Just-In-Time

PRESENTED TO:- PRESENTED BY:-

Dr. SameerGupta Ridhima Gupta(27-MBA-09)
Sahil Kandhari(28-MBA-09)
Sandeep Gupta(30-MBA-09)
Sumita Kumari(35-MBA-09)
Varun Gupta(36-MBA-09)
Ankush Gupta(41-MBA-09)
Sem-III,TBS,Jammu
 Logistics Management “Just
In Time” (JIT)
• “Just In Time” (JIT) is an approach to
managing logistics matters that aims at
“reducing waste and redundant
inventory by delivering products,
components or materials just when an
organization needs them”
 The Global Supply Chain Forum
• Typically, customer orders trigger the
process
• Just In Time (JIT) is a production and
inventory control system in which
materials are purchased and units are
produced only as needed to meet actual 2
 Just-In-Time
 Just-In-Time:


– JIT is a management approach that

originated in Japan in 1950.
– The basic elements of JIT were developed
by Toyota in the 1950's, and became
known as the Toyota Production System
(TPS).  JIT was well-established in many
Japanese factories by the early 1970's
– Uses a systems approach to develop and
operate a manufacturing system
– JIT is a Pull supply process
– Organizes the production process so that
parts are available when they are needed
– A method for optimizing processes that
involves continual reduction of waste
 Just-In-Time

 Central themes surrounding

Just-in-time
– Waste reduction
– Simplicity
– Quality or service improvement
 Seven Wastes
• Defects
• Overproducing
• Idle / Unnecessary Inventory
• Waiting
• Unnecessary Process Steps
• Unnecessary Worker Movement
• Unnecessary Materials Movement
•
•
 Common Causes of Waste
• Layout (distance) • Inconsistent
• Long setup time performance
measures
• Incapable
• Ineffective
processes production
• Poor maintenance planning
• Poor work methods • Lack of workplace
• Lack of training organization
• Poor supply
quality/reliability
 Objective of JIT
 Produce only the products the
customer wants.
 Produce products only at the rate
that the customer wants them.
 Produce with perfect quality
 Produce with minimum lead time.
 Produce products with only those
features the customer wants.
 Produce with no waste of labor,
material or equipment -- every
movement must have a purpose
so that there is zero idle
 Just-In-Time
 Pull Scheduling
– A system of controlling
materials whereby buyer
the use signals to the Pull: Just-in-
maker or provider time
that more material is
needed.
 Push Scheduling Push: traditional
– A system of controlling way
materials whereby
makers and providers supplie
make or send r
material in response
to a pre-set schedule,
regardless of whether
 Pull Supply Models
• A supply chain based on the “pull”
model is one where “a firm waits to
produce product until customers
demand it”
• The aim is to focus the production
process on customer needs, reduce
cycle time, minimize inventory and
avoid the risk of excess production
of unwanted product
9
 Push Supply Models
• A supply chain based on the “push”
model is one where “a firm
produces then pushes product
through the channel without orders
in hand”
• Production and inventory held are
therefore guided by predictions or
anticipation of customer demand

10
 BENEFITS OF JIT
 Funds that were tied up in
inventories can be used elsewhere.
 Areas previously used, to store
inventories can be used for other
more productive uses.
 Throughput time is reduced, resulting
in greater potential output and
quicker response to customers.
 Defect rates are reduced, resulting in
less waste and greater customer
satisfaction.
 Benefit: Real Business
Example
 Dell Computers:
Del Computer Corporation has finally
tuned its Just-in-Time system so that
an order for a customized personal
computer that comes in over the
internet at 9 AM. can be on a delivery
truck to the customer by 9 P.M. In
addition, Dell's low cost production
system allows it to under price its
rivals by 10% to 15%. This
combination has made Dell the envy
of the personal computer industry and
 Disadvantages of JIT
 Implementing thorough JIT procedures
can involve a major overhaul of your
business systems - it may be difficult
and expensive to introduce.
 JIT manufacturing also opens
businesses to a number of risks,
notably those associated with your
supply chain. With no stocks to fall
back on, a minor disruption
in supplies to your business from just
one supplier could force production to
cease at very short notice.
 Loss: Real Business
Example
 Toyota the Developer of JIT System
Just-in-time manufacturing system has
many advantages, but they are vulnerable
to unexpected disruptions in supply. A
production line can quickly come to a halt
if essential parts are unavailable. Toyota,
the developer of JIT, found this out the
hard way. One Saturday, a fire at
Aisin seiki Company's plant in Aichi
Prefecture stopped the delivery of all
break parts to Toyota. By Tuesday, Toyota
had to close down all of its Japanese
assembly line. By the time the supply of
break parts had been restored, Toyota had
lost an estimated $15 billion in sales.
 List of Companies that use
just in time (JIT)

• Harley Davidson
• Toyota Motor Company
• General Motors
• Ford Motor Company
• Manufacturing Magic
• Hawthorne Management Consulting
•
 Just-in-time
 Activity

Computer Book/CD
uncertainty
Demand

Grocery

Scale economics
 Just-in-time
 Just-in-time system
JIT Pyramid of key factors

Level 1 Just-in-
time
1

Level 2 Minimum 2 Minimum

delay inventory 6
3 4
Level 3 Minimum 5 Minimum
defects Simplicity downtime
and visibility
 Just-in-time
 Just-in-time system
– Factor 1
 The top of the pyramid is full
capability for JIT supply
supported by Level 2 and Level 3
operation.
– Factor 2
 ‘Delay’ and ‘inventory’ interact
positively with each other
 The concept of Kanban
– Factor 3
 Defect → delay → inventory
 Just-in-time
 Just-in-time system
– Factor 3
 Defect → delay →
inventory

