Chapter 6 Just-In-Time. Just-In-Time (JIT). JIT is a means of market pull inventory management embedded within a humanistic environment of continuing improvement. The use of JIT techniques result in considerably reduced inventory and enhanced customer response.
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JIT is a means of market pull inventory management embedded within a humanistic environment of continuing improvement. The use of JIT techniques result in considerably reduced inventory and enhanced customer response.
Primarily JIT developed for manufacturing. The new notion of well-developed networking such as the Internet, allows JIT inventory and JIT advertisement to emerge.
JIT is actually a dynamically linked system.
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.
It is an approach to achieving excellence in the reduction or total elimination of waste.
Over-production, unneeded inventory, defective products, transport and waiting time are example of what can be considered as wastes according to JIT.
JIT manufacturing is a system of enforced (the situation in which one has to put huge efforts e.g. money and personal) 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.
Another JIT implementation logic is that customers can have what they want, when they want it without a penalty. To achieve this goal, the following important points should be kept in mind:
Improvement is always possible and necessary.
Customers are the reason for existence, and they must always have a perfect product or service.
All buffers are wasteful and need to be eliminated.
A career consists of solving more difficult problems in a multi-skilled, cross-functional team environment.
The performance measurement is most essential to accommodate JIT in manufacturing. Otherwise, JIT goals will fail miserably. The successful JIT implementation rules are :
Know your customers and their needs; identify value-added activities and functions.
Focus all the business processes around the value stream of activities.
Align the company to the needs of its customers.
Activities that take time, responses and space but do not meet the customer’s requirement, are non-value added and must be reduced or eliminated.
Establish performance measurements in all aspects of the value stream.
JIT involves the perfect harmony of man and machine with the evolving ease and faster computing facilities.
Figure: Integration in JIT
The accounting side of JIT has concerns for work-in-progress, utilization and overhead allocation.
The engineering side of JIT focus is on simultaneously and participative design of products and processes.
The customer side produces stimulus for JIT and the supplier side makes the response for in-time supply.
The suppliers are crucial to JIT success. A good and consistent supply which is vital for JIT manufacturing is normally performed by:
A long-term, guaranteed, contract (i.e. managerial issue)
A good price (i.e. economical issue)
A steady demand (i.e. manufacturing issue)
Minimal paperwork, e.g. usage of EDI (i.e. computing issue)
The primary focus of JIT is not the reduction of inventory, but to improve operational efficiency and organizational effectiveness in ways that will reduce the need for inventory.
The goal of JIT are to provide very precisely:
Ordering, scheduling and producing sides are the major parts of a manufacturing firm. JIT production concept contains the well-known Kanban System. This influence in the manufacturing firm is depending on employees, supplies or customers. They are the ones on which the JIT principle is relying.
Implementing JIT in a manufacturing environment needs proper communication with customers who will pass orders so that manufacturers can start the production cycle. The suppliers of the raw material should be connected such that there should be no delay in order placing and no error should be tolerated in order placement.
EDI technology has become vital to many manufacturers engaged in JIT delivery because of the speed and data accuracy capabilities provided. The traditional paper-order processing simply could not keep up with the rapidly shifting needs of assembly lines and mass production, as well as the time-to-market constraints.
EDI supports other improved manufacturing concepts such as automatic identification systems (e.g. bar coding), statistical process control, as well as other efforts designed to integrate previously separated business systems, such as materials management and manufacturing.
Probable components of a JIT manufacturing are:
Figure: JIT manufacturing components
The Material Requirement Planning (MRP) system (or any schedule-based system) is a push system, in which a detailed production schedule for each part is used to push parts to the next production stage when scheduled.
The weakness of a push system, such as MRP, is that the customer demand must be forecasted and production lead time must be estimated. Bad guesses (such as forecasts or estimates) result in excess inventory, and the longer the lead time, the more room for error.
While JIT is very sensitive to change, MRP can absorb the change because of the infinite scheduling process.
The main focus of MRP is on the customer satisfaction and date to delivery, whereas JIT focuses on the quality of the product.
JIT is an approach designed to minimize inventory cost and increase product quality and plant productivity. If one can implement JIT, he/she will shift inventory cost to the suppliers and subsequently reduce inventory investment. Money will not be tied up in supplies sitting in a warehouse.
Example: General Electric, 1991 less than 5 inventory turnover, the amount of money tied up was $6.7 billion and 1995 more than 9 inventory turnover, the amount of money tied up was $3.8 billion
JIT Inventory needs the following information regarding the inventory items for the JIT inventory systems.
The JIT philosophy on inventory management are:
JIT inventory allows some e-business to be emerged for performing JIT inventory, such as Star (www.star.techgrp.com)
In a practical JIT inventory system, the first job is to answer some basic questions such as:
In order to increase the impact and effectiveness of the advertisement, the web-based advertisers normally make improvement by targeting and tailoring the advertisement.
Some of the following popular web –advertisement practices are used to put advertisement on the web page:
The advertisement tools and techniques usually used in web-based advertisement are:
In Purchasing Magazine, special Internet report-June ’98[Min98] states that 57% of purchasing professionals look for maintenance, repair and operations (MRO) sources online.
A surprising 42% of buyers use the web to locate information on metals.
Figure: JIT advertisement Placement information flow
Figure: Click through mechanism for the advertisement