JIT is a philosophy of manufacturing based on planned elimination of all waste and continuous improvement of productivity. It encompasses the successful execution of all manufacturing activities required to produce a final product from design engineering to delivery and including all stages of conversion from raw material onward. The primary elements include having only the required inventory when needed; to improve quality to zero defects; to reduce lead time by reducing set up times, queue lengths and lot sizes; to incrementally revise the operations themselves; and to accomplish these things at a minimum cost.
Just-In-Time (JIT) offers another way of planning. It organizes all activities so they occur at exactly the time they are needed. They are not done too early (which would leave materials hanging around until they are actually needed) and they are not done to be too late (which would give poor customer service). JIT seems obvious but it can have a dramatic effect on the way that materials are organized. It aims at delivering materials directly to operations and virtually eliminates stock.
JIT’s view of stock
- Stocks are held to cover short term mismatches between supply and demand
- These stocks serve no useful purpose- they only exist because poor coordination does not match to the supply of materials to the demand
- As long as stocks are held, there are no obvious problems and no incentives for managers to improve the flow of materials
- The operations continue to be poorly managed with problems hidden by stocks
- The real answer is to improve operation, find the reasons for differences demand supply and demand and then take whatever action is needed to overcome the differences
- JIT is based on very simple principles instead of hold stocks to allow for problems, you identify the problems and solve them.
Wider effects of JIT
- JIT involves a change in the way an organization looks at all its operations
- It is a way of eliminating waste or a way of enforced problem solving
- JIT sees an organization as having a series of problems that hinder efficient operations
- These problems include long lead times, unreliable deliveries, unbalanced operations, constrained capacity, equipment breakdowns, defective materials, interruptions, unreliable suppliers, poor quality, too much paperwork and to many changes.
Managers try to get around these problems by holding large stocks, buying extra capacity, keeping back-up equipment, employing trouble-shooters. This approach leads to a number of changes in viewpoint:
- Stocks- organizations hold stocks to cover short term differences between supply and demand. JIT assumes that these stocks actually hide problems. Organization should find the reasons for differences between supply and demand, and then take whatever action is needed to remove them.
- Quality- organizations have defined some arbitrary level of acceptable level and quality such as ―accept one defect in a hundred units‖. JIT recognizes that all defects have costs and it is better to find the cause and make sure that no defects are produced (supporting the view of TQM)
- Suppliers- JIT relies totally on the suppliers so it supports the view of customers and suppliers working closely together in long term partnerships pursuing common objectives.
- Batch sizes- operations often use large batch sizes as they reduce set up costs and disruptions. But if demand is slow, the products made in large batches sit on stocks for a long time. JIT looks for ways of reducing the batch sizes so that it more closely matches demands.
- Lead times- long lead times encourage high stocks as they have to cover uncertainty until the next delivery. JIT aims for small frequent deliveries with short lead time.
- Reliability- JIT is based on continuous uninterrupted production, so all operations must be reliable. If say equipment breaks down, managers must find the reasons and make sure it does not happen again.
- Employees- some organizations still have a function between managers and workers. JIT argues that, this is a meaningless distinction as the welfare of everyone depends on the success of the organization.
Note: JIT minimizes stock by coordinating all the activities; it increases efficiency and eliminates waste
Key elements of JIT
JIT only works well in certain types of Organization. The most successful uses of JIT are large scale assembly plants, which makes virtually identical products in a continuous process e.g.
- Every time there are changes to process or it switches from making one product to another, there are delays, disruptions and costs. JIT says that these changes waste resources and should be eliminated. JIT needs a stable environment where a process
makes large number of a standard product at a fixed rate for a long time. - This stable environment can reduce costs by using specialized automation. The JIT works best with high volume, mass production
- The level of production must allow flow of products through the process. Each part of the process should be fully utilized so the process is likely to be well balanced assembly line.
- Deliveries of materials are made directly to the assembly line at the time they are needed, supplies must be able to adapt to this kind of operation. It would be impractical to bring each individual unit from supplies so the next best thing is to use very small batches.
- If small batches are used, reorder costs must be reduced as much as possible or the frequent deliveries will be too expensive.
- Lead times must be shorter or the delay in answering a request for materials becomes too long. This means working closely with suppliers and encouraging them to build facilities that are close.
- As there are no stocks to give safety cover, any defects in materials would disrupt production. Suppliers must be totally reliable and provide materials that are free from defects
