OM Term Paper Final Report 2

8/8/2019 OM Term Paper Final Report 2

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Introduction

Just-in-time (JIT) is easy to grasp conceptually everything happens just-in-time . For example

consider my journey to work this morning, I could have left my house, just-in-time to catch a bus

to the train station, just-in-time to catch the train, just-in-time to arrive at my office, just-in-

time to pick up my lecture notes, just-in-time to walk into this lecture theatre to start the lecture.

Conceptually there is no problem about this however achieving it in practice is likely to be

difficult!

In today's competitive world shorter product life cycles customers rapid demands and quickly

changing business environment is putting lot of pressures on manufacturers for quicker response

and shorter cycle times. Now the manufacturers put pressures on their suppliers. One way to

ensure quick turnaround is by holding inventory but inventory costs can easily become

prohibitive. A wiser approach is to make your production agile able to adapt to changing

customer demands. This can only be done by JUST IN TIME (JIT) philosophy. JIT is both a

philosophy and collection of management methods and techniques used to eliminate waste

(particularly inventory). Waste results from any activity that adds cost without adding value such

as moving and storing. Just-in-time (JIT) is a management philosophy that strives to eliminate

sources of such manufacturing waste by producing the right part in the right place at the right

time.

Features

JIT (also known as lean production or stockless production) should improve profits and return on

investment by reducing inventory levels (increasing the inventory turnover rate), reducing

variability, improving product quality, reducing production and delivery lead times, and reducing

other costs. The basic elements of JIT manufacturing are people involvement, plants, and system.

People involvement deal with maintaining a good support and agreement with the people

involved in the production. This is not only to reduce the time and effort of implementation of

JIT but also to minimize the chance of creating implementation problems. The plant itself also


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has certain requirements that are needed to implement the JIT and those are plant layout, demand

pull production Kanban, self-inspection and continuous improvement. The plant layout mainly

focuses on maximizing working flexibility. It requires the use of multi-function workers

Demand pull production is where you produce when the order is received. This allows for better

management of quantity and time more appropriately. Kanban is a Japanese term for card or tag.

This is where special inventory and process information are written on the card. This helps in

tying and linking the process more efficiently. Self-inspection is where the workers on the line

inspect products as they move along this helps in catching mistakes immediately. Lastly

continuous improvement which is the most important concept of the JIT system. This simply

asks the organization to improve its productivity, service, operation, and customer service in an

on-going basis. In a JIT system, underutilized (excess) capacity is used instead of buffer

inventories to hedge against problems that may arise. The target of JIT is to speed up customer

response while minimizing inventories at the same time. Inventories help to response quickly to

changing customer demands, but inevitably cost money and increase the needed working capital.

JIT requires precision as the right parts must arrive "just-in-time" at the right position. It is used

primarily for high-volume repetitive flow manufacturing processes.

HISTORY

The technique was first used by the Ford Motor Company as described explicitly by Henry

Ford's.

The technique was subsequently adopted and publicized by Toyota Motor Corporation of Japan

as part of its Toyota Production System (TPS). Japanese corporations could afford large amounts

of land to warehouse finished products and parts. Before the 1950s this was thought to be a

disadvantage because it reduced the economic lot size. The undesirable result was poor return on

investment for a factory. Also at that time Japanese companies had a bad reputation as far as

quality of manufacturing and car manufacturing in particular was concerned. One motivated

reason for developing JIT and some other better production techniques was that after World War

II Japanese people had a very strong incentive to develop a good manufacturing technique which

would help them rebuild their economy. They also had a strong working ethic which was

concentrated on work rather than on leisure and this kind of motivation was what drove Japanese


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economy to succeed. Therefore Japans wish to improve the quality of its production led to the

worldwide launch of JIT method of inventory Toyota Motors

The basic elements of JIT were developed by Toyota in the 1950's, and became known as the

Toyota Production System (TPS).The chief engineer Taiichi Ohno, a former shop manager and

eventually vice president of Toyota Motor Company at Toyota in the 1950s examined

accounting assumptions and realized that another method was possible. The factory could be

made more flexible reducing the overhead costs of retooling and reducing the economic lot size

to the available warehouse space. Over a period of several years, Toyota engineers redesigned

car models for commonality of tooling for such production processes as paint-spraying and

welding. Toyota was one of the first to apply flexible robotic systems for these tasks. Some of

the changes were as simple as standardizing the whole sizes used to hang parts on hooks. Toyota

implemented a program called Single Minute Exchange of Die (SMED). With very simple

fixtures measurements were substituted for adjustments. Almost immediately die change times

fell to about half an hour. JIT was firmly in place in numerous Japanese plants by the early

1970's. JIT began to be adopted in the U.S. in the 1980's.

STANDARDIZATION

Where the supplies are standardized and the suppliers are trustable and close to the plant. As

there is little barrier inventory between the workstations, so the quality must be high and efforts

are made to prevent machine breakdowns. Those organizations that need to respond to customer

demands regularly this system is also being able to respond to changes in customer demands.

