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“Just -In- Time (JIT) Methodology”
Group AssignmentGCB 3123 Management Accounting
Prepared by:Nur Diana Farhana Bt Mohamad Akashan 17973Siti Hajar Bt Mohd Termezi 17959Nur Asilah Bt Abu Bakar 17967Azamat Vafaev 17832
Submitted on26th of March, 2016
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1. Definition
Just-in-time (JIT) manufacturing is a supply chain management process that aims to produce
necessary quantities at the necessary time. JIT is also known as a management philosophy
applied mostly in manufacturing company which involves having the right items of the right
quality and quantity in the right place and the right time. It has been proven that the use of JIT
manufacturing has resulted in increases of quality, productivity and efficiency, improved
communication and decreases in costs and wastes among industries. With the application of
JIT manufacturing, a company only produces an item when there is a demand, or just-in-time
for a company or individual to purchase it, rather than using the common practice of mass
production which result in plentiful of waste. JIT only waits until there is a defined need and
demands that must be met. As a result, the company will produce less production level,
decrease the necessary manpower hours, and eliminates overproduction waste. These
techniques are especially effective for small companies that unable to absorb the impact of
unsold products. JIT has been shown to gives large impact on cutting back overhead costs that
reduce re-investments, and reassure stabilizing business practices.
2. Development of the technique comes about
The origin and development is from Japan, from the year of 1960s and 1970s and has been
migrated to Western industry in the 1980s. The first company that developed this methodology
is Taiichi Ohno of Toyota, with the objectives of minimizing waste and improve quality. JIT
was first developed and perfected within the Toyota as a means of meeting consumer demands
with minimum delays. For this reason, Taiichi Ohno is referred to as the father of JIT, and JIT
system is also known as Toyota Production System (TPS). This approach focused on people,
plants and system.
Today, JIT has evolved into a management philosophy containing a body of knowledge and
encompassing a comprehensive set of manufacturing principles and techniques. JIT
manufacturing has the capacity, when properly adapted to the organization, to strengthen the
organization’s competitiveness in the marketplace substantially the organization’s
competitiveness in the marketplace substantially by reducing wastes and improving product
quality and efficiency of production. The uses of JIT has been increasing manufacturing
worldwide which includes company such as Dell and Harley Davidson. JIT has solved most of
their problems and led to company’s success.
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However, there are several factors that need to be aware of when using JIT system. For
example, the company need to have a dependable suppliers with the ability to meet demanding
lead time requirements and their willingness to keep inventory on hand. We also need to have
good work ethics as presented by Toyata, The work ethic emerged shortly after World War II
and was seen as an integral part of the Japanese economic success. In addition, JIT also came
up as a means of achieving the best levels of effectively use company’s resources. Due to the
limitation, the Japanese worked toward gaining the highest cost/quality proportion in their
manufacturing processes. This involves reducing waste and using materials and resources in
the most efficient manner possible.
In Malaysia, most of the automotive companies uses JIT to operate. As JIT is originally
developed from automotive company back in Japan, it is assumed that the best field toimplement the system outside the country is in the same field which is automotive, since they
share the same nature, almost similar production, and shares likely the same problems.
Example of automotive companies that uses JIT in Malaysia is Proton. JIT is practised at Proton
and there still some technical improvements to be conducted. The integration of suppliers into
an overall chain to achieve strategic JIT and gain competitive advantage among the industry is
also the area to be focused by Proton. On the bright side, Proton has successfully achieved
several goals such as increasing the number of component manufacturers and suppliers,increasing Bumiputera participation, reducing costs, carrying out technology transfer,
competing globally with the practice of JIT in the company.
3. The Technique
JIT Based Quality management is combination of inventory control, quality control and
production management, functions that makes sincere efforts for quality improvement by two
ways.
To start with, it focuses on philosophical part of quality improvement by making the quality
everyone’s obligation and after that concentrated on viable usage of quality control
techniques. It perceived that the most important assets of an organization are its employees,
and they work best when they spurred, esteemed, encouraged to contribute, and permitted to
make their own choices. Under this methodology, the workers check the product quality after
each successful operation. They are trained along with managers in preparation and
interpretation of process control charts. Managers embrace the workers to think quality first
and production rate is second. The employees have the right to stop the production line or
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cell, if quality problems are revealed. Consequently, this idea not just grant the quality
obligation to workers but also match that responsibility with authority to share the quality
control functions so that quality problems can be identified and resolved rapidly.
