Just In Time and Its Impact on Operations Management

Just-in-time or (JIT) is an inventory strategy, which companies employ to increase efficiency and decrease waste by receiving goods as per their production requirement, thereby reducing inventory costs. This method requires producers to forecast demand accurately.

1. PRODUCTION AND OPERATIONS MANAGEMENT PGDM (2017-19) Submitted By Saurabh Vats Roll No: 171078 JUST IN TIME AND ITS IMPACT ON OPERATIONS MANAGEMENT Submitted To Prof. S. K. Palhan

2. JUST IN TIME Definition: Just-in-time or (JIT) is an inventory strategy, which companies employ to increase efficiency and decrease waste by receiving goods as per their production requirement, thereby reducing inventory costs. This method requires producers to forecast demand accurately. Elements of JIT include: Continuous Improvement – Product oriented layout and Quality Control Eliminating Waste – 7 Types of wastes reduction Good Housekeeping – Workplace and Organization cleanliness Set-up Time reduction – Increases flexibility and Multi process handling Automation – To increase efficiency of workers Mixed Production – To smooth the flow of products through the factory

3. HISTORY It is basically, a Japanese management philosophy which has been applied in practice since early 1970s in many Japanese manufacturing organizations. It was first developed and perfected within the Toyota Manufacturing Plants by Taiichi Ohno as a means of meeting consumer demands with minimum delays. Reason for the Evolution of JIT: Evolved in Japan after World War II, as a result of Japan’s diminishing market share in the Auto Industry

4. The production plants gained extended support during the 1973 oil embargo and was later adopted by many other organizations The oil embargo and the increasing shortage of other natural resources were seen as a major impetus for the widespread adoption of JIT Toyota was able to meet the increasing challenges for survival through an approach to management different from what was characteristic of the time. This approach focused on people, plants and systems (Reference Book: Surviving by Breaking Tradition by Goddard, 1986 ) Toyota realized that JIT would only be successful if every individual within the organization was involved and committed to it, if the plant and processes were arranged for maximum output and efficiency, and if quality and production programmes were scheduled to meet demands exactly. HISTORY – CONTD.

5. TOYOTA MANUFACTURING PLANT

6. JAPANESE WORK ETHICS The Japanese work ethic involves the following concepts: Companies focus on group effort which involves the combining of talents and sharing knowledge, problem-solving skills, ideas and the achievement of a common goal. Employees tend to remain with one company throughout the course of their career span. This allows the opportunity for them to hone their skills and abilities at a constant rate while offering numerous benefits to the company. Workers are highly motivated to seek constant improvement

7. METHODOLOGIES OF JIT MANUFACTURING List of Methodologies that are important but not exhaustive: Housekeeping – physical organization and discipline Make it right the first time – elimination of defects Setup reduction – flexible changeover approaches Balanced flow – organizing flow scheduling throughput Skill diversification – multi-functional workers Control by visibility – communication media for activity Preventive maintenance – flawless running, no defects Fitness for use – Productivity, design for process Compact plant layout – product-oriented design Streamlining movements – smoothing materials handling Supplier networks – extensions of the factory Pull system – signal [Kanban] replenishment/resupply systems.

8. JUST IN TIME - PRINCIPLES The Japanese principles involves: Total Quality Management Production Management Supplier Management Inventory Management Human Resource Management

9. TOTAL QUALITY MANAGEMENT Seek long-term commitment to quality efforts with continuous improvement. Minimizing waste Quality must be a higher priority than cost. Eliminate Quality Inspectors Quality is everyone’s responsibility Do it right the first time.

10. PRODUCTION MANAGEMENT It involves planning, organizing, directing & controlling production activities and deals with converting raw materials into finished goods or products. It brings together the 6M's i.e. men, money, machines, materials, methods and markets to satisfy the wants of the people. INPUTS TRANSFORMATION PROCESS INPUTS FEEDBACK

11. SUPPLIER MANAGEMENT Establish Long Term Relationships with few suppliers. Delivery of Parts = 100% Defect Free Where they are needed When they are needed The exact quantity Work Together: Elimination inspection of parts Information Systems: Eliminating barriers to information Communicate problems to suppliers in a positive manner.

12. INVENTORY MANAGEMENT Management of inventory and stock including aspects such as controlling and overseeing ordering inventory, storage of inventory, and controlling the amount of product for sale. It is all about having the right inventory at the right quantity, in the right place, at the right time, and at the right cost. ECONOMIC ORDER QUANTITY FORMULA REORDER POINT FORMULA SAFETY STOCK FORMULA

13. INVENTORY MANAGEMENT HUGE INVENTORIES HIDES WASTAGE REDUCING OVERPRODUCTION AND INVENTORIES

14. HUMAN RESOURCE MANAGEMENT Company-wide Involvement: Motivation Problem Solving High Employee Interaction Build Pride In Workmanship Self-Inspection of work Diversified Employees: Absenteeism To eliminate boredom in process Management Support

15. JUST IN TIME FUNCTIONS ZERO Lead Time ZERO Inventory ZERO Failure

16. JUST IN TIME – 7 WASTE’S The 7 types of wastes include: Over Production Waiting Transportation Processing Stocks Motion Defective Products

17. WASTE 1: OVER PRODUCTION Definition: Overproduction is making products in too great a quantity or before it is actually needed leading to excessive inventory. Overproduction is the worst of the seven wastes as it obscures all of the other problems within your processes. Ways to reduce Overproduction: Realize and understand the issue Identify principles of lean manufacturing Rearrange your work place and make a proper process flow Now implement the JIT principle using techniques such as KANBAN Causes of Overproduction: Large Batch Sizes Unreliable Processes Unstable Schedules Unbalanced Departments Inaccurate Forecast

