Quality - Just In Time
Just in Time
The purpose of any Business is Profit and a commensurate Return on Investment (ROI). An industry thrives in a market by offering goods or services and while doing so sees to it that its turnover and profit margins are within healthy limits, i.e. the higher the better.
These goals are set by the Company’s Financial Planners by analyzing the current market trends & future demand scenarios, not to forget competition from peers.
These financial plans are converted to ‘Material Plans’ by the Resource/Capacity Planner who decides exactly how much of a particular resource is required to achieve the monetary targets.
However, the job of a Capacity Planner is not as easy as it seems. Miscalculations can lead to heavy losses. Various techniques have been used for capacity planning over the years. “Just In Time” is one such famous philosophy used by organizations world over.
So if you want to know what JIT is & can’t seem to figure out the jargon used, read on, as this is article should be very easy to digest.
Important Terminology:
Inventory:
It is a list of materials (raw or semi-finished) held available in stock by a business to produce finished goods and also to be used as a buffer against unforeseen breaks in supply.
JIT in a nutshell:
It is all about having the right material, at the right time, at the right place and in the exact amount.
The When, Where & How:
Contrary to the fact that JIT originated in Japan, it was Henry Ford who, way back in 1922, expressed concerns over growing inventory sizes.
A large inventory meant higher transportation costs, higher holding costs & higher maintenance costs. This philosophy was actually put into practice by Toyota Motor Corp., Japan in the ‘50s.
The Japanese saw to it that the flow of material from inventory stage to product stage never ceased. This meant that the Planner knew at all times exactly how much was needed at what times.
Of course there was provision of buffer stock to account for delivery failures, strikes or production breakdowns. No wonder Toyota’s plant efficiency sky-rocketed.
Philosophy:
Under this philosophy, businesses are encouraged to eliminate inventory that doesn’t compensate for manufacturing issues (like production bottlenecks), and to constantly improve processes so that excess inventory can be removed.
Management is often tempted to keep stock to hide problems within their production systems. The problems may include backups at work centers, machine reliability, process variations, lack of flexibility of employees & equipment among others.
In a way, the Just in Time philosophy aims to make the manufacturing system “lean”, i.e. one which can achieve the most with the least.
However, implementing JIT from the inventory perspective only is not of much use. Optimum implementation requires that the shop floor processes also be efficient enough to sustain continuous material flow. This means that machine setup times have to be minimum, proper backups in case of breakdowns, zero idle time, i.e. the machine must not run idle at any instant.
Benefits:
- Cutting down the set up time to be more productive will allow the company to improve their bottom line to look more efficient & focus time spent on other areas that may need improvement.
- Having employees focused on specific areas of the system will allow them to process goods faster instead of having them vulnerable to fatigue from doing many jobs at once and simplifies the tasks at hand.
- Having employees trained to work on different parts of the inventory cycle will allow companies to use workers in situations where they are needed when there is shortage of workers & a high demand for a particular product.
- No company wants a break in their inventory system that would create a shortage of supplies. Having a trusted supplier relationship means that you can rely on goods being there when you need them the most & keep the company name in good standing with the public.
Thus, the benefits of JIT are very much 'far-fetched' than evident at one look. Incorporating JIT with ideologies like “Kaizen” and “Total Quality Management (TQM)” can have drastic effects on production lines.
