Just in Time Case

Introduction

In the fast-paced world that we live in it is not a surprise that companies are constantly competing to get their products made and sold as quickly and efficiently as possible, and with the growing demand from customers it is important that companies find a method that will help further develop and operate a manufacturing system that will meet these demands.

Just-in-time is a system that aides the development of manufacturing in which requires that equipment, resources and labor are ordered when they are needed to do a job and only in the amount required. For instance a firm will produce a product with the necessary parts needed for that product, a certain amount of that product, in the necessary amount of time that the product is demanded. It makes what the customers want when they want it. Its main job is to eliminate waste and cut cost.

Products that are stored in inventory or delayed are waste. Just-in-time offers faster delivery and reduces work-in-process which cuts waste, making the system efficient. It also eliminates what is called variability, another word for problems primarily in inventory. Variability transpires when a company tolerates waste or just plain poor management. At times variability will go undiscovered when there is inventory, but with JIT inventory is reduced which removes variability.

The idea of the Just-in-time manufacturing is in fact what is known to be a pull system also known as the Kanban Production Control System. The system pulls the parts of a product where it is needed just as it is needed. The pull system is used along the chain of production of a product, from suppliers to production process, much like an assembly line. A kanban or "pull" production control system uses visual aides to organize the movement of materials between the work stations. Kanban is a card that is placed unto a storage container. The number of the part used for production, quantity of the part, and other information about the part is written on the card. Whenever the company starts to run short on parts they use the kanban card to reorder just what is needed.

Just-in-Time requires the contribution of every department in a company to make the system an overall success. Despite the time it may take and the minor setbacks a company may obtain to establish a full working just-in-time system, it is worth all the effort in the long run.

Review of Literature:

JIT is not a new concept. The Japanese have been using the system in manufacturing for some time now. The first to adopt the JIT system was chief executive of the Toyota manufacturing plants, Taiichi Ohno. It was implemented around the 1950's to meet consumer demands and became known as the Toyota Production System. By the early 1970's it became established in many other Japanese face factories, and by the 1980's in many U.S. factories.

A company called Green Gear Cycling Inc. in Eugene, Oregon uses the JIT system. While installing the JIT system the company was able to store the inventory that is was going to use at the moment forcing inventory to go down and they were able to keep the reordering quantities small, by only ordering what they needed. With the JIT system Green Gear is able to complete the construction of a bicycle in less then one day. Once the bicycles are completed they are shipped immediately to one more satisfied customer.

Several other known companies using Just-in-Time are Round Rock, Dell Computer Corp. and Cisco Systems Inc. According to a company spokesman of Dell, Vanancio Figueroa the process is known as "pull to order." "The system contributes to increasing the accuracy of doing business, both from a customer and supplier standpoint." (Figueroa) After getting an order, Dell informs suppliers about the parts that are going to be needed, and the parts are delivered within an hour and a half. When the parts are received in the Dell factories the manufacturing process begins. "With our pull-to-order system, we've been able to eliminate warehouses in our factories and have improved factory output by double by adding production lines where warehouses used to be," says Figueroa. Figueroa also mentions that Dell will save $15 million dollars in the six months and $150 million dollars in three years.

With Dell's exceptional JIT system they are usually able to meet consumer demands in less then a week.

Data input requirements

Just-In-Time manufacturing's goal is to match production exactly with market design. Essentially JIT manufacturing seeks to eliminate costs associated with inventory and production, inventory kept on hand is kept at a minimum and just enough to produce the predetermined amount established by market demand. JIT is concerned with reducing the various aspects of manufacturing to an absolute minimum, these aspects include; movement of both materials and people, reducing distances between work cells, work centers and assembly lines, and reducing investments in inventory. Timing is essential in the process of Just-In-Time manufacturing, setup times and costs must be established beforehand as inputs data to develop a properly functioning system of JIT manufacturing. All the different roles of production must be staged and laid out in a manner in which a consecutive and continuous process of manufacturing can take place.

The input data required to develop a JIT process of manufacturing consists of; Historical annual demand, forecasted annual demand, daily production rate, holding cost, production time, level schedules and kanbans. Historical annual demand is utilized to forecast inventory batch orders, this information is examined to help establish the re-order level. Since JIT is concerned with producing only the necessary units in the necessary quantities, the units are pulled from production rather than pushed. The only issue associated with forecasting demand in the JIT manufacturing system is that if there is a sudden shift in demand the whole JIT manufacturing system can be compromised, whether it is an increase in demand or a decrease this sudden shift can throw off the whole process since it is based on forecasting. Daily production rates and production times are established to give managers a perspective on output capacities; though full capacity may not be utilized it is still necessary to know exactly what it is. Actual production rates will be based on demand since it is a pull based manufacturing system. And production time will be based on the optimal layout of the aforementioned aspects of JIT manufacturing systems such as the movement of both materials and people and the distances between work cells, work centers, distribution