18. WASTE 2: WASTE OF WAITING Definition: It is an idle time produced when two interdependent processes are not completely synchronized Ways to reduce Overproduction: Implement Standard Operating Procedures Reduce overproduction Improve machine reliability and quality Causes of Overproduction: Poor Man/Machine coordination Long Changeovers Unreliable process/quality Only batch completion allowed

19. WASTE 3: WASTE OF TRANSPOTATION Definition: It is the wastage due to the movement of products from one location to another which adds no value to the product, which does not create any transformation and which does not make the customer happy Causes of Waste of Transportation: Poor Layouts (Large distances between operations Lengthy or complex material handling system Multiple storage location Ways to reduce Waste of Transportation: Improve machine reliability and quality Implement Standard Operating Procedure

20. WASTE 4: WASTE OF OVERPROCESSING Definition: Putting more into product than is valued by the customer. For e.g. painting of unseen areas, unnecessarily tight tolerances, cleaning and polishing beyond the level required etc. Causes of Waste of Over Processing: No standardization of best techniques Unclear specification Ways to reduce Waste of Over Processing: Review designs with techniques like value engg. and value analysis Examine the process routes and search for alternatives, if possible.

21. WASTE 5: WASTE OF STOCKS Definition: Inventory waste is stock and work in process in excess of the requirements necessary to produce goods and services Causes of Waste of Over Processing: Large Batch Size Lack of balance in work flow, forcing inventory build up between processes Incapable processes Ways to reduce Waste of Over Processing: Look at factory and cell layout and balance your production processes Follow the main principle of lean manufacturing

22. WASTE 6: WASTE OF MOTION Definition: Any motion of man and/or equipment that does not add value to the product or service is considered to be a waste of motion Causes of Waste of Over Processing: Poor workstation layout Reorientation of materials Poor method design – transferring parts from one hand to another Ways to reduce Waste of Over Processing: Eliminate unnecessary inventory movement Eliminate manual processes Reduce paper waste Reduce wasted employee motion

23. WASTE 7: DEFECTIVE PRODUCTS Definition: Waste of correction includes additional work performed on a product or service Causes of Waste of Over Processing: Inadequate training Shortage of skill and Operator error Incapable processes and suppliers Excessive Stock and Transportation Ways to reduce Waste of Over Processing: Implement principles of 5S Proper training should be given to ensure that the correct methods are undertaken and standard achieved.

24. JIT TECHNIQUES Suppliers - JIT involves reducing the number of vendors and focuses on good relationships between suppliers. Focused on quality products and making sure that goods are delivered when needed. Layout - JIT focuses on maximizing usage of space. By grouping similar products together you can ensure a larger amount of production gets done in a smaller space (aided by machinery capable of doing tasks for more than one product). JIT also focuses on reducing the distance required for transportation of products/materials therefore the requirement for storage is also reduced (also due to the fact that JIT aims to reduce inventories to only what is required). Inventories - As mentioned above, JIT aims to reduce the amount of inventories on hand (ideally eradicating inventory all together except for what is needed to fulfil the current demand). This includes producing in smaller lot sizes thus allowing production cycles to be shorter.

25. JIT TECHNIQUES – CONTD. Scheduling – JIT techniques make sure that the schedules are communicated across all suppliers and focuses on performing tasks exactly to their required scheduling time. Using the “Kanban” technique is also a feature of JIT, this is where inventories are moved through the process on a pull basis (in other words, only when they are needed by the next phase/step, will they be “pulled” to the next step). Preventative Maintenance – By maintaining systems and checking on systems on a daily basis, future problems are caught before they get to the point where they become serious. Quality Production – By making quality a top priority, JIT aims to make sure all suppliers, processes and personnel are of the highest quality therefore eliminating the chances of quality control issues.

26. JIT TECHNIQUES – CONTD. Employee Empowerment – By empowering employees to do multiple functions or “jobs” within the business, we allow fewer employees as well as more flexible employees to perform multiple tasks. Commitment – All aspects of the organization must be committed to the JIT process. Management, employees and suppliers should all be supported and committed to their functions within the process.

27. WORK AND BUILD TRUST WITH VENDORS DESIGN FLOW PROCESS TOTAL QUALITY CONTROL BASELINE AND STABILIZE SCHEDULE DEMAND OR KANBAN PULL BUILD SKILLS AND CAPABILITIES INVENTORY REVIEW AND REDUCTION IMPROVE PRODUCT DESIGN JIT - IMPLEMENTATION STEPS MEASURE AND METRICS CONTINUOUS IMPROVEMENT

28. PROCESS INVOLVED IN STEPS

29. PROCESS INVOLVED IN STEPS

30. References Website Reference https://www.ifm.eng.cam.ac.uk/research/dstools/jit-just-in-time-manufacturing/ http://leanmanufacturingtools.org/114/waste-of-overproduction-causes-symptoms-examples-and-solutions/ http://leanmanufacturingtools.org/126/waste-of-waiting-causes-symptoms-examples-and-solutions/ http://leanmanufacturingtools.org/106/waste-of-inventory-causes-symptoms-examples-solutions/ http://leanmanufacturingtools.org/101/waste-of-transport-causes-symptoms-examples-solutions/ http://leanmanufacturingtools.org/96/the-waste-of-motion-causes-symptoms-solutions/ http://leanmanufacturingtools.org/121/waste-of-overprocessing-causes-symptoms-examples-and-solutions/ http://leanmanufacturingtools.org/129/waste-of-defects-causes-symptoms-examples-and-solutions/ http://www.michaelrauch.net/2012/07/the-jit-just-in-time-technique/ Presentation Reference Presentation on JIT by Prof. S. K. Palhan