JUST IN TIME PRODUCTIONBy - Tanvi BhatiaSwaranjeet ChoudharySonalShailesh

PRODUCTION MANAGEMENT AND ITS IMPORTANCEDefinition-Production Management is the application of management principles to the production function in a factory which involves directing& controlling production in the process of transformation of raw materials to finished goodsImportance-Why Production management? The basis of Production management is the reduction of production cost as Globalization has changed the Equation of Competition where Market price - Production cost=ProfitOther functions arePlanning & ControllingMaintaining Quality at its optimum levelAdministration co-ordination and efficient use of manpower

CONCEPT OF ZERO INVENTORY(IMPORTANT ZERO OF MANAGEMENT)A System in which a company keeps no or very little inventory in storage by simply ordering exactly what it needs to sell and receiving it in a timely manner

This concept is also known as Made to order Concept

ADVANTAGESReduction in space requiredReduction in inventory carrying costBetter ManagementElimination of wasteReduction in damages

JUST IN TIME PRODUCTION OR LEAN PRODUCTIONJust in time production refers to the production of goods to meet customer demand exactly in time with demanded quantity and with optimum quality.

In simple words JIT is more of a demand pull system rather than a production pull system wherein emphasis is more on satisfying customer demand at a minimum lead time.

It is also known as Lean Manufacturing or Lean Production system

JUST IN TIME PRODUCTION

ORIGINS OF JITAlthough there were many predecessors, JIT production system was first implemented by Toyota as a strategy for competitive advantage in Japan post World War-II

Toyota introduced JIT using a system known as Kanban which is also known as TPS(Toyota Production System) or a pull system

Kanban was introduced into two partsProduction instruction KanbanParts retrieval Kanban

KEY FEATURES OF JITJIT runs on a demand pull basis rather than a production pull basis.The activity of each workstation is authorised by the demand of downstream work stations, thus parts move through the production system based on end unit demand, focussing on maintaining a constant flow of partsSetup and manufacturing lead time are minimisedMore Emphasis is given on minimizing the lead time for deliveryJIT rejects mass productionJIT goes hand in hand with total QualityJIT concentrates on eliminating wastes and expired products.

PROCESS FLOW DIAGRAM OF JIT

STEPS TO IMPLEMENT JITDetermine a design flow processDerive a quality control processStabilize scheduleEstablish a Kanban pull systemWork with vendorsFurther reduce inventory in other areasImprove Product design

ADVANTAGES OF JITJIT keeps stock holding costs to bare minimum thus reducing the carrying cost of the inventoryJIT eliminates wastes and out of date expired products do not enter into the equation.Only essential stocks are obtained, hence less working capital is required to finance procurement. A minimum re-order level is set and goods are procured only if that mark is reachedBetter ROIInspection cost and cost of rework is minimizedBetter Quality and higher efficiencyBetter relationships are fostered along the production chain.Overproduction is eliminatedHigh customer satisfaction

DISADVANTAGES OF JITJIT system is very difficult to implement when the demands are fluctuatingJIT requires extremely good co-ordination between retailers and suppliers which is practically very difficult Stock out chances are very highJIT is subjected to supply shocksVery little room for mistakes as minimal stock is kept for reworking faulty productRequires advance technology and Hi-tech softwareA small rise or fall in demand may totally disrupt the production chain, hence estimated demand has to be very accurateJIT is very difficult to implement in Turnkey projects industry as there is always a bulk requirement of capex materialsE.g. A famous case study wherein a sudden shutdown of Oil refineries after Katrina Storm totally disrupted the supply chain

ELIMINATION OF LOOPHOLES IN JITDemand estimate should be very accurate. Historical data and strong innovative technology should be employed to estimate demand

Effective manpower should be employed

A strong control over downstream and upstream supply chain should be maintained

An effective material procurement team must be employed

A strong QC team must be maintained.

Higher management should keep a close look at the entire Production chain.

CONCLUSIONJIT concentrates on maintaining zero inventory, reduces cost of production and hence forms a effective tool in PM

JIT has certain disadvantages and cannot be implemented in all industries

Better manpower and an effective management team will help to eliminate the loopholes in JIT