SOFTWARE

For JIT to work efficiently Supply Chain Planning software companies have in the mean time

extended Just-in-time manufacturing externally by demanding from their suppliers to deliverinventory to the factory only when it's needed for assembly making JIT manufacturing ordering

and delivery processes even speedier more flexible and more efficient.


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MULTI-FUNCTIONALITY

In JIT workers are multifunctional and are required to perform different tasks. Machines are also

multifunction and are arranged in small U-shaped work cells that enable parts to processed in a

continuous flow through the cell. Workers produce pars one at a time within cells and transport

those parts between cells in small lots.

The principle of JIT philosophy

y Total Quality Managementy Production Managementy Supplier Managementy Inventory Managementy Human Resource Management

JUST-IN-TIME TOTAL QUALITYMANAGEMENT

Quality within JIT manufacturing is necessary because without a quality program in JIT the JIT

will fail. Here we think about quality at the source and the Plan, Do, Check, Action with its

statistical process control. Just-In-Time Total Quality Management is the mean of market and

factory management within a humanistic environment of continuing improvement. Moreover it

means continuing improvement in social life and working life. When applied to the factory

Kaizen means continual improvement involving managers and workers alike. When it comes to

Total Quality Management Japans strong industrial reputation is well-known around the world.

Total quality control is the system which Japan has developed to implement Kaizen or

continuous improvement. The traditional description of Just-In-Time is a system for

manufacturing and supplying goods that are needed. There are several important tools that are

important for total quality management control but there are seven that are even more important.

These are check sheets, scatter diagrams, cause and effect diagram, pareto diagram, histogram

and control chart. When used properly, these seven tools will help the total quality management

system by eliminating defective products. Moreover, they will help in assisting to improve

productivity, complete tasks on time, eliminate waste, and reduce lead time and inventory cost.


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Implementation of TQM in Toyota

One of the widely held opinions about Japanese firms high performance suggests that Japanese

employees organized in teams are making improvements in their own jobs through quality

circles or other initiatives such as a suggestion system. These kaizen (continuousimprovement) activities have been considered in the Western industrial world as a

principal factor in Japanese firms high product quality and productivity.Consequently it is

comprehendible that European and American automobile producers have tried to set in place

kaizen activities in order to assure high product quality, and if possible, to increase their

productivity, by involving workers in these activities. Consequently in contrast with the

stereotyped opinion about kaizen at Japanese firms there are two kinds of kaizen activities

at Toyota: kaizen made by the supervisory staff and engineers as their functions, and that

made by workers through the quality circles and suggestion system. The latter is well

known in the Western world as worker's voluntary activities that bring high quality while a

essential part of economic gains realized by kaizen cost reduction and productivity

increase comes from the former with regards to the cost management. This paper then aims to

explain the conventions in the kaizen activities organized under the cost management system at

Toyota Motor Co without neglecting of course the role of workers voluntary kaizen

activities.


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Thereare four main element of kaizen which are followed by Toyota:

y Teamwork: Would administrators be able to share decision making with staff? There isthe whole issue of team building which requires and investment of time, money, and

effort from all the staff. Most of our administrators are trained as managers not leaders.

Teachers are trained as followers not leaders. Most faculties I have been a part of are very

good at being committee members but have insufficient training to be members of a

decision making team. Are teachers good at organizing students into learning teams? Are

parents involved in decision making?

y Personal Discipline: Do administration and staff have the personal discipline to beconsistent? Does everyone have to be told that education is for the rest of ones life? Do

staff members have the goal of continuous improvement? Is there a program in place for

students to work on their own personal discipline?


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y Improved Morale: Are staffs members valued as part of the team or do you noticepeople hiding out in the classroom/office? Are there process improvement plans in place

to help teachers with instruction, discipline, and dealing with innovation? What about

improving the morale of the students isnt that important also?

y Quality Circles: How unique it would be to truly work on improving the process ofeducation! Would staff be willing to work together on improvement of instruction? Is the

school seeking input from students and parents for school-wide improvement?

J-I-T ProductionManagement

Just-in-time (JIT) is defined as a philosophy of manufacturing based on planned elimination ofall waste and on continuous improvement of productivity. It also has been described as an

approach with the objective of producing the right part in the right place at the right time. Waste

results from any activity that adds cost without adding value such as the unnecessary moving of

materials, the accumulation of excess inventory or the use of faulty production methods that

create products requiring subsequent rework. JIT (also known as lean production or stockless

production) should improve profits and return on investment by reducing inventory levels,

reducing variability, improving product quality, reducing production and delivery lead times and

reducing other costs.

The basic elements of JIT were developed by Toyota in the 1950's and became known as the

Toyota Production System (TPS). JIT was well-established in many Japanese factories by the

early 1970's. JIT began to be adopted in the U.S. in the 1980's (General Electric was an early

adopter) and the JIT/lean concepts are now widely accepted and us

ToyotaProduction System

A production system that is steeped in the philosophy of the completed elimination of all the

waste and that imbues all aspect of production with this philosophy in pursuit of the most

efficient production method.


