Capville Food (M) Sdn. Bhd.

This company situated at Kajang, Selangor. It manufactures and distributes Fruit juice/
Concentrate (Passion fruit, Calamansi), Fruit jam (Passion fruit), Passion fruit puree. This
company has Halal Certificate where the Muslim people can buy their product without any
hesitate.

JIT- Just In Time

JIT stands for just in time. JIT is defined in the APICS dictionary as “a philosophy of
manufacturing based on planned elimination of all waste and on continuous improvement of
productivity”. It also has been described as an approach with the objective of producing the right
part in the right place at the right. Waste results from any activity that adds cost without adding
value, such as the unnecessary moving of materials, the accumulation of excess inventory, or the
use of faulty production methods that create products requiring subsequent rework. JIT (also
known as lean production or stockless production) should improve profits and return on
investment by reducing inventory levels (increasing the inventory turnover rate), reducing
variability, improving product quality, reducing production and delivery lead times, and reducing
other costs (such as those associated with machine setup and equipment breakdown). In a JIT
system, underutilized (excess) capacity is used instead of buffer inventories to hedge against
problems that may arise.

In JIT, the ingredients are ordered according to required quantity. Order in small quantity
not a really advantage. Basically the ingredients ordered according to rolling cycle or pattern.
Then, there is no storage or warehouse. Warehouse or storage is additional cost which can be
leaved it to supplier. Besides that, food products will be manufactured once the orders of raw
material are received. This step will save cost and space because need place to put the upcoming
raw materials.
JIT and inventory

Inventory is a inventory management strategy that is aimed at monitoring the inventory

process in such a manner as to minimize the costs associated with inventory control and
maintenance. To a great degree, a just-in-time inventory process relies on the efficient
monitoring of the usage of materials in the production of goods and ordering replacement goods
that arrive shortly before they are needed. This simple strategy helps to prevent incurring the
costs associated with carrying large inventories of raw materials at any given point in time.

Costs associated with inventory make up one of the most critical cost areas within an
organization. Whether the company manufactures goods or sells finished products, inventory
carrying costs and their component parts can represent a significant portion of the company's cost
structure. In addition, having the wrong amount of inventory on hand can result in difficulty.
Having too much inventory on hand means that extra warehouse space is needed in addition to
the costs associated with the inventory itself.

According to Capville Food (M) Sdn.Bhd. applying JIT inventory help them minimize
the inventory of fruits as well packaging materials such as bottles, cartons, stripe metals and
labels in term of reducing the element of storage and the cost of storage (storekeeper, big
warehouse and etc) because suppliers deliver materials just when needed and neither sooner nor
later. This, eliminate product inventories from the supply chain. Besides that, according to
Capville Food (M) Sdn.Bhd. , they manufacture within 2 days after ordered raw material arrived.
So, there is no storage of raw materials for long period. This saves the cost of storage and no
need warehouse.

Just in time inventory focuses not on raw materials but on finished goods. Again, the idea
is to develop a solid understanding of what is needed to produce goods and schedule them for
shipment to customers within the shortest time frame possible. Shipping finished goods shortly
after producing them leads to minimizing storage costs and any taxes that may be applicable.
This dual application of a just in time inventory strategy can significantly cut the operational
expenses of a business in regards to the amount of inventory that must be stored at any one time
and the amount of taxes that must be paid on larger inventories.
 Moreover, Cash flow is improved due to less capital investment in inventory. Less
inventory on hand leads to savings in other areas as well, such as smaller space requirements,
decreased materials handling costs, decreased record keeping costs, decreased insurance and tax
obligations, and less scrap and obsolescence.

JIT and purchasing

Capville Food (M) Sdn.Bhd. is applying ‘PULL’ system which means they only
manufactured products after receive orders. A kanban or “pull” production control system uses
simple, visual signals to control the movement of materials between work centers as well as the
production of new materials to replenish those sent downstream to the next work center. A kanban
system is referred to as a pull-system, because the kanban is used to pull parts to the next
production stage only when they are needed. Thus, in a pull system, material movement occurs
only when the work station needing more material asks for it to be sent.

Just in time purchasing, the requirement for purchasing comes from manufacturing
process. When they require raw materials, purchasing must be triggered and then purchasing will
be taken place in smaller quantities and will have frequent deliveries. To facilitate just in time
purchasing, the supplier bases must be sorted. There should be a narrow, manageable and
reliable supplier base. There should be convenient ways of communication between suppliers
and purchasers. This purchasing behavior will make sure the correct quantities of high quality
supplies every time when there is a requirement. In fact the JIT purchasing gives the real value to
JIT manufacturing process.