Additionally, JIT creation framework requests to purchase parts in small quantities. The small
amount requires less space and time. Less space and time require less people and facilities to
accomplish the same assignment. Moreover, the small lots are easier to inspect, and defects
can be instantly identified. Therefore, the parts that are acquired consistently in small lot sizes
with regular deliveries add to higher quality and efficiency through lower levels of inventory
and scrap, lower inspection costs for approaching parts, and early recognition of defects. In
nutshell, JIT based methodologies can possibly enhance the item quality and profitability to
noteworthy level, however, organizations must adopt its standards in way that meet their own
particular organizational structure, design and procedures.
El ements of JI T M anufacturi ng
This methodology comprises of several components or elements which must be united
together to operate in harmony to accomplish the JIT objectives. Basically, these elements
incorporate the human resources and the production, purchasing, manufacturing, planning
and organizing function of an organization. To sum it up, these elements can be combined
together into the production system of people, plants and system.
1. People Involvement
Obtaining support and agreement from all individuals involved in the achievement of
organizational goals is a fundamental sine qua non for JIT success. Obtaining support and
agreement will require involving, and informing all groups who an interest in the
company. This can extraordinarily lessen the measure of time and exertion included in
executing JIT and can minimize the probability of occurrences of usage issues. Support
and understanding should be acquired from the following groups.
Stockholders and owners of the company: the organization shouldfocus on the long-term implementation of profit, and so short-term
income should be reinvested back into the company to support various
changes and investment commitments necessary for JIT success. It
should be understandable that most of the advantages related to JIT
will only be accomplished in the long run term.
Labor Organization: All employees and labor unions should be notified
about the objectives of JIT and explain how the new approach will
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impact on working practices. This is essential in winning the union and
employee’s support to help with the realization and to get rid of
potential issues and barriers. Inability to involve labor organizations
will bring a potential lack of comprehension of administration motives
processes and creating fears of j о b l оss оn th е pаrt оf th е lа bor. This
can prompt hindrances, for example, non-collaboration and
imperviousness to change. Union support is additionally indispensable
in accomplishing disposal of employment arrangements to take into
consideration multi-gifted laborers and broad core interest. Late
research demonstrates that one conceivable shortcoming of JIT is that it
might expand the anxiety set on specialists; this makes the presence of
good work relations fundamental.
Management support: This includes the support of administration from
all levels. It likewise requires that management be arranged to set
samples for the specialists and start the procedure to change attitudes.
Endeavoring for nonstop change is not just required of the
representatives on the shop floor, however should likewise be innate in
management ’s mentality.
Government support:
Government can provide support to companies willing to carry out JIT
by offering different kind of privileges such as extending tax and so on.
This incentive may encourage companies to become more innovative
since there is a pretty amount of cost involved in JIT implementation.
The organizational theory shares the idea of that employees will be more
urged to work towards objectives accomplishment when they are also
involved in the process of setting goals. On top of this hypothesis JIT
suggests the thought of including employees at different level in the
organization. The quality circles and the concept of total people
involvement are samples of cases accessible for endeavoring to amplify
individual ’s involvement using JIT. The presentation of changes in an
organization can possibly inspire responsive practices from the people
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who might be subjects to these changes. JIT speaks to one of these
progressions and cause considerable association in exceptionally positive
ways, responsive practices, for example, opposing the change by
conflicting with authoritative objectives might create. Including individuals
turns out to be progressively vital as of right now. Correspondence,
training and increasing the value of the employees ’ occupations can lighten
responsive practices.
2. Plants
Numerоus chаnges оccur abоut thе plаnt which еncompass plаnt lаyout, multi -
functiоn wоrkers, dеmand pull, kanbans, sеlf -inspectiоn, MPR (matеrial rеquirements
planning) and MRP II (mаnufacturing rеsource plаnning) аnd cоntinuous
imprоvement. Eаch оf thеse will bе еxplained sеparately with rеlation to how thеy tiе
into JIT productiоn.
Plant layout: Und еr JIT prоductiоn, thе plаnt design is laid out fоr
ultimate employee resilience аnd is planned in alignment with the
product rаther thаn procedure . This type of design demands the
utilization of ‘multi -capable employees ’ , i.e. the center movements
tоwards trаining employees аnd giving thеm with thе abilitie s
needed to multi-task rather than focusing on one or two specific
tasks..
