JIT Manufacturing Essay, Research Paper

Just-In-Time Systems

In today’s companies, new catch phrases and ideas are being developed each and every day. One of the more popular ideas that is circulating around these days is the idea of just-in-time manufacturing. Many magazines and newspapers have documented the efforts of companies to develop and implement just-in-time processes. The question can be asked, though, what does just-in-time mean? How does a company implement just-in-time processes, and what are the results of implementation? Just-in-time manufacturing is basically the idea that companies should

the beginning of the manufacturing process and shipment to the customer.

of these strategies are some of the most difficult tasks in just-in-time manufacturing.

One key idea that must be understood about just-in-time manufacturing is throughput time. This is the time between the start of the manufacturing process and the end, where the product is ready to be shipped. Five key elements are involved in throughput time. The first element is processing time, or the time actually spent working on the product. Next is inspection time and moving time. Moving time is simply the amount of time spent moving the product from one production department to another, as well as back and forth from storage areas. The last two elements of throughput

time are waiting, or queue, time and storage time. Queue time is the amount of time a product is waiting at a production department before being worked on, while storage time is the amount of time raw materials, finished goods, and works-in-progress actually stay in storage. Just-in-time philosophy says that the first element, processing time, actually adds value to the product,

while the last four key elements do not.1 Thus, there are value-added activities and nonvalue-added activities. Just-in-time manufacturing tries to decrease the amount of time spent on nonvalue added activities as much as possible. Just-in-time philosophy was first used by Toyota in Japan. Since that time, many companies around the world have begun to successfully implement just-in-time processes, including several companies in the United States. The implementation of just-in-time processes have taken on a familiar pattern in these companies. Usually it is begun by training everyone in the company about the just-in-time philosophy. The basic just-in-time concepts that employees would be trained in and made to follow as guidelines are listed in Table I.

Table I

* Visualize the process in as few steps as possible.

* View inventory as moving, not static.

* Emphasis should be placed on the synchronization of each process.

* Simplify, combine, eliminate

* Wastes are: over and under production, unnecessary steps, and excessive

inventory and motion.2

These basic ideas are not unique to just-in-time, but are crucial in training employees about the just-in-time philosophy. Most companies have realized now that the just-in-time philosophy is an important component in the idea of total quality management. Total quality management has the same goals as just-in-time, but also seeks as few errors as possible between each stage of production. Just-in-time philosophy is a tool that top-level managers use to implement total quality management. Most companies today seek this implementation, and follow the following steps.

The first step to implementing TQM/JIT manufacturing is to train the top management in the basic concepts of these ideas. Once this is accomplished, the next step is to form a top-level team. This team’s responsibilities include deciding upon an organizational structure and

developing a plan to implement TQM/JIT within the company. This plan should include the company’s goals concerning production, as well as how to establish this plan among all employees (i.e. motivation and discipline). This plan should then be used to establish the overall philosophy of the

company concerning TQM/JIT.3 Next, the system should be implemented to every aspect of the company from supplier to distributors. First, each department should establish its goals and a specific problem to attack. Then, a team should be chosen by each department and team leaders established. The teams should focus on the reduction of costs and the elimination of wastes. Data must then be collected on the teams’ problems. This data should be plotted in order to find excess waste or costs. Once this is done, measurements should be made as far as average costs, cycle times, and error rates. Manipulation of this data should show at least some apparent problems in the current system. Further analysis should help in the implementation of TQM/JIT by showing problem areas. In addition, the data could be used to show the effects of implementing TQM/JIT into the company.4 After the beginning of implementation, it is crucial that every employee believe in the concepts listed in Table I. Otherwise, the system could fail. Once implemented, though, just-in-time systems must be continually monitored and preventative actions performed. For instance, if a fault in a product is discovered because of a faulty wire, that roll of wire is removed. In a complete just-in-time system, however, the process does not stop there. The manager would check the warehouse and determine if there were any more rolls of faulty wire. If he discovered any, then those would be thrown out as well. Then, the manager would contact the supplier which sold the company the faulty wire and inform him of the situation, hopefully to prevent any more shipments of faulty wire. By doing all of this, the manager prevents any backlogs and waste in the future. With the just-in-time system, every aspect of the company is continuously running. The just-in-time system helps companies spotlight those areas that are falling behind and need improvement. There are methods by which a company can perform preventative maintenance. The first is through planning a well-developed, goal-oriented. Second, the management of each department should work together to try and eliminate problems, and not place blame on any one department. Blame has never accomplished anything, and therefore is a nonvalue-added item. Next,

