional forms of project management,
the project manger often has to rely on the
cooperation of other managers to accomplish project goals.
3.2.4 Manufacturing Planning and Control
Five elements of manufacturing planning and control are
particularly important for JIT
systems:
1. Level loading
2. Pull system
3. Visual system
4. Close vendor relationships
5. Reduced transaction processing.
Level Loading:- JIT systems place a strong emphasis on achieving
stable level daily mix schedules.
Toward that end, the master production schedule is developed with level capacity loading. That
may entail a rate-based production
schedule instead of the more familiar quality -based schedule. Moreover,
once they are established, production
schedules are of short time horizon, which
provide certainty to the system. This is needed in day-to-day schedules
to achieve level capacity
requirements.
Pull Systems:- The terms push and pull are used to describe two
different systems for moving
work through a production process. In push systems, when work is finished at a workstation, the output
is pushed to the next station: or, in
the case of the final operation, it is pushed on to final inventory
Conversely, in a pull system, control of
moving the work rests with the following operation: each workstation pull the output from the
preceding station as it is needed;
output of the final operation is pulled by customer demand or the
master schedule.
Thus, in a pull system, work is moved response to demand from
the stage in the process, whereas in
push system, work is pushed in as it is
completed, without regard to the next station’s readiness for the
work. Consequently, work may pile up at
workstations that fall behind schedule
because of equipment failure or the detection of a problem with
quality.
JIT systems use the pull approach to control the flow of work,
with each workstation gearing its output
to the demand presented by the next
workstations. Traditional production systems use the push approach for
moving work through the system. JIT
system communication moves backward through
the system from station to station. Work moves "just in time"
for the next operation; the flow of work
is thereby coordinated, and the accumulation of
excessive inventories between operations is avoided. Of course,
some inventory is usually present
because operations are not instantaneous.
Visual Systems:- Another way to describe the pull system is that
work flow is dictated by
"next-step demand". Such demand can be communicated in a variety of ways, including a shout or a ware,
but by far the most commonly used device
is the kanban card. Kanban is a Japanese word meaning "signal"
or "visible record". When a
worker needs materials or work from the preceding station, he or she used a kanban card. In
effect, the kanban card is the
authorization to move or work on parts. In Kanban system, no part or lot
can be moved or worked on without one of
these cards. The ideal number of Kanban
cards can be computed using this formula:
N= DT(l+X) C
Where
N = Total number of containers
D = Planned usage rate of using work centre
T = Average waiting time for replenishment of parts plus average
production time for a container of
parts
X = Policy variable set by management that reflects possible
inefficiency in the system (the closer
to 0. the more efficient the system
C = Capacity of a standard container (should be no more than 10
percent of daily usage of the
part).
Note that D and T must use the same time notes (e.g., minutes,
days). Let's illustrates the use of the
formula with the following example:
Suppose the usage at a work centre is 300 parts per day, and a
standard container holds 25 parts. It
takes an average of 12 day for a container to
complete a circuit from the time a kanban card is received until the
container is returned empty.
Compute the number of kanban cards need if
X = 20.
N = ?
D = 300 parts per day
T = 12day
C = 25 parts per container
X = 20
N = 300(12)(1 +20)(25) = 1,890,000 containers
Close Vendor Relationships: JIT systems typically have close
relationship with vendors, who are
expected to provide frequent small delivers of highquality goods. Traditionally, buyers have assumed the
role of monitoring the quality of
purchased goods, inspecting shipments for quality and quantity, and returning poor-quality goods to the vendor
for rework. JIT systems have little
slack, so poor-quality goods cause a disruption in the smooth flow of
work.
Moreover, the inspection of incoming goods is viewed as
inefficient because it does not add
value to the product. For these reasons, the burden of ensuring quality shifts to the vendor. Buyers work
with vendors to help them achieve the
desired quality levels and to impress upon them the importance of
consistent, high-quality goods.
The ultimate goal of the buyers is to be able to certify a vendor as product A producer of high-quality
goods. The implication of certification
is that a vendor can be relied on to deliver high quality goods without the need for buyer inspection. Suppliers must also be willing and able to
ship in small lots on regular basis.
Under JIT purchasing, good vendor relationships are very
important. Buyers take measures to
reduce their list to suppliers, concentrating on maintaining close working relationships with a few good
ones. Because of the need for frequent,
small delivers many buyers attempt to find local vendors to shorten the lead time for deliveries and to reduce
lead time variability. An added
advantage of having vendors nearby is quick response when problems
arise.
