JUST-IN-TIME (JIT)

Introduction
Just-in-time (JIT) (also known as lean production or stockless production) is a
management philosophy that strives to eliminate sources of manufacturing waste by
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 moving
and storing. 

JIT 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 (such as those associated with machine setup and
equipment breakdown). 

JIT applies primarily to repetitive manufacturing processes in which the same

products and components are produced over and over again. 

The general idea is to establish flow processes (even when the facility uses a
jobbing or batch process layout) by linking work centers so that there is an even,
balanced flow of materials throughout the entire production process, similar to
that found in an assembly line. 

To accomplish this, an attempt is made to reach the goals of driving all queues
toward zero and achieving the ideal lot size of one unit.

The basic elements of JIT were developed by Toyota in the 1950's, and became known
as the Toyota Production System (TPS).  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.

1. History of Just in Time

Just-In-Time is a Japanese manufacturing management method developed in 1970s. It

was first adopted by Toyota manufacturing plants by Taiichi Ohno. The main concern at
that time was to meet consumer demands. Because of the success of JIT management,
Taiichi Ohno was named the Father of JIT.

After the first introduction of JIT by Toyota, many companies followed up and around
mid 1970s’, it gained extended support and widely used by many companies.

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 techniques to help them rebuilding the economy. They also had a
strong working ethnic which was concentrated on work rather than leisure, seeked
continuous improvement, life commitment to work, group conscious rather than
individualism and achieved common goal. These kind of motivation had driven
Japanese economy to succeed.

Because of the natural constraints and the economy constraints after World War II,
Japanese Manufacturers looked for a way to gain the most efficient use of limited
resources. They worked on "optimal cost/quality relationship".

Before the introduction of JIT, there were a lot of manufacturing defects for the existing
system at that time. According to Hirano, this included:

 inventory problem,

 product defects,

 risen cost,

 large lot production and

 delivery delays.

 The inventory problems included:

o the unused accumulated inventory that was not only

 unproductive, but also required

 a lot of effort in storing and managing them. Other implied

problems such as

 parts storage,

 equipment breakdowns, and

 uneven production levels.

For the product defects, manufacturers knew that only one single product defects
can destroy the producer's creditability. They must create a "defect free" process.

Instead of large lot production - producing one type of products, they decided that they
should produce more diversified goods. There was also a problem of rising cost,
the existing system could not reduce cost any further but remember improvement
always leads to cost reduction.
Some Key Elements of JIT
1. Stabilize and level the MPS with uniform plant loading (heijunka in Japanese):

create a uniform load on all work centers through constant daily production
(establish freeze windows to prevent changes in the production plan for some period of
time) and mixed model assembly (produce roughly the same mix of products each day,
using a repeating sequence if several products are produced on the same line).  Meet
demand fluctuations through end item inventory rather than through fluctuations in
production level.  Use of a stable production schedule also permits the use of
backflushing to manage inventory: an end item’s bill of materials is periodically exploded
to calculate the usage quantities of the various components that were used to make the
item, eliminating the need to collect detailed usage information on the shop floor.

2. Reduce or eliminate setup times: aim for single digit setup times (less than 10
minutes) or "one touch" setup. 

This can be done through better planning, process redesign, and product
redesign

3. Reduce lot sizes (manufacturing and purchase):

reducing setup times allows economical production of smaller lots; close cooperation
with suppliers is necessary to achieve reductions in order lot sizes for purchased items,
since this will require more frequent deliveries.

4. Reduce lead times (production and delivery):

production lead times can be reduced by

 moving work stations closer together,

 applying group technology and

 cellular manufacturing concepts,

 reducing queue length (reducing the number of jobs waiting to be

processed at a given machine),

 and improving the coordination and

 cooperation between successive processes;

 delivery lead times can be reduced through close cooperation with

suppliers, possibly by inducing suppliers to locate closer to the factory, as
Toyota has done in Japan and Honda has done in Ohio.
5. Preventive maintenance:

use machine and worker idle time to maintain equipment and prevent
breakdowns.

6. Flexible work force:

workers should be trained to operate several machines, to perform maintenance

tasks, and to perform quality inspections.  In general, JIT requires teams of competent,
empowered employees who have more responsibility for their own work.  The Toyota
Production System concept of “respect for people” contributes to a good relationship
between workers and management.

7. Require supplier quality assurance and implement a zero defects quality program:

errors leading to defective items must be eliminated, since there are no buffers of
excess parts.  A quality at the source (jidoka) program must be implemented to give
workers the personal responsibility for the quality of the work they do, and the authority
to stop production when something goes wrong.  Techniques such as "JIT lights" (to
indicate line slowdowns or stoppages) and "tally boards" (to record and analyze causes
of production stoppages and slowdowns to facilitate correcting them later) may be used.