designers should be knowledgeable of manufacturing requirements and limitations so that there is not a contradiction between designs and actual products. This results in waiting time, another nonvalue-added item. Last, but most important, is ample training. Employees that have been trained

thoroughly can handle minor problems on the spot without having to hold up the entire manufacturing process and call for a manager. Employees without such training are problems waiting to happen.5 Once all of the training, goal setting, and team forming are complete, the time has finally come to implement the TQM/JIT system. Once implemented, a company must find a way to organize all of the teams, including who is on what team and what their goals are. In order to do this, some companies have developed what is called a team tracking and status report. An example of this kind of report is shown in Table II.

Table II6

Status Phase Meeting Main

Name of Team A B C D Leader Time Goal

Top-Level Non-Applicable R. Wilson Mon 1pm System Implem.

& Management

Corrective Action

Supplier Mgmt X X X R. Klimo Mon 10:30 Improve Vendor

Performance

Excess Inventory X X X X BG Thur 7am Reduce Excess

Inventory

Glass Stains X RC Wed 8:30 Reduce Stains

from Curr. Level

Functional Improvement

Secretary X X D. Boggs Tues 9am Improve Copier

Effic. & Qual

Engineering X X X X PW Tues 10am Reduce Doc.

Errors

Cust. Service X B. Murray Thur 8am Reduce Sales

Order Cycle

Time & Defects

Purchasing X X X X R. Klimo Fri 7:30 Improve Qual of

Requisitions

Qual Engineering X X X X J. Fish Wed 10am Reduce Planning

Defects

JIT Line A X X X B. Yong Tues 1pm Reduce Lint in

Coil Defects

JIT Line C X P. Tipa Tues 2pm Reduce Chip

Defects

Special Teams

KANBAN H. Wong Tues 8am Rebalance JIT

Line A

Setup G. Knodel Fri 8am Reduce Tester

Setup Times

SPC K. Gangkai Mon 4pm Move SPC In-

Line for JIT

Line F

As indicated in Table II, many teams are required to successfully run a

TQM/JIT operation.

Now that we have discussed how just-in-time philosophies can be

implemented along with the entire total quality management scheme, it can

be questioned whether or not large United States companies can completely

implement just-in-time systems. The answer is yes.

Before the idea of just-in-time was widely accepted, economic

recessions and recoveries played havoc with American businesses. During a

period of economic well-being, for example, a company would anticipate

further economic growth and stockpile both labor and products. This was a

fine idea, until the economy hit a recession. Companies were stuck with

enormously large inventories and low customer demand. The only way

companies could respond was to cutback on labor, resulting in large layoffs.

Then, once the economy took an upswing, companies were eventually faced

with labor shortages, and large scale hiring began. This cycle continued

each time the economy fluctuated. That is, except for companies who

decided to implement just-in-time manufacturing, which broke the cycle. As

more and more companies bought into the just-in-time philosophy, “the

result was smaller inventories of both parts and final products.”7 With

smaller inventories, billions of dollars were freed up for investment purposes.

This protects companies during the lean years when demand may exceed

production.