Inventory
hides
problems
Poor
Machine downtime quality
Bad Inefficient
design Unreliable
supplier layout
 Just-in-time
 Just-in-time system
– Factor 4 Preventive maintenance
–
–
Breakdowns
–
Planned–maintenance Machine downtime Safety stocks
–
Changeover

Flexible production
 Just-in-time
 Just-in-time system
– Factor 5
 Simply and visible process help to
reduce inventory and could be
better maintained.
– Factor 6
 It’s more difficult to see the flow
of a process with increased
inventory.
 Just-in-time

• Case: Automobile
•
•
•
• Case: Cake
 Just-in-time
 Demand characteristics and
planning approaches
– Economic order quantities (EOQ)
Recorder
Stoc quantity Usage rate
k

Reorder
point

Buffer
stock
Lead time Time
 Just-in-time


 Assumptions in Economic Order Quantity

Model
– Demand is deterministic. There is no
uncertainty about the quantity or timing of
demand.
– Demand is constant over time. In fact, it can
be represented as a straight line, so that if
annual demand is 365 units this translates into
a daily demand of one unit.
– A production run incurs a constant setup
cost. Regardless of the size of the lot or the
status of the factory, the setup cost is the same.
– Products can be analyzed singly. There is only
a single product.
 Notation
– D = Demand rate (in units per year).
– c = Unit production cost, not counting
setup or inventory costs (in dollars per
unit).
– A = Constant setup (ordering) cost to
produce (purchase) a lot (in dollars).
– h = Holding cost (in dollars per unit per
year)
 Just-in-time
 EOQ model
Q
– Average inventory=
level 2Q
×h
hQ
= 2 =


– The holding cost per D 2D

unit A
=
 Q
– The setup cost per
unit =c


– The production cost

 Just-in-time
 EOQ model
hQ A
Y (Q) = + + c ( total cos t per unit )
2D Q

dY (Q) h A
= − 2 =0
dQ 2D Q

2 AD
Q =
*
(economic order quantity)
h
 Just-in-time
 Practice
– Pam runs a mail-order business
for gym equipment.  Annual
demand for the TricoFlexers is
16,000.  The annual holding cost
per unit is $2.50 and the cost to
place an order is $50.  What is
the economic order quantity?
2 × 16000 × 50
Q =
*
= 800( units per order )
2.5
 Just-in-time
 Demand characteristics and
planning approaches
– Periodic order quantity (POQ)
and target stock levels

How much to
Economic order quantity
order?

When to order? Periodic order quantity

 Just-in-time
 Economic order quantity with
Week No. Demand uncertain
Order Inventory
demand Inventory Inventory
1 100 quantity
1,000 end
900 start
1,000 holding
950
2 100 0 800 900 850
3 200 0 600 800 700
4 400 0 200 600 400
5 800 1,000 400 200 300
6 1,000 1,000 400 400 400
7 800 1,000 600 400 500
8 400 0 200 600 400
9 100 0 100 200 150
10 200 1,000 900 100 500
Sum 4,100 5,000 5,100 5,200 5,150
Average 410 500 510 520 515
 Just-in-time
 Periodic order quantity (POQ) with
Week No. Demand uncertain
Order Inventory
demandInventory Inventory
1 100 quantity
200 end
100 start
200 holding
150
2 100 0 0 100 50
3 200 600 400 600 500
4 400 0 0 400 200
5 800 1,800 1,000 1,800 1,400
6 1,000 0 0 1,000 500
7 800 1,200 400 1,200 800
8 400 0 0 400 200
9 100 300 200 300 250
10 200 0 0 200 100
Sum 4,100 4,100 2,100 6,200 4,150
Average 410 410 210 620 415
 Just-in-time
 Target stock level (TSL)
– constant

– Periodic order quantity = Target

stock level – Stock on hand –
Stock on order
–
– TSL = cycle stock + safety stock

 Just-in-time
 JIT and material requirements
planning (MRP)
– Material requirements planning
(MRP) - A methodology for
defining the raw material
requirements for a specific item,
component, or sub-assembly
ordered by a customer, or required
by a business process.
– MRP systems will usually define
what is needed, when it is needed,
and by having access to current
inventories and pre-existing
commitment of that inventory to
 Just-in-time
 Feature of
MRP
– MRP is
based
on JIT
Pull
scheduli
ng logic
– MRP is
good at
plannin
g, but
weak at
control
 Kanban Production Control
Systems


• Simple, paperless procedures



• Signals/visual systems
– Posted schedules
• Containers
– Standard size, small
• Factors: Material Handling consideration
proximity of work centers


JIT 35
 Kanban Production Control
Systems (Cont.)
• Kanban…Cards
• Production Card---”P” Card:
– Part #, Quantity to be produced,
2-card
system Supply work center #, etc.
• Conveyance (Move) Card---”C”
Card:
– Part #, Container Capacity, Source,
Destination, etc.


 1-card system: Move card and an empty

space

JIT 36
Difference Between JIT and JIC Approach

JIT 37
Difference Between JIC and JIT
Approach

JIT 38
THANK YOU