8. Small lot (single unit) conveyance:

use a control system such as a kanban (card) system (or other signaling system)
to convey parts between work stations in small quantities (ideally, one unit at a time).  In
its largest sense, JIT is not the same thing as a kanban system, and a kanban system is
not required to implement JIT (some companies have instituted a JIT program along
with a MRP system), although JIT is required to implement a kanban system and the
two concepts are frequently equated with one another.

Examples I

A giant manufacturer in the U.S. West Coast used to produce large volumes of pipe
spools for their products, with apparent big savings because of the "serial" production of
these sub-assemblies. It was quite frequent, though, that they had to modify the pipe
spools because the main design had changed, other cases were even worse, when the
spool was obsolete all together. Today they are working on a day by day basis, finishing
a spool just a few hours or even minutes before it has to be integrated into the main
product. Other problems that were solved at the same time, were: storage space,
transportation, eventualities like scratches or other kinds of damages, plus savings of
the money invested in the raw materials and labor that in the past was not being
immediately cashed into the main product.

Unless you are in the business of storage and wholesale, buying large volumes of raw
material may not be the best way you can use your money. Your suppliers can become
more efficient and give you the same good prices if you reach an agreement of buying
all your requirements from them (win-win situation). The automobile industry has
established in many cases agreements for hourly or daily delivery of some materials
and parts. This can allow for them to operate in more compact areas, reducing time and
movement in the process.

Example II
"G.C.", a prestigious manufacturer of medical equipment in California had a receiving
and storage system in a traditional warehouse of more than 20,000 square feet, in
average materials would travel almost a quarter mile distance to the diverse production
lines. Now they operate with five mini-receiving areas of just 400 square ft. each,
located just a few yards from each production line. The average storage time for the raw
materials came down from 48 days to a little less than two days, they are still thinking of
reducing that time. It is just a matter of developing a very good relationship and assure
the reliability of the suppliers and scheduling the deliveries in a very precise manner.
This is easy with the computer systems now so accessible.

This concept, when continued throughout the full operation will also allow for each work
cell and department of the the plant to deliver products at the right pace to the
customer, (some times another department within the same facility), and of course to
the final user.

EXAMPLE III

Just-in-Time at Toyota

Kanban (Just-In-Time) helps companies solving many Manufacturing problems. 

Kanban derives it name from the manufacturing systems and processes implemented at
Toyota Motor Manufacturing that are so effective at producing at low cost, high
quality, and short cycle times. As a consequence, these systems are highly flexible
and responsive to customer requirements. Toyota capabilities are listed below. Kanban
Just-In-Time impact on whole Toyota production approach as following:

(a) Standardized work

(b) Quality Improvement
(c) Continuous Improvement

Toyota manufacturing processes route the product around the plant to various work
centers where work is staged to be processed. Implementing manufacturing cells
typically increases net income dramatically and reduces cycle time over 50%. The cost
of design and implementation is usually recovered within the first year from inventory
savings. The benefits of bringing the processes to the product and discussing  the value
of simulation as a tool to design and predict cell performance prior to implementation;
therefore, reducing financial and technical risk to the company.  Toyota Production
System implements all the elements of Kanban Manufacturing directed at elimination of
manufacturing.  These systems are more flexible, responsive, and profitable than
traditional manufacturing systems.  It is best to start with a Kanban implementation
which usually involves an assessment of current operations. Once the plan is developed
the system will be implemented.
Back Flush Accounting

Back flush costing is a simplified cost accumulation method that is sometimes used by
companies that adopt just-in-time (JIT) production systems. However, JIT is not just a
technique, or collection of techniques. Just-in-time is a very broad philosophy, that
emphasizes simplification and continuously reducing waste in all areas of
business activity. JIT systems were developed in Japan and depend on the
communitarian concepts of teamwork and continuous improvement. In fact, many of the
assumptions, attitudes and practices of communitarian capitalism are included in
the JIT philosophy.

One of the many goals of JIT systems is zero ending inventory. In a backflush cost
system, manufacturing costs are accumulated in fewer inventory accounts than when
using the job order or process cost methods. In fact, in extreme backflush systems,
most of the accounting records are eliminated. The production facilities are also
arranged in self contained manufacturing cells that are dedicated to the production of a
single, or similar products. In this way more of the manufacturing costs become
direct product costs and fewer cost allocations are necessary. Thus, more
accurate costing is obtained in spite of the fact that the cost accumulation method is
simplified.