This also means that with such little room for inventory error, one

mistake could mean thousands in lost revenues. For example, in 1993, one

General Motors engine plant in New York had repeated production

problems. This resulted in the underproduction of 90,000 cars. Still,

General Motors is completely dedicated to the just-in-time philosophy. This

strong belief held in TQM/JIT by General Motors, as well as thousands of

United States companies, may improve the nation’s economy over the long

haul.8

Some companies have found ways to place the burdens of estimating

sales and keeping the exact amount of inventory upon someone else. These

companies have paid “middleman” companies a specific amount to be in

charge of their inventories. One such “middleman” company is Owens &

Minor, a hospital supplies distributor. For example, UCLA Medical Center

allowed Owens & Minor to buy their inventory. Owens & Minor workers

take daily inventory and report to the home office what each individual

hospital needs for the next day. The items are delivered, and all UCLA

Medical Center has to do is pay for the items it uses, thereby saving millions

on inventory costs. In addition, Owens & Minor works with the hospital to

find unnecessary items and help eliminate waste, keeping costs to a

minimum.9 This coincides with the principles of the just-in-time philosophy.

According to recent studies, just-in-time systems have helped keep

inventories of American companies down. Ratios of inventory-to-sales have

been declining for the past four years. However, due to the economy growing

very slowly, finished goods inventories have increased over the past year.10

To combat this growth, companies have turned to improving their

relations with their suppliers. By sharing sales forecasts as well as

production forecasts with their suppliers, materials are shipped according to

the demand from the company. For example, say an automobile production

company produces one hundred cars in a day. They will need two hundred

bucket seats. They will place an order to their suppliers for two hundred

seats within a certain, predetermined time period. This time period allows

for the seats to arrive the day that they are needed, therefore, no seats will be

placed in inventory. This sounds wonderful, but companies still must make

estimates many months before hand using an unstable economy. This means

that some companies may end up with sales estimates that are over or under

real sales.

This brings us back to the overall concept of just-in-time being a tool

used in total quality management. Take, for instance, American Standard,

Inc. American Standard manufactures bathroom fixtures, air conditioning

units, and braking systems for cars. They believe that this type of

manufacturing is demand-driven by their customers. This demand-flow type

of production fits right in with the concept of total quality management.

American Standard also believes in allowing their workers to manage their

own production process. This was not always the case, however. American

Standard began to implement just-in-time systems as early as 1979. It met

with moderate success, but when the recession of 1990-91 hit, they had debt

in excess of three billion dollars. That is when they decided to implement

total quality management, and use just-in-time as a major tool. Through

demand-flow manufacturing, efficiency improved and cycle time decreased.

In addition, inventory and waste also declined. American Standard believes

in the philosophy of improving relations with suppliers, but it also believes

in demanding total quality control from its suppliers.11 With American

Standard, as well as other companies, insisting on TQC from their suppliers,

the total quality management idea is being spread nationwide.

Just-in-time systems are being implemented in most companies,

though some more than others. Those companies that acknowledge

just-in-time philosophies and implement them fully as part of a complete

total quality management system are quickly becoming players in the world

market. Those companies that do not implement total quality management

with an emphasis on just-in-time systems may be left behind as we go into

the twenty-first century.

1. Polimeni, Ralph S., et. al., Cost Accounting, Third Edition (New York:

McGraw-Hill, Inc., 1991) 446.

2. Ryan, John M., The Quality Team Concept in Total Quality Control

(Milwaukee: ASQC Quality Press, 1992) 17.

3. Ryan, 11.

4. Ryan, 11.

5. Ryan, 29-30.

6. Ryan, 54-55.

7. Howard Gleckman, “A Tonic for the Business Cycle,” Business Week

April 4, 1994: 57.

8. Gleckman, 57.

9. Suzanne Oliver, “Cut Costs, Add a Middleman,” Forbes April 25, 1994:

135.

10. David Fischer, “Sitting on Excess Supplies,” U.S. News & World

Report September 18, 1995: 88.

11. Michael Barrier, “When ‘Just In Time’ Just Isn’t Enough,” Nation’s

Business November 1992: 30-31.