Just-In-Time MA Assignment Azamat Vafaev 17832Group-Leader

8/18/2019 Just-In-Time MA Assignment Azamat Vafaev 17832Group-Leader

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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.

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Just-In-Time MA Assignment Azamat Vafaev 17832Group-Leader