Just-In-Time

=__//**Just-In-Time**//__= toc
 * Just-In-Time (JIT)** is a business strategy which has the goal of minimizing a company's in-stock inventory. The goal of this methodology is that it will cut costs and eliminate "wastes", activities that do not add value, for the company employing the strategy. Instead of a company continuously manufacturing parts or components to be sold, JIT production takes place only when it is demanded. Signals known as Kanban are used to alert different facets of production when new components are needed and how many are required (1).

Toyota Motor Corporation, for example, employs two different kanban in their production, which are as follows (4):
 * 1) Withdrawl Kanban, detailing items to be withdrawn from previous steps in the process.
 * 2) Production Ordering Kanban, which describes items that are to be assembled.

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=**//__History of JIT__//**=

JIT is widely considered to be a Japanese invention, thanks to its widespread use starting in the 1950s with Toyota Motor Corporation under the name Toyota Production System. Despite this, JIT is said to have its earliest beginnings nearly 150 years before Toyota. It is said that Eli Whitney designed a system which utilized interchangeable parts for manufacturing in 1799. The process was first put to use when Whitney was awarded a contract for the production of 10,000 muskets for the U.S. Army. What was notable about this contract is the cost at which each weapon was sold, a then-bargain price of $13.40 for each musket (2).

The next evolution of what became known as JIT was in 1910 at the hands of auto manufacturer Henry Ford. Ford was looking to design an efficient process from which his Model T would be produced. By analyzing all facets of the manufacturing process, including machinery, hardware, labor, and products, he and assistant Charles Sorensen were able to organize these factors in an order which allowed continuous, efficient Model T production. Ford's system worked well until staples involved with automobiles as we know them today, such as different color options, new models, and custom options, became common in the 1920s (2).

Not to be outdone by Ford, General Motors (GM) developed a system similar to that of their American rivals, with the advantage that it was easily able to adjust for the new variety of cars available. Even though times were changing, Henry Ford refused to make adjustments to his system despite a changing world, and GM's advancement into the lead in car manufacturing, the concept of lean manufacturing was still effective. Some argue that Ford's production efforts and the scale to which they were able to build bombers during World War II helped push the Allies over the top in the war (2).

=**__//Toyota and JIT//__**=

Amazed by the industrial might demonstrated by American corporations during the war, Toyota began studying lean manufacturing processes in the 1950s, most notably those employed by Ford (2). Taiichi Ohno was Toyota's chief engineer at this point in time and realized that his company would have to increase flexibility while lowering costs. The re-tooling of Toyota manufacturing in Japan was given the name "Toyota Production System", and took into account the importance of inventory management in the system. This system also catered to an issue common with Japanese industry, the fact that some businesses in the country found extra warehouse space to be unaffordable (1). By reducing inventory and lot sizes, production and inventory could be right-sized to fit existing warehouse space.

As time went on, changes to Toyota's products began to appear. While some auto manufacturers might re-design their cars for aesthetics or features, Toyota tweaked their automobiles to improve aspects of production such as component installation, painting, or welding. Assembly processes and the tools used to complete them were standardized, with the number of tools, fasteners, and other parts used to build cars were reduced to aid these processes. Toyota was further innovative by being an early user of robotic technology in place of humans to complete some assembly tasks (1).

Toyota employee Shigeo Shingo designed the Single Minute Exchange of Die (SMED) process to reduce time to change stamping dies in the company's machinery. Before SMED, the repair or replacement of stamping dies used for body assembly had to be done by hand, with the entire process taking a number of weeks to complete. Large die sets which would be precisely adjusted to Toyota's standards could take several days to install, with this process having to be done manually (1).

Once SMED was in effect, adjustments would be substituted with measurements. This reduced the physical effort for the adjustment, as it was now dictated by a pre-determined formula. The time to complete the process was also significantly reduced, from weeks to a matter of days. Die sets, some of which took days to replace, could now be changed out in as little as 40 seconds (1). The result of SMED was that one car could make up an economic lot in Toyota facilities and only one part had to be left in place at each assembly station, with a Kanban (sign or signal) being activated should replacement parts be necessary (1).

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=__//**The Goal of JIT**//__=

The goal of JIT, 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 dpms, lower costs, and greater profits.

Guidelines for Successful JIT Implementation

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. 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 can not afford to incur errors due to defects. 8) Use a control system to convey lots between workstations efficiently; the use of a kanban system is an example of this



=__//**JIT & Lean **//__=

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.

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 work stations that the materials pass through are very evenly matched and balanced, such that bottle necks in the production line are eliminated. This set-up ensures that the materials will undergo manufacturing without queueing 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 is what modulates 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.

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= __//**The Kanban**//__ =

Kanban systems are often associated with JIT implementation. In fact, some people have the misimpression that JIT requires the use of a kanban system. Having a kanban system is not a strict requirement of JIT implementation, but their use as a tool for practicing JIT has become quite popular owing to its simplicity.

<span style="font-family: Arial,Helvetica,sans-serif;">A kanban is a card attached to the carrier or container of a lot used to match what needs to be produced in a work station and what needs to be delivered to the next station. As mentioned, a JIT system is basically a 'pull' system, which means that what needs to be produced in a particular station depends on what the next station needs. Ultimately the production is therefore modulated by end customer orders. Kanbans, which contain information about the lots and quantities involved, are therefore used to facilitate the execution of this 'pull' system. With this 'pull' system, no parts that can not be processed in succeeding stations will be produced.

