Just In Time Concept and Its Benefits - Coursework Example

Just In Time (JIT) Name: Institution: Introduction The Just In Time (JIT) concept was initiated in Japan making Toyota as its masterpiece. JIT is a system where a company only starts purchasing or manufacturing once the customer has ordered the goods, therefore, making zero inventories. In other words, in a JIT system the materials will be purchased or produced once it is required. This concept is based on providing the goods just in time as needed, and when the customer places an order (Clouse & Gupta, 1990). JIT system can identify any hidden problem in the value chain so that it can be solved in time, and reduces the production waste while increasing the sales-raw material cost throughout the system. Although, JIT is less complicated, it requires more coordination with the supply chain in order to avoid delay in the production and purchasing schedule. JIT concept is differentiated from the traditional production system by the use of push versus pull systems of production. The push system of production is used to move the material to the next stage of production regardless of resources and time will be required to the other of production. As a result, it creates many inventories at each level of the production flow. The traditional manufacturers have adopted a push system where they can produce for the inventory, as well as work in progress. On the other hand, the pull system of production is whereby the materials are pulled to the next level of production only after it is needed by the next stage of production. It reduces the inventory because it does not keep any work in progress. The JIT system is based on the idea that the pull production system eliminates the total inventory. This paper discusses the concept and benefits of JIT, its role in manufacturing and implementation of JIT in a business. What is Just-In-Time (JIT)? Just-In-Time (JIT) manufacturing is a philosophy in the Japanese management used in the manufacturing, and involves having the right materials, right quantity, and right quality at the right place and time. Research indicates that the proper use of JIT manufacturing has resulted in increased production and efficiency, enhanced communication and reduction in costs and wastes (Goyal & Deshmukh, 1992). The possibilities of gaining these advantages have made organizations consider the system in manufacturing. Therefore, JIT has increased its popularity, and it is currently investigated by numerous organizations globally. Just In Time involves the application of traditional management; however, in the application to modern manufacturing requires new practice. The JIT approach is adaptable, thus can be used in a competitive environment. Due to the success of the Japanese organization, many organizations are striving at obtaining phenomenal levels of productivity to remain competitive in the market. To gain a competitive advantage and experience economic success, companies should focus on increasing their production, increase the quality of their products, and improve efficiency standards of the products within their companies. One of the crucial goals of many manufacturing firms is to achieve higher standards of productivity without lowering the quality of the products. Concept of JIT JIT system is a combination of inventory control, production management, and quality control functions that are used for quality improvement. First, it emphasis on the philosophical aspects of quality improvement as it makes quality to be everyone’s responsibility, and then concentrates on the effective implementation of quality control techniques. In addition, it recognizes that the most valuable resources in an organization are its employees. For that reason, employees should be motivated and allowed to participate in the decision-making process. Under JIT approach, the employees inspect the product quality after every operation. The workers are trained along with the supervisors and managers in the preparation and interpretation of the process control charts (Golhar & Stamm, 1991). The employees are encouraged to focus on quality first. The workers also have the authority to stop production if any quality issue occurs. Thus, JIT concept not only obligate workers the quality responsibility, but also match these responsibilities with the management to share the quality control function and problems are solved faster. JIT production system requires buying materials in small quantities, which demand less space, time, and labor to complete the same job. Moreover, it easier to inspect smaller amounts and defects can be easily identified. The quantities purchased in small size with frequent deliveries result in higher productivity, particularly in the lower levels of inventory, low costs of inspection, and earlier detection. Even though there is a common framework, systems run differently in varying environment. For example, general-purpose machines are used in make-to-order environment, while dedicated facilities are used in make-to-stock environments. General-purpose production lines should be set up before production, while dedicated machines are designed with minimal setups to increase the material flow rate. The manufacturing environments can also be changed to make control and planning systems more efficient. For instance, products are designed to have similarities in processing. Benefits of JIT There are numerous benefits of using a JIT system. First, JIT approach works in such a way that it reduces inventory levels thus lower investment inventories. Since the system requires small quantities of materials, it significantly reduces the overall inventory level. Many companies that use JIT concept in Japan, as a result inventory levels have been reduced such that the annual working-capital turnover ratio is greater than their counterparts in the U.S. For example, Toyota reported an inventory turnover ratio of 41 to 63 compared to an inventory turnover ratio of 5 to 8 of a similar company in the U.S (Fiedler, Galletly & Bicheno, 1993). In addition, purchasing under JIT system requires a shorter delivery lead-time; thus its reliability is greatly enhanced. Improved reliability and decreased lead-time can also result in a significant reduction in the safety stock requirements. The safety stock extra units in the inventory are used in the production to reduce possible stock outs. Reduction in lead times increases scheduling flexibility. Consequently, cumulative lead-time that includes both purchasing, as well as production lead times is decreased. Therefore, the company schedule in terms of production is also reduced. This results in increased time after the production that can be utilized to changes in the market demand. The production is done in smaller lot size, which is made possible by reduced setup time also increases flexibility. JIT approach lead to improved