Suppliers: A key feature of many lean production systems is the
relatively small number of
suppliers used. Lean production companies may employ a tiered approach for suppliers. They use
relatively few first-tier suppliers who
work directly with the company or who supply major subassemblies. The
firsttier suppliers are responsible for
dealing with second-tier suppliers who provide
components for the subassemblies, thereby relieving the final buyer
from dealing with large numbers of
suppliers. A good example of this
situation is found in the automotive industry. Suppose a certain model has an electric seat. The seat
and motor together might entail 250
separate parts. A traditional producer might use more than 50 suppliers
for the electric seat, but a lean
producer might use a single (first-tier) supplier who has the responsibility for the entire seat note.
The company would provide specifications
for the overall note, but leave to the supplier the details of the motor, springs and so on. The first-tier
supplier, in turn, might subcontract the
motor to a second-tier supplier, the track to another second-tier
supplier, and cushions and fabric to
still another. The second-tier suppliers might subcontract some of their work to third-tier suppliers,
and so on. In this "team of suppliers" approach, all suppliers benefits from a
successful product, and each supplier
bears full responsibility for the quality of its portion of the
product.
Reduced Transaction Processing:- The transactions can be
classified as logical, balancing,
quality, or change transactions.
Logical Transactions:- Include ordering, execution, and
confirmation of materials transported
from one location to another. Related costs cover shipping and receiving personnel, expediting
orders, data entry, and data
processing.
Balancing transactions:- Include forecasting, production
control, procurement,
scheduling, and order processing. Associated costs relate to the personnel involve in these and supporting
activities.
Quality transactions:- Include determining and communicating
specifications, monitoring,
recording, and follow-up activities. Costs relates to appraisal, prevention, internal failures (e.g., scrap,
rework, retesting, delay, administration
activities) and external failure (e.g., warranty cost, product
liability, returns, potential loss of
future business).
Change transactions:- Primarily involve engineering changes and
the ensuing changes generated in
specifications, bills of material, scheduling, processing instructions and so on. Engineering changes
are among the most costly of all
transactions. JIT systems cut
transaction costs by reducing the number and frequency of transactions. For example, supplier deliver
goods directly to the production floor,
by passing the store-room entirely, thereby avoiding the transactions related to receiving the shipment into
inventory storage and later moving the
materials to the production floor. In addition, vendors are certified for
quality, eliminating the need to inspect
incoming shipment for quality. The unending
quest for quality improvement that pervades JIT systems eliminates many
of the above mentioned quality
transactions and their related costs. The use of bar coding (not exclusive to JIT systems) can
reduce data entry transactions and
increase data accuracy.
3.3 Benefits of JIT Systems
JIT systems have a number of important benefits that are
attracting the attention of traditional
companies. The main benefits are:
1. Reduced level of in-process inventories, purchased goods, and
finished goods.
2. Reduced space requirements.
3. Increased product quality and reduced scrap and rework.
4. Reduced manufacturing lead times.
5. Greater flexibility I changing the production mix.
6. Smoother production flow with fewer disruptions caused by
problems due to quality, shorter setup
times, and multi-skilled workers who can
help each other and substitute for other
7. Increased productivity levels and utilization of equipment
8. Worker participation in problem solving.
9. Pressure to build good relationships with vendors
10. Reduction in the need for certain indirect labour, such as
material handlers.
4.0 CONCLUSION
This note has described the JIT/lean production approach,
including the basic elements of these
systems, and what it takes to make them work effectively. It has also pointed out the benefits of these
systems.
5.0 SUMMARY Just-in-time (JIT) is
a system of lean production used mainly in repetitive manufacturing, in which goods move through
the system and tasks are completed just
in time to maintain the schedule. JIT systems require very little inventory because successive operations are
closely coordinated. The ultimate goal
of a JIT system is to achieve a balanced, smooth flow of production.
Supporting goals include eliminating disruptions to the
system, making the system flexible,
reducing setup and lead times, eliminating waste, and minimizing inventories. The building
blocks of a JIT system are product
design, process design, personnel and organization, and
manufacturing planning and control. Lean systems require the elimination of
sources of potential disruption to the
even flow of work.
High quality is stressed
because problems with quality can
disrupt the process. Quick, low-cost setups, special layouts, allowing
work to be pulled through the system
rather that pushed through, and a spirit of
cooperation are important features of lean systems. So too, are problem
solving aimed at reducing disruptions
and making the system more efficient, and an
attitude of working toward continual improvement. Key benefits of JIT/lean systems are reduced
inventory levels, high quality,
flexibility, reduced lead times, increased productivity and
equipment utilization, reduced space
requirements.
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