Just In Time (JIT) Inventory Management

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JIT Inventory Management

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Just-in-Time
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• JIT is a MPR philosophy that is designed to help
  an organization eliminate all types of waste such
  as those that result from carrying too much
  materials and the ones associated with long lead
  times.
• Like the name suggest, JIT is based on the idea
  of replenishing material buffers jus at the time
  when they are required, not after or before as is
  the case of EOQ.
• This method was developed and applied by Toyota
  Motor Company in mid-1970s with huge success in
  terms of cost reduction and increased efficiency
  at the manufacturing floor due to making the
  floor more visible which helped reduce wastages
  since mistakes in the production process could be
  identified more easily and rectified before they
  went to far down the production process.
• The method is best applied in repetitive
  production processes similar to that used in
  automobile assembly line and where the lot size
  is small.

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Philosophy behind JIT
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• JIT is build around three main tenants
• To minimize all wastes JIT seeks to reduces
  wastage of space, labor, and material used in the
  production process. To ensure that this remains
  so, JIT calls for constant evaluation of the
  production process to remove all manner of
  inefficiencies associated with overproduction,
  defects, waiting times and unnecessary
  transportation.
• Process of continuous improvement or processes
  and systems although JIT seeks to reduce the
  inefficiencies of a system from a sloppy to an
  efficient one, it also seeks to build a process
  of feedback mechanism through which improvements
  can be made that makes the entire firm more
  competitive and profitable.
• Respect for workers under JIT the system seeks
  to reduce status in order to improve respect for
  all workers regardless of the work that they do.

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Elements of JIT
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1. Stabilization of MPS to match plant loading- this
   is done by creation of uniform loads through
   constant production, mixed model assembly to
   eliminate the need for collecting data on the
   production flow
2. Reduce set-up time to below ten minutes- this is
   done through better planning.
3. Reduce lot sizes- this make it possible to make
   the production more economical.
4. Reduce lead times- done by moving workstations
   together and improving the process of succession
   from one process to the next.
5. Preventive maintenance- done by using machine
   during idle time to prevent breakdowns.
6. Flexible workforce- employees trained too operate
   different machines and perform tasks done by
   others in the production process to prevent
   disruption of a process incase a person leave.
7. Supplier assurance- enter into a supply contract
   to ensure supply instead of pilling up suppliers
   which reduces the floor.
8. Small lot sizes- employ systems like Kanban to
   convey work between stations in small quantities.

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Kanban System

• A Kanban, also called a pull production process
  relies on simple visual signs to control movement
  of material and finished goods between work
  centers as well as to signal the need for
  replenishment of the material. This system
  therefore is based on both upstream and
  downstream feedback.
• Kanban comes from the Japanese word which means
  signal or visible record.
• In the Toyota Dual card Kanban system, the two
  main types of Kanban are production Kanban and
  withdrawal Kanban.
• The production Kanban are used to denote the need
  for production of more units while withdraw
  Kanbans signal withdrawal of parts from a work
  centre.
• Signaling can also be used instead of Kanbans.
  For instance, an empty can may be used to signal
  replenishment while a covered or colored can may
  indicate move parts forward.

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Working of a Kanban System

• A kanbans can be a computer order, card, labeled
  or container, or other devices that can be used
  in a production process that additional products
  or parts should be transferred from the previous
  process. The kanbans bears the description and
  number of exact items that should be transferred
  so as to smoothen the process of producing goods
  and acquiring new inventory.
• Kanbans therefore assist JIT in its quest to
  eliminate inefficiencies through overproduction
  or stocking too much materials.
• A successful Kanban system is based on well known
  rules.
• The system works upstream to downstream (from
  customer order) and only the Kanban specified
  number of units are withdrawn from each process.
• The upstream process work to replenish what has
  been used up in production. Each step reduces the
  defective parts from the kanbans and allows for
  more products to replace these to begin.

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KANBAN PROCESS
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Why use kanbans ?

• When used together with JIT, kanbans have the
  following benefits
• Decrease the number of items to be scrapped as
  waste
• Decrease raw material used in production
• Reduces amount of energy, wastes and emissions.

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References

• Grossly, J. M., McInnis, K. R. (2003). Kanban
  Made Simple Demystifying and Applying Toyota's
  Legendary Manufacturing Process. New York, NY
  AMACOM Div American Mgmt Assn.
• Lu, D. J., Kyokai, N. N. (2000). Kanban Just-in
  Time at Toyota Management Begins at the
  Workplace. New York Productivity Press,.
• Vollmann, T. E., Berry, W. L., Whybark, C. D.
  (1997). Manufacturing Planning and Control
  Systems. Irwin Professional Publishing.
• Xue-tao, P., Zhong, Z. (2011). On Solving JIT
  Production Problems for Small Batch Orders Based
  on E-Kanban Visualization. Changzhou, China
  Changzhou Inst. of Technol.
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