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Kanban Production control System

In the TPS, a unique production control method called the kanban system plays an important

role. The kanban system has also been called the super market method because the idea behind

it was borrowed from super market. Super markets and mass merchandizing stores use productcard on which product related information such as product name, product code and storage

location is entered. A kanban or pull production control system uses simple visual signals to

control the movement of materials between work centers as well as the production of new

materials to fill those sent downstream to the next work center. Toyota employed kanban sign in

place of the cards for the in production processes the method came to call the kanban system. At

Toyota when a process goes to the preceding process to retrieve parts it uses a kanban to

communicate what parts have been used.

In Toyotas dual-card kanban system, thereare two main types of kanban

1. Production Kanban: signals the need to produce more parts


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2. Withdrawal Kanban (also called a "move" or a "conveyance kanban): signals the need to

withdraw parts from one work center and deliver them to the next work center.

A kanban system is referred to as a pull- system because the kanban is used to pull parts to the

next production stage only when they are needed. In contrast an 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. Thus in a pull system material

movement occurs only when the work station needing more material asks for it to be sent, while

in a push system the station producing the material initiates its movement to the receiving station

assuming that it is needed because it was scheduled for production. The weakness of a push

system (MRP) is that customer demand must be forecast and production lead times must be

estimated. Bad guesses result in excess inventory and the longer the lead time the more room forerror. The weakness of a pull system (kanban) is that following the JIT production philosophy is

essential especially concerning the elements of short setup times and small lot sizes because each

station in the process must be able to respond quickly to requests for more materials.

Dual-card Kanban Rules:

1. No parts are made unless there is a production kanban to authorize production. If no production kanban are in the in box at a work center, the process remains idle, and

workers perform other assigned activities. This rule enforces the pull nature of the

process control.

2. There is exactly one kanban per container.3. Containers for each specific part are standardized, and they are always filled with the

same quantity. (Think of an egg carton, always filled with exactly one dozen eggs.)

Decisions regarding the number of kanban at each stage of the process are carefully considered

because this number sets an upper bound on the work-in-process inventory at that stage. For

example if 10 containers holding 12 units each are used to move materials between two work

centers the maximum inventory possible is 120 units occurring only when all 10 containers are

full. At this point, all kanban will be attached to full containers so no additional units will be


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Present some remarkable facts about Toyotas way of achieving good results from suppliers and

summarize their extraordinary relationships. Toyota has a very strong position in its supply

chain. As a result it can more easily impose demands on suppliers than smaller companies. The

two benefits of that the cost of implementation of new concepts such as the cost of a zero defect

delivery performance is fully financed by Toyotas suppliers themselves and Toyota has forced

their key suppliers to locate their production units within a radius of 30 kilometers around their

own plants. Toyotas supplier relations can be characterized as a network rather than a sum of

independent relationships. Toyota holds minority shares of its key suppliers and also these

suppliers have substantial cross-holdings in each other. The suppliers are independent companies

with separate books, which make them real profit centers. Furthermore Toyota is exchanging

employees with their key suppliers on a regular basis for example to provide help if suppliers

have serious production problems. Toyota has built a network based on trust among its suppliers

which forces its suppliers to cooperate among each other. However this is only possible because

Toyota is able to ensure that each supplier will make a reasonable return on their investments.

Toyota is also able to guarantee their suppliers a steady volume of business. That way the

suppliers can minimize their inventory buffers and can utilize employees and machinery more

effectively than companies which are facing sudden changes in the volume and mix of orders at a

very short notice. All benefits that stem from innovations by suppliers alone are fully granted to

them. Toyota has also connected their information systems to enhance communication which

further improves efficiency. Their suppliers are usually involved in innovation processes at a

very early stage. Often half of the engineering hours are transferred to the first level suppliers. It

has become apparent that Toyota is very much relying on long-term relationship.

Supply ChainManagement: Just In Time

Introduction

In the realm of supply chain management Just in time refers to an inventory strategy that it

used to improve a businesss return on investment through a reduction of in process inventory

and all related costs. Just in time is driven by a series of signals referred to as Kanban, which tell

production processes when it is necessary to make the next part.


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Supply chainManagement in Toyota

Toyota has shown superior result in term of cost, quality, and lead-time compared to its

competitor. This success has led to an extensive interest in the Toyota production system and

Toyotas way of doing business. Toyota supply chain management explain how to achieve

balance of efficiency by focusing on

y Variety: Determining your variety of offering based on the operational efficiency andmarket demand.

y Velocity: Maintain a steady flow through all processes of the supply chain.y Variability: Manage inconsistencies carefully to reduce cost and improve quality.y Visibility: Ensure the transparency of all processes to enable continuous learning and

improvement.

OM Term Paper Final Report 2

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