They applying ‘pull’ system because, they are following the rolling cycle or demand
cycle. Each cycle consist of 3 months where they calculate the cost according each cycle. This
cycle consist of festival season and after festival season. The sales are high during festival season
while sales are low after festival season. For example, the demand for fruit jam and puree before
Hari Raya are higher than that after Hari Raya. So, the purchasing of material is depends on the
cycle. However, according to them, they will order materials to suppliers for a year but negotiate
with them to deliver amount according to cycle.
Ingredients for making jam and puree

The ingredients in production of Jam (Passion Fruit/ Markisa) are fresh markisa puree
(Pulp), fruit pectin (Passion fruit pectin), fresh lime juice, sugar, food grade preservatives (If
required) while ingredients in Passion Fruit Puree are fresh fruit pulp - grind and strain,
emulsifier and food grade preservatives (if required).

There are certain ingredients which are seasonal. For example, mango fruits depend on or
occur in a particular season of the year. Therefore, it cannot be supplied throughout the year. In
contrast, for non seasonal fruits such as calamansi, they can be supplied throughout the year
because they are available all the time. To avoid insufficient ingredients during production, the
order is made according to the weather and season as stated in their annual contract with the
suppliers for an estimated quantity during contract life. The order is made earlier and the
ingredients are stored in a good condition before the rainfall if the ingredients cannot be found
during that season and same procedures go for ingredients that cannot be found during sunshine.
In conclusion, earlier order is made for seasonal ingredients. Raw ingredients that are required in
a small amount such as sugar are bought from hypermarket just in time. The pectin is prepared
by the company itself. Generally, they will only order the quantities just enough for the particular
month’s production to minimize the quality problem arise from freshness of fruit, reduce wastage
of fruit and storage problem.

Production schedule :

Production schedule of Capville is made up based on two criteria:

▫ The need to produce batches of sufficient size.

▫ The need to keep machines and labors as fully utilized as possible.

Some workers are required to start work earlier for the purpose of machine set-ups so that
production of jam can be carried out on time. Scheduling for raw materials is as the following.
Fresh fruits must be sent to Capville within 24 hours after harvesting. Calamansi must be
harvested from 10.00am to 3.00pm and processed within 48 hours after receiving the
consignment to retain the freshness of the fruits and to reduce the storage problem. The condition
of the fruits is determined through visual observation and checking of the moisture content. The
harvesting time affects the quality of the fruits especially their natural sweetness. Therefore,
proper scheduling is used for harvesting and processing period. Scheduling is also based on
workers’ abilities in making jam or puree. In Capville, men are better in making jam than ladies
where they have more patience in conducting the processes. There are a few cases found where
the ladies caused the jam to scorch. This type of scheduling maintains the manufacturing of high
quality products in Capville. Purchasing of raw fruits and packaging materials are done in bulk
purchase for cost saving as stated in contract that Capville will receive the order in small amount
every month rather than take all once. By doing this the inventory can be minimized.

JIT and People

The application of Just In Time can be successful and might not be successful according to the
management and its practices. In companies like Capviller, the management of Just In Time is
necessary. The manager and supplier should understand the concept of JIT. By this they can
develop a good supplier- user relationship. A good supplier user relationship requires certain
factors like integrity, good communication, understand of each other’s need and capabilities,
mutual confidence and trust and be serious about conformance. There are two types of
communication that are the communication between Capviller and Supplier and communication
between Capviller and buyers. The success of this good relationship will give a better quality
product.

Disadvantages of JIT

The disadvantages of Just In Time are:

Transportation problem.

The transportation problem mostly occurs during the rainy season or during flood where the
supplier can’t send the supply on time or during that period. The production is very reliant on
suppliers and if stock is not delivered on time, the whole production schedule can be delayed.
This problem can be prevented by preplanning in advance order during the rainy season.
No supply from supplier

Due to the policy of Just In Time, the producer will just order supply from the supplier according
to the size of the production schedule and there will be no storage. When the supplier didn’t send
the supplies, there will be no production or a delay in the production. This can cause waste of
time and cost.

The elements of Just In Time.

Quality is essential at all times. The Just In Time works to eliminate defects and scraps. Elements
of JIT stress that JIT is a process that continuously goes toward a definite goal helping to
eliminate waste and further improves productivity. The application of JIT helps in reducing the
cost of purchasing, helps in managing and in the storage of the items. The storage space is
directly related to inventories. By eliminate it in response to the elimination of inventories.
Besides that, it also reduces the time- related to work including production, R & D, QC and
purchasing department.

Just In Time and Quality.

Before a manufacturer select a particular supplier, the supplier must comply with certain
criteria’s where the suppliers company must be close to the production plant or else there will be
potential transportation delays. The supplier must possess good industrial relations such as
involvement, ownership, dignity and no strikes and met their promises with respect to the on
time supply. This is so known as the supplier user relationship. Once the suppliers meet the
criteria’s, the manufacture will negotiate with the supplier and comes with requirements and
certain specification on the items purchased. This is to maintain and obtain a better quality
product. In Capviller, the company has developed certain specification and criteria on the fruits
that they buy from the suppliers. For example, the cultivation method for the fruits must be
natural and organic. The harvest time for example, the mango must be harvested with duration of
95 days from flowering to harvest time. By this, Capviller can ensure and maintain the quality of
their product and the fruits that been supplied.