Demand pull production: The cоncept of dеmand pull comprises
thе usе оf demаnd fоr а given item to alert whеn manufacturing
should happen. Utilization оf dе mand makes аlways а cоmpany tо
manufacture оnly whаt is necessary in the proper amount and at the
appropriate period.
Kanban: This is а Jаpanese wоrd meаning “signаl” аnd is usuаlly а
cаrd or tаg аccompanying prоducts thrоughout thе plаnt. Indicatеd
on thе kanbans is the namе or serial number for product
identification, the quаntity, the rеquired opеration аnd thе
dеstinаtion of whеre thе pаrt will trаvel to. Thе usе of kanbans
assists in trying оr linking thе diffеrent prоduction prоcesses
tоgether.
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through. Quality at the source stands out enormously from the customary 'sometime later'
way to deal with quality on the other hand creating the item then investigating it. This
methodology does not take into account minimizing stock levels and revamp costs. In this
manner, it doesn't tie into the objectives of JIT to wipe out wastes.
4. The Strengths
Save on warehouse space- Just in time will enable the store to process their turnover process of their stocks
in the warehouse. Thus an organization does not have to deal with storage space
for storing the goods.
Inventory cost- The companies can manage to focus on the other part of the business that need to
be develop and embrace the available opportunities as the cost of inventory
control management is higher. It also help company with smaller funds to survive
without the needs to purchase high amount of stock at once.
Waste reduction
- Just in time will reduces the possibility of goods becoming damage or expires inthe warehouse. By having a faster turnaround inventory control, the company do
not have to worry about the needs to replace the old stock in the warehouse.
5. The weaknesses
Unavailability of stock- If the company are thrifty in their stock on their warehouse, they need to always
ensure they can manage to get their supply just in time they need it to run the
business. It is a necessary to establish a good relationship maybe an exclusive
contract with their supplier to make their stock readily available.
Efficiency of Planning.- Just in time inventory control are good for company that understand their market
trend and the various factor that influence the sales of their goods. Within the
seasonal period, the product that the companies sell maybe in high demand in
certain times in a year. Thus, it is truly cooperative for the company to manage
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their supplier to meet the different volume requirement each time they need to
sales their goods.
Lack of control over time frame- The business in the long run will have to put their next order according to the
timeliness of their supplier. It will in return cause the company the risk of
delaying the customer time in receiving the goods that they want. Thus resulting a
bad reputation for the company.
6. Company That Use the Technique
Just in Time (JIT) is an intense and demonstrated arrangement of creating items proficientlywhile keeping costs low. Some of the most successful companies has been apply this theory
to enhance their manufacturing process and better meet of client demand.
One of the company that has been used this inventory strategy is a car manufacturing
company, Toyota. The Toyota production strategy is highlighted by the way that raw
materials are not conveyed to the production floor until an order request is received
and this product is prepared to be manufactured. No parts are permitted to at a node
unless they are required for the following node. This rationality has permitted Toyotato keep a minimum amount of stock and inventories which implies lower cost of
expenses. This additionally implies that Toyota can adapt quickly to changes in
demand without worrying about disposing of expensive stock and inventory.
Other example of company that use this inventory strategy is a computer technology
company, Dell. Dell apply build-to-order process which a product is manufactured
and customized according to customer requests. Within five days, when the customer
has made an order, Dell will order parts from their suppliers and once the parts aredelivered, Dell starts to manufacture the actual computer.
The computer will be test and does custom integration work for the finished product. Items
ordered will then be delivered to customer. The Just in Time method makes Dell to be able to
reap significant benefits, including reduction of inventory waste, reduced expenses and
increased efficiency, and reduction in use of facilities material and human resources.
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7. Conclusion
In conclusion, Just in Time (JIT) is an inventory strategy that is used by certain company as a
supply chain management process that produces necessary quantities at the necessary time
that helps to increase efficiency and decrease waste by receiving merchandise just as they are
required in production process, thereby it can reduce in stock expenses.
Implementation of JIT could be put by company that is willing to undergo some business
process re-engineering in order to ensure that the business process are consistent withdemands of JIT, and if the company can access sufficient predictive information regarding its
anticipated business levels for each day to make it possible to order suitable material. If the
company involves in this activity, the company may be able to reap significant benefits,
including reduction of inventory waste, reduced expenses and increased efficiency, and
reduction in use of facilities material and human resources. However, without the redesign of
business practices and cautious thought, the implementation may fail and have strong
negative impacts on the organization.