<span style="font-family: Arial,Helvetica,sans-serif;">There are two types of kanban assigned to every lot, namely, a production kanban (P-kanban) and a conveyance kanban (C-kanban). The P-kanban denotes the need to produce more parts while the C-kanban denotes the need to deliver more parts to the next station. No parts can be produced unless authorized by a P-kanban. On the other hand, a C-kanban triggers the 'pulling' or 'withdrawal' of units from the preceding station. C-kanbans are also known as 'move' or 'withdrawal' kanbans.

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=__//**JIT II**//__=

JIT II, is a customer-supplier partnership concept pioneered at Bose Corporation and now practiced by major companies and their suppliers, can aid in cutting both design and response lead time. This is done through system integration, a basic process strategy of time-based competition. The practice of JIT II links engineering, planning, and purchasing departments and bridges the inter-organization gap between customer and supplier. System integration is achieved because sequential processes are no longer separated by functional or organizational walls.

JIT II Purchasing

In a JIT II relationship, a supplier's sales representative works full-time in a customer firm while being paid by the supplier. The customer serves as the host organization, and the supplier representative-referred to as an in-plant representative, or "in-plant"--functions as an employee of the customer's purchasing department, attending planning meetings and determining material needs. The in-plant is then authorized to purchase materials from the supplier for the customer. In conventional JIT purchasing, customers and suppliers conduct themselves as partners rather than as adversaries. These partnerships provide long-term contracts to single-source suppliers. In return for the cumulative volume of business, the customer receives frequent deliveries in small quantities of high-quality goods. Benefits reported by JIT purchasing customers include improved communication between customer and supplier and the reduction of lead times, on-hand inventories, space needed for storage, and paperwork.

ADMINISTRATIVE BENEFITS OF JIT II Efficient administration of the purchasing function is reducing lead times in JIT II companies. Having an in-plant on-site provides the customer with continuous supplier support. Essentially, the supplier is always available and has a real-time awareness of customer needs. The levels of customer service and efficiency that are achieved are greater than those in firms where off-site representatives serve the account. The time required to contact a supplier is minimized because the in-plant attends the customer's production planning meetings, determines the material quantities needed from the supplier, and places orders on behalf of the customer. Necessary follow-up tasks, including order revisions, material delays, shortages, or quality problems, are also the in-plant's responsibility. With the customer's production planning information, the in-plant may even schedule the supplier's production of the customer's materials, linking the partners in the supply chain even more closely.

Logistics Transportation lead times are also cut through the application of JIT II to logistics. This is accomplished by organizations partnering with shipping companies to deliver incoming materials. Like the supplier's sales representative in a customer's purchasing department, the shipper's representative works inside a customer's logistics department, scheduling and monitoring the delivery of incoming materials from third-party suppliers. In logistics, electronic technology can also be used to decrease lead times and lower costs. Communication regarding the location and movement of materials is managed through the use of EDI (Electronic Data Interchange) technology, which is especially effective when used by overseas shippers. Through this paperless communication, customs brokers can file clearance documentation prior to the movement of the material, monitor intermediate processing points for bottlenecks and move material to non-bottleneck processing points, match invoices and material, and transfer funds electronically.

Material Stores and Support Services Some JIT II relationships require more than just a supplier representative to be assigned to a customer site. JIT II suppliers are providing their customers with on-site, vendor-owned, and vendor-operated stores. These stores stock anything from materials used in production to parts and equipment needed by office personnel, such as computer hardware and software. In the case of raw materials, the in-plant acts as the store manager and releases materials to production as needed. For equipment or software, customer management decides the policies employees must follow when purchasing or withdrawing those items; the inplant then issues them from the store in accordance with those policies.

ACKNOWLEDGING THE RISKS IN JIT II RELATIONSHIPS JIT II partnerships are not appropriate for all customer-supplier relationships. The level of intimacy required of both parties goes well beyond examining each other's financial statements and touring one another's facilities. Suppliers may be reluctant to disclose their cost levels or expose their process technology to customers. Furthermore, it may not be cost effective for a supplier to assign an employee exclusively to one customer. Or the customer's expectations for service may be too high. The volume of business awarded the supplier must be commensurate with the cost and effort required for it. In other words, the supplier must receive enough business to warrant assigning one of its employees exclusively to a customer. Suppliers of such organizations as Bose, IBM, Intel, Honeywell, and AT&T have found that JIT II partnerships do provide that level of business.

PARTNER PROFILES AND RELATIONSHIP GUIDELINES Typically, an organization will initiate a JIT II partnership with a current reliable supplier who produces quality products at good cost levels, provides engineering support, and delivers on time. The best candidates for JIT II suppliers are those with whom numerous purchase order transactions occur annually and with whom the annual dollar volume of business is at least $1 million. It is also recommended that the participants not be involved in sensitive technology areas, thereby removing a reason to distrust one another. For those organizations that wish to commit themselves to JIT II partnerships, there are a variety of ways to reduce the risks involved. Managers of firms that practice JIT II have established several guidelines to create and maintain integrity in their relationships. These guidelines address personnel selection, determine pricing, and encourage competitiveness and compliance with established policies. In personnel selection, it is recommended that managers from both companies interview prospective in-plants and agree on the selection of the candidate and the job responsibilities.

Today's organizations are being measured by how fast they respond to customer needs. Reducing lead times has become such a critical issue that companies are already abandoning the practice of conventional JIT. These organizations have discovered that low inventories can make it difficult to respond quickly to customer demand, and they are willing to bear the cost of additional inventory to speed up lead times. However, for high-volume material and service needs, JIT II partnerships are helping companies meet customer demand and still control cost and inventory levels. Competition is now defined as one company and its suppliers versus another company and its suppliers. Consequently, different ways of managing the customer-supplier relationship are needed, so companies and their suppliers must form strategic alliances.

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