quality levels in a firm. The order quantity is usually small; therefore, it is easier to identify and correct quality problems immediately. In most cases, the employee quality consciousness is also improved. This lead to quality improvement at the source of production. How does the JIT system play an important role in manufacturing today? Elimination of waste All activities that do not add value to a product or service are considered a waste. Poor product designs that are not required by the consumer are a waste. Standardization reduces the planning and control of the number of items and inventory required. JIT eliminates the waste of overproduction, which is building a product more than the consumer requires. The customer is not willing to pay for the extra product; thus, it is considered a waste. The excess product will also require additional storage, transportation, and inventory. Waiting is another wastage, which can be identified as lost time due to poor flow. Material waiting in the queue is a waste. In addition, an operator waiting for instruction and no production is a waste. Moreover, parts that do not comply with customer specification can be rejected. In most cases, rejects are sent back to the production line again, and consumes valuable production time. In some cases, separate work are is required, which require extra labor. Poor plant layout can also lead to a waste of movement as the material move extra distance. For this reason, the work centers should be close to one another to reduce distance moved. Inventory causes increased costs in space, record keeping, and so on. In addition, inventory can prevent the problem that can cause inventory build up. For instance, finished goods inventory can avoid poor forecasting, quality, and control. Lastly, if there are improper methods of performing tasks, it can result in wasted motion. If the materials are far is a waste of motion. Also, searching for tools or any activity that does not add value to the products should be eliminated. Continuous improvement JIT system improves the manufacturing system continually, as in business process reengineering (BPR). This constant improvement is a process of gradually decreasing the lot size of the number of item in the manufacturing process to reduce waste. Continuous improvement is a constant, step-by-step that makes JIT work in any environment. In JIT system, the same process is repeatedly used to produce different products. Quality at source A defect can occur at any stage in the production line. Quality of a product is determined at the design stage. A poor design will result in a bad quality. In a production line, operators should do inspection at each stage of the line before the parts move to the next stage. Any defect should be screened out after it occurs. JIT system – A case study of Toyota Toyota Production System (TPS)is a successful manufacturing systems in the world. This system is being adopted in both management and manufacturing globally due to its benefits it has brought to Toyota. The primary objective of Toyota system is to reduce lead time, the moment when a customer place an order to the time he or she receive it and the manufacturer receives payment. According to the company’s founder, the best strategy to remain competitive in the automobile industry is having all the necessary parts for assembly just in time for their use. Thus, a sound management system is crucial to ensure continuity of the business. This philosophy has allowed the company to keep a minimum amount of inventory. Toyota can also adapt quickly to changes in demand without disposing of expensive stock. Just In Time is one of the pillars of TPS, and the other component is referred to as Jidoka. Both pillars have played an important role for the success of TPS. Stability of Toyota company in terms of the workforce, materials, process, and machine have been facilitated Stability of a company. The company production strategy is emphasized by the fact that raw material are not brought in the production section until an order is received. No parts are allowed in one stage unless that are needed for the next stage. Toyota company goal is to produce highest products with lowest cost with shorter lead-time. JIT is considered as a manufacturing technique that produces and deliver only what is required. To achieve JIT conditions, TPS employs continuous flow, task time production, and pull system. Toyota company can reduce inventory level and approach zero inventory conditions. According to Clouse & Gupta (1990), the concept of JIT in Toyota works in the opposite direction since the final assembly line is used as a starting point. The final process removes the required amount of production from the next process at a particular time. This procedure is repeated in the opposite direction throughout the process. Another concept of JIT is visualization, which requires a proper flow process of coordination. Kanban ensures that all movements in the company are unified and systematic. It consists of three sections, pick up information, production information, and transfer information. Kanban only sends a signal to production on what should be produced; this helps Toyota to eliminate overproduction waste and inventory waste. Reducing on inventory helps the company to save on cost. For example, reduction in inventory levels will eliminate the need for a warehouse. Kanban helps Toyota company to achieve its goal by reducing waste, efficient production process, as well as meeting customers needs through on time delivery. Conclusion Just-in-time manufacturing system seeks to improve business operations and eliminate all insufficiencies in the organization. JIT system primary objective is to improve the process to reduce inventory and eliminate inventory costs. It uses a philosophy where employees are the most significant for the business success. Therefore, the management should involve the workers in the decision-making process and allow them to control production to detect errors and correct them. Also, the suppliers to buyers should be properly integrated. The raw materials should be delivered on time, and thus requires long-term cooperation and high level of trust between the firm and suppliers. References Clouse V.G.H. and Gupta, Y.P. (1990). Just-in-Time and the Trucking Industry: Implications for Motor Carrier act. Production and Inventory Management Journal. 31(4), 7-12. Fiedler K., Galletly J.E. and Bicheno J. (1993). Expert Advice for JIT Implementation. International Journal of Operations and Production Management, 13, 23-30. Golhar D.Y. and Stamm, C.L. (1991). The Just-in-Time Philosophy: A Literature Review. International Journal of Production Research. 29(4), 657-676. Goyal S.K. and Deshmukh, S.G. (1992). A Critique of the Literature on Just-in-Time Manufacturing. International Journal of Operations and Production Management. 12(1), 18-28. Read More