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Benefits and challenges that organizations face in implementing just in time system

J E Beasley OR-Notes are a series of introductory notes on topics that fall under the broad heading of the field of operations research OR. They are now available for use by any students and teachers interested in OR subject to the following conditions.

What are the main problems with a JIT (just in time) production strategy?

A full list of the topics available in OR-Notes can be found here. For example consider my journey to work this morning, I could have left my house, just-in-time to catch a bus to the train station, just-in-time to catch the train, just-in-time to arrive at my office, just-in-time to pick up my lecture notes, just-in-time to walk into this lecture theatre to start the lecture. Conceptually there is no problem about this, however achieving it in practice is likely to be difficult!

So too in a manufacturing operation component parts could conceptually arrive just-in-time to be picked up by a worker and used.

So we would at a stroke eliminate any inventory of parts, they would simply arrive just-in-time! Similarly we could produce finished goods just-in-time to be handed to a customer who wants them. So, at a conceptual extreme, JIT has no need for inventory or stock, either of raw materials or work in progress or finished goods.

Obviously any sensible person will appreciate that achieving the conceptual extreme outlined above might well be difficult, or impossible, or extremely expensive, in real-life. However that extreme does illustrate that, perhaps, we could move an existing system towards a system with more of a JIT element than it currently contains. Adopting a JIT system is also sometimes referred to as adopting a lean production system. More about JIT can be found hereherehere and here.

History JIT originated in Japan.

  • Obviously by reducing costs and hence a large focus of the system that Toyota implemented was to do with cost reduction;
  • The optimum Kanban system designs, simulates, and determines numbers of Kanbans in order to investigate numerous features More description in [5, 6];
  • Automatic generation of reports based on fresh and previous data;
  • The Kanban that was associated with the finished part is removed as soon as the part has been withdrawn by the next stage downstream;
  • The production cycle improved from 21 days to 4 days, including processing ore into steel at the on-site steel mill [23];
  • Therefore, the financial market fluctuations affect significantly on sole lean production strategy.

The beginnings of this production system are rooted in the historical situation that Toyota faced. After the Second World War the president of Toyota said "Catch up with America in three years, otherwise the automobile industry of Japan will not survive". At that time one American car worker produced approximately nine times as much as a Japanese car worker. Taiichi Ohno examined the American industry and found that American manufacturers made great use of economic order quantities - the traditional idea that it is best to make a "lot" or "batch" of an item such as a particular model of car or a particular component before switching to a new item.

  • Don't get involved with JIT simply because other companies have; do it if you think it will work for your company;
  • Show the CEOs of any supply companies you might want to partner with how they can benefit from being part of your JIT program;
  • Adopting a JIT system is also sometimes referred to as adopting a lean production system;
  • A full list of the topics available in OR-Notes can be found here;
  • That dispute ended with the formation of a company backed union, formed initially by members of the Nissan accounting department.

They also made use of economic order quantities in terms of ordering and stocking the many parts needed to assemble a car. Ohno felt that such methods would not work in Japan - total domestic demand was low and the domestic marketplace demanded production of small quantities of many different models. Accordingly Ohno devised a new system of production based on the elimination of waste.

In his system waste was eliminated by: Ohno regarded waste as a general term including time and resources as well as materials. He identified a number of sources of waste that he felt should be eliminated: However in Japan low demand meant that manufacturers faced price resistance, so if the selling price is fixed how can one increase the profit mark-up?

Benefits of lean manufacturing – short/long term benefits and challenges explained

Obviously by reducing costs and hence a large focus of the system that Toyota implemented was to do with cost reduction. To aid benefits and challenges that organizations face in implementing just in time system cost reduction Toyota instituted production levelling - eliminating unevenness in the flow of items.

So if a component which required assembly had an associated requirement of during a 25 day working month then four were assembled per day, one every two hours in an eight hour working day. Levelling was also applied to the flow of finished goods out of the factory and to the flow of raw materials into the factory.

Toyota changed their factory layout. Previously all machines of the same type, e. This meant that items had to be transported back and forth as they needed processing on different machines. To eliminate this transportation different machines were clustered together so items could move smoothly from one machine to another as they were processed.

