JUST IN TIME

Click here to load reader

  • date post

    14-Nov-2014
  • Category

    Education

  • view

    533
  • download

    1

Embed Size (px)

description

COSTING PROJECT

Transcript of JUST IN TIME

  • 1. 1 A PROJECT ON JUST IN TIME IN THE SUBJECT Advance Cost Accounting SUBMITTED BY Soumeet D. Sarkar A041 M.Com. Part-I UNDER THE GUIDANCE OF Prof. Kedar Bhide TO UNIVERSITY OF MUMBAI FOR MASTER OF COMMERCE PROGRAMME (SEMESTER - II) In ADVANCE ACCOUNTANCY YEAR: 2013-14 SVKMS NARSEE MONJEE COLLEGE OF COMMERCE &ECONOMICS VILE PARLE (W), MUMBAI 400056.

2. 2 EVALUATION CERTIFICATE This is to certify that the undersigned have assessed and evaluated the project on JUST IN TIME submitted by Soumeet D. Sarkar student of M.Com. Part - I (Semester II) in Advance Accountancy for the academic year 2013-14. This project is original to the best of our knowledge and has been accepted for Internal Assessment. Name & Signature of Internal Examiner Name & Signature of External Examiner PRINCIPAL Shri. Sunil B. Mantri 3. 3 DECLARATION BY THE STUDENT I, Soumeet D. Sarkar student of M.Com.(Part I) in Advance Accountancy, Roll No.: A041, hereby declare that the project titled JUST IN TIME for the subject Advanced Cost Accounting submitted by me for Semester II of the academic year 2013-14, is based on actual work carried out by me under the guidance and supervision of Prof. Kedar Bhide. I further state that this work is original and not submitted anywhere else for any examination. Place: Mumbai Date: Name & Signature of Student Name : Soumeet D. Sarkar Signature : _________________ 4. 4 ACKNOWLEDGEMENT This project was a great learning experience and I take this opportunity to acknowledge all those who gave me their invaluable guidance and inspiration provided to me during the course of this project by my guide. I would like to thank Mr. Kedar Bhide - Professor of Advanced Cost Accounting (MCOM Narsee Monjee College). I would also thank the M.Com Department of Narsee Monjee College of Commerce & Economics who gave me this opportunity to work on this project which provided me with a lot of insight and knowledge of my current curriculum and industry as well as practical knowledge. I would also like to thank the library staff of Narsee Monjee College of Commerce & Economics for equipping me with the books, journals and magazines for this project. 5. 5 CONTENT Sr. No. PARTICULARS Page No. CHAPTER I - INTRODUCTION 1.1 JIT Philosophy 7 1.2 JIT History 8 CHAPTER II - ABOUT JIT 2.1 WHAT to EXPECT? 10 2.2 BENEFITS OF JIT 11 2.3 UNDERSTANDING WASTE 12 2.4 EVILS of INVENTORY 13 2.5 JIT and QUALITY 15 2.6 PREVENTING QUALITY PROBLEMS 16 CHAPTER III - JIT CONCEPTS 3.1 UNIFORM PLANT LOAD 19 3.2 SETUP TIME REDUCTION 23 3.3 PULL SYSTEMS 28 3.4 JIT & PURCHASING 30 CHAPTER IV - CONCLUSIONS 4.1 IMPLEMENTING JIT 33 4.2 MANAGEMENT's RESPONSIBILITY 35 4.3 BIBLOGRAPHY 38 6. 6 INTRODUCTION Just in Time (JIT) means making "only what is needed, when it is needed, and in the amount needed." For example, to efficiently produce a large number of automobiles, which can consist of around 30,000 parts, it is necessary to create a detailed production plan that includes parts procurement. Supplying "what is needed, when it is needed, and in the amount needed" according to this production plan can eliminate waste, inconsistencies, and unreasonable requirements, resulting in improved productivity. It is a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs. To meet JIT objectives, the process relies on signals or Kanban between different points, which are involved in the process, which tell production when to make the next part. Kanban are usually 'tickets' but can be simple visual signals, such as the presence or absence of a part on a shelf. Implemented correctly, JIT focuses on continuous improvement and can improve a manufacturing organization's return on investment, quality, and efficiency. To achieve continuous improvement key areas of focus could be flow, employee involvement and quality. JIT relies on other elements in the inventory chain as well. For instance, its effective application cannot be independent of other key components of a lean manufacturing system or it can "end up with the opposite of the desired result." In recent years manufacturers have continued to try to sharpen forecasting methods such as applying a trailing 13-week average as a better predictor for JIT planning; however, some research demonstrates that basing JIT on the presumption of stability is inherently flawed. Just-In-Time (JIT) manufacturing distances itself from the competition because no large capital outlays are required. Other methods promote complexity, large overheads, automation, and other "state-of-the-art" technologies, while JIT advocates simplifying and streamlining the existing manufacturing process. Since World War II, traditional American companies have developed a way of doing business that entails top management planning, re-planning, and more planning. Although some planning is good, it ultimately adds no value to the end product. Customers want 7. 