Tuesday, 16 July 2013

Just in time

Just in time is the theory that materials are delivered to the point of use at the right time and in the right quantities. JIT aims to minimize waste related to inventory, stock should be delivered and goods or components produced 'just in time.' Stock is simply brought in or created as and when required. There are various wastes associated with inventory for example in transactional processing, storing what is not yet required, management resource. JIT tries to focus on material at the right time at the right place in the right amount.
There are various benefits in using JIT principles.
1. Over Production Ceases - components are typically made to order not stock
2. Labour Costs Are rationalized - The company saves because it is not paying workers to produce items that have no immediate use. Staff are focused only on the material at hand.
3. Relationships With Suppliers become strategic - Suppliers have to have a positive and inter-dependent relationship with the manufacturer, rather than the historic relationship where the customer had the power and the supplier was not an equal.
4. Motivated Workforce - Staff are motivated by specific goals and targets related to the manufacturing targets.
5. Improvement in scheduling and forecasting - JIT requires adequate focus in scheduling and forecasting (getting these wrong means that you'll have problems in getting the correct inventory at the right time).
6. Material Flow improves - JIT typically includes some rationalization of lot sizes - this facilitates better management of inventory and reduced delays in completing lots for distribution.
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Just in time production (JIT)

Just in time is a ‘pull’ system of production, so actual orders provide a signal for when a product should be manufactured. Demand-pull enables a firm to produce only what is required, in the correct quantity and at the correct time.
This means that stock levels of raw materials, components, work in progress and finished goods can be kept to a minimum. This requires a carefully planned scheduling and flow of resources through the production process. Modern manufacturing firms use sophisticated production scheduling software to plan production for each period of time, which includes ordering the correct stock. Information is exchanged with suppliers and customers through EDI (Electronic Data Interchange) to help ensure that every detail is correct.
Supplies are delivered right to the production line only when they are needed. For example, a car manufacturing plant might receive exactly the right number and type of tyres for one day’s production, and the supplier would be expected to deliver them to the correct loading bay on the production line within a very narrow time slot.
Advantages of JIT
  • Lower stock holding means a reduction in storage space which saves rent and insurance costs
  • As stock is only obtained when it is needed, less working capital is tied up in stock
  • There is less likelihood of stock perishing, becoming obsolete or out of date
  • Avoids the build-up of unsold finished product that can occur with sudden changes in demand
  • Less time is spent on checking and re-working the product of others as the emphasis is on getting the work right first time
Disadvantages of JIT
  • There is little room for mistakes as minimal stock is kept for re-working faulty product
  • Production is very reliant on suppliers and if stock is not delivered on time, the whole production schedule can be delayed
  • There is no spare finished product available to meet unexpected orders, because all product is made to meet actual orders – however, JIT is a very responsive method of production

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