This meant that workers had to become skilled on more than one machine - previously workers were skilled at operating just one type of machine. Although this initially met resistance from the workforce it was eventually overcome.

Whilst we may think today that Japan has harmonious industrial relations with management and workers working together for the common good the fact is that, in the past, this has not been true. In the immediate post Second World War period, for example, Japan had one of the worse strike records in the world. Toyota had a strike in for example.

In the car maker Nissan suffered a four month strike - involving a lockout and barbed wire barricades to prevent workers returning to work. That dispute ended with the formation of a company backed union, formed initially by members of the Nissan accounting department.

Striking workers who joined this new union received payment for the time spent on strike, a powerful financial inventive to leave their old union during such a long dispute.

The slogan of this new union was "Those who truly love their union love their company". In order to help the workforce to adapt to what was a very different production environment Ohno introduced the analogy of teamwork in a baton relay race. As you are probably aware typically in such races four runners pass a baton between themselves and the winning team is the one that crosses the finishing line first carrying the baton and having made valid baton exchanges between runners. Within the newly rearranged factory floor workers were encouraged to think of themselves as members of a team - passing the baton processed items between themselves with the goal of reaching the finishing line appropriately.

Just-in-Time Inventory Management

If one worker flagged e. In order to have a method of controlling production the flow of items in this new environment Toyota introduced the kanban. The kanban is essentially information as to what has to be done. Within Toyota the most common form of kanban was a rectangular piece of paper within a transparent vinyl envelope.

The information listed on the paper basically tells a worker what to do - which items to collect or which items to produce. In Toyota two types of kanban are distinguished for controlling the flow of items: Hence the importance of autonomation as referred to above - the system must detect and highlight defective items so that the problem that caused the defect to occur can be resolved.

Another aspect of the Toyota Production System is the reduction of setup time. Machines and processes must be re-engineered so as to reduce the setup time required before processing of a new item can start. Ohno has written that Toyota was only able to institute kanbans on a company wide basis inten years after they first embarked on the introduction of their new production system. Although, obviously, as the originators of the approach Toyota had much to learn and no doubt made mistakes, this illustrates the time that can be required to successfully implement a JIT system in a large company.

With respect to the Western world JIT only really began to impact on manufacturing in the late 's and early 's. Even then it went under a variety of names - e. Hewlett Packard called it "stockless production". Such adaptation by Western industry was based on informal analysis of the systems being used in Japanese companies. Books by Japanese authors such as Ohno himself detailing the development of JIT in Japan were not published in the West until the late 's.

  • This distinction will bring you to the correct application of the lean strategy as a whole, so you will use the appropriate tools and practices to have the customer satisfaction value;
  • Obviously by reducing costs and hence a large focus of the system that Toyota implemented was to do with cost reduction.

As an indication of the growth of interest in JIT over time the graph below shows the number of documents such as books and conference proceedings referring to just-in-time in the British Librarywhich has a very extensive collection of such documents relating to the UK.

The earliest material I could find was fromwhen there was one book published and one set of conference proceedings. The graph shows the number of documents published each year as well as the cumulative number published.

One often reads nowadays that JIT involves employee participation, involving workers so as to gain from their knowledge and experience. Such participation is meant to ensure that workers feel involved with the system and make suggestions for improvements, cooperate in changes, etc. Personally I am not convinced that this aspect of JIT, as it is interpreted nowadays, played any part in its initial development.

Certainly Ohno, writing in long before the appearance in the West of material related to JIT, in 8 pages of single spaced A4 paper outlining the Toyota Production System makes little mention of this aspect.

My best guess, from my reading of the subject, is that JIT started out as a top-down, centrally organised and imposed production system. Whilst it may later have come to take on a "human-face" with connotations of worker involvement and participation I personally doubt it started out that way.

Toyota still describes itself as using the Toyota Production System for car manufacture, e.

Japanese terms There are a number of Japanese terms words associated with JIT that you may encounter. I have listed some below for you: Andon - trouble lights which immediately signal to the production line that there is a problem to be resolved typically the line is stopped until the problem is resolved Jikoda - autonomation - enabling machines to be autonomous and able to automatically detect defects Muda - waste.