7 quality products at competitive prices - they couldn't care less how much planning was required to get that product to them. By implementing JIT, much of the planning disappears and a large portion of the remaining planning is entrusted to the shop floor personnel. The transition to JIT often is not easy, but it is almost always rewarding. All employees in the company - from top management to direct labor - must have a clear understanding of the benefits that JIT offers to them and to their company. JIT is not a cure-all for every manufacturing problem. But, if implemented properly, JIT is a no-cost or low-cost method for improving your manufacturing process. PHILOSOPHY The philosophy of JIT is simple: the storage of unused inventory is a waste of resources. JIT inventory systems expose hidden cost of keeping inventory, and are therefore not a simple solution for a company to adopt it. The company must follow an array of new methods to manage the consequences of the change. The ideas in this way of working come from many different disciplines including statistics, industrial engineering, production management, and behavioral science. The JIT inventory philosophy defines how inventory is viewed and how it relates to management. Inventory is seen as incurring costs, or waste, instead of adding and storing value, contrary to traditional accounting. This does not mean to say JIT is implemented without an awareness that removing inventory exposes pre-existing manufacturing issues. This way of working encourages businesses to eliminate inventory that does not compensate for manufacturing process issues, and to constantly improve those processes to require less inventory. Secondly, allowing any stock habituates management to stock keeping. Management may be tempted to keep stock to hide production problems. These problems include backups at work centers, machine reliability, process variability, lack of flexibility of employees and equipment, and inadequate capacity. In short, the Just-in-Time inventory system focus is having the right material, at the right time, at the right place, and in the exact amount, without the safety net of inventory. The JIT system has broad implications for implementers. 8. 8 The basis of Just-In-Time (JIT) is the concept of ideal production. It centers on the elimination of waste in the whole manufacturing environment, from raw materials through shipping. Just-In-Time is defined as "the production of the minimum number of different units, in the smallest possible quantities, at the latest possible time, thereby eliminating the need for inventory. Remember, JIT does not mean to produce on time, but to produce just in time. HISTORY JIT is sometimes said to have been invented by Henry Ford because of his one-at-a-time assembly line, around 1913. This is an incorrect conclusion since Ford's system could handle no variety and was designed for large volumes and large batch sizes of the same parts. JIT was invented by Taiichi Ohno of Toyota shortly after World War II. Ohno's system was designed to handle large or small volumes of a variety of parts. Many people are intimidated by JIT because of its association with Japan. If these people take a broader look at JIT, they will see that it is nothing more than good, common sense manufacturing. Ohno and his associates came to America to study Fords manufacturing processes. They determined that Fords system was much like the system that Japanese companies were using, but Japanese companies could not afford waste in their systems due to the devastation to their economy caused by World War II. While in America, Ohno learned much about America's culture. One of his discoveries has transformed the world's perspective on manufacturing. Legend has it that Ohno got the idea for his manufacturing system from America's supermarket system. Ohno learned the Kanban (pull) system from our supermarket system in which customers pulled items from the shelves to fill their shopping carts, thereby creating an empty space on the shelf. The empty space is a signal for the stocker to replace that item. If an item was not bought that day, there was no need to replace it. When item quantities become low, that is the signal for the stockers to order more 9. 9 goods from their suppliers. Customers are content to take just what they need, because they know that the goods will be there the next time they need them. To apply this concept to manufacturing, Ohno devised a system whereby the usage of parts is determined by production rates. Materials are pulled through the plant by usage or consumption of the parts in final assembly. To obtain maximum results, Ohno decided to move the machines closer together and form manufacturing cells. The JIT system continued to evolve, with the central thrust being the elimination of waste. Ohno's system has become a totally flexible system in which production rates are determine