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.

Just-In-Time ManufacturingJust-In-Time Inventory SystemJust-In-Time Advertisement

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 ManufacturingJust-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.

Just-In-Time Manufacturing (Cont..)

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.

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:

Just-In-Time Manufacturing (Cont..)

The performance measurement is most essential to accommodate JIT in manufacturing. Otherwise, JIT goals will fail miserably. The successful JIT implementation rules are :

1. Know your customers and their needs; identify value-added activities and functions.

2. Focus all the business processes around the value stream of activities.

3. Align the company to the needs of its customers.

4. 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.

5. Establish performance measurements in all aspects of the value stream.

Important Aspect in JIT Manufacturing

JIT involves the perfect harmony of man and machine with the evolving ease and faster computing facilities.

Figure: Integration in JIT

Important Aspect in JIT Manufacturing

People: Motivated workforce can be utilized in JIT. Job enrichment, which provides job rotation, a flexible workforce and cross-training, will in fact improve total job quality of the workforce.

Quality: Quality within JIT manufacturing is necessary and must be inherent in the process. Without high quality standards, JIT will fail. For example, statistical process control, and error proofing are some quality measurement techniques.

Important Aspect in JIT Manufacturing (Cont…)

Techniques: The JIT technique is a “pull system”, based not on producing units they are needed. JIT system are originated from Japan, where they are often implemented using kanbans, or cards.

Integration: JIT integrates the accounting side, engineering side, customer side and supplier side. 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.

Important Aspect in JIT Manufacturing (Cont…)

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)

Influence of JIT in Manufacturing

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:

1. What is the demand of customers?2. When will the Customer’s demand be fulfilled?3. Size of demand should be in a single lot4. No error in any level of processing

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.

Production Control Components

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.

Production Control Components (Cont…)

Probable components of a JIT manufacturing are:

Figure: JIT manufacturing components

Comparison with Other Systems

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.

Just-In-Time Inventory System

Major Components for JIT Inventory

JIT Inventory Issues

Examples of JIT Inventory system

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

Major Components for JIT Inventory

JIT Inventory needs the following information regarding the inventory items for the JIT inventory systems.

Communication with other system: Online via some kind of network or

off-line.

Inventory level: If the inventory system is smart, one can adapt with business

activity.

Business period: Allows tracking period for inventory to be accommodated, can be

daily, weekly or monthly. .

Audit trails: Usage report and inventory valuation are needed for auditing purpose and

quality of the JIT inventory system.

Purchase order processing: Automatic purchase order generation and sending

via traditional fax or EDI is one of the important requirements of the JIT inventory system.

JIT Inventory IssuesThe JIT philosophy on inventory management are:

Strive for a level of zero inventory

Elimination of all unnecessary lead times

Reduce set-up costs to achieve the smallest

economical lot size

Optimize material flow from suppliers through the

production process

Ensure high quality and dependable JIT delivery

from suppliers.

Minimize safety stocks.

Examples of JIT Inventory System

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:

Availability:How much inventory is in stock?

Location:Where is the inventory?

Examples of JIT Inventory System (Cont…)

Costing:

What is inventory costing?

Movement:

How long will inventory last with current

demand?

How many times does inventory turn over?

Just-In-Time Advertisement

Web Advertisement Methods

Web Advertisement Tools

The JIT Advertisement Issues

In order to increase the impact and effectiveness of the advertisement, the web-based advertisers normally make improvement by targeting and tailoring the advertisement.

Web Advertisement Methods

Some of the following popular web –advertisement

practices are used to put advertisement on the web

page:

1. Integrating the website into overall marketing

strategy

2. Placing advertisement to some other sites on

the basis of payment, is also known as banner

advertisement

Web Advertisement ToolsThe advertisement tools and techniques usually used in web-based advertisement are:

1. E-mail auto responder and alias2. Forms, surveys and questionnaires3. E-mail forwarding and list servers4. Listing services5. Search engines6. Guest book, visit counter and statistics such as

click-through rate.7. Advanced web-page techniques such as scripting,

animated graphics, etc.

The JIT Advertisement Issues

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.

The JIT Advertisement Issues (Cont…)

Figure: JIT advertisement Placement information flow

The JIT Advertisement Issues (Cont…)

Figure: Click through mechanism for the advertisement

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