JIT Just-in-Time manufacturing

`Just-in-time' is a management philosophy and not a technique. It originally referred to the production of goods to meet customer demand exactly, in time, quality and quantity, whether the `customer' is the final purchaser of the product or another process further along the production line. It has now come to mean producing with minimum waste. "Waste" is taken in its most general sense and includes time and resources as well as materials. Elements of JIT include:

Continuous improvement. o Attacking fundamental problems - anything that does not add value to the product. o Devising systems to identify problems. o Striving for simplicity - simpler systems may be easier to understand, easier to manage and less likely to go wrong. o A product oriented layout - produces less time spent moving of materials and parts. o Quality control at source - each worker is responsible for the quality of their own output. o Poka-yoke - `foolproof' tools, methods, jigs etc. prevent mistakes o Preventative maintenance, Total productive maintenance - ensuring machinery and equipment functions perfectly when it is required, and continually improving it. Eliminating waste. There are seven types of waste: o waste from overproduction. o waste of waiting time. o transportation waste. o processing waste. o inventory waste. o waste of motion. o waste from product defects. Good housekeeping - workplace cleanliness and organisation. Set-up time reduction - increases flexibility and allows smaller batches. Ideal batch size is 1item. Multi-process handling - a multi-skilled workforce has greater productivity, flexibility and job satisfaction. Levelled / mixed production - to smooth the flow of products through the factory. Kanbans - simple tools to `pull' products and components through the process. Jidoka (Autonomation) - providing machines with the autonomous capability to use judgement, so workers can do more useful things than standing watching them work. Andon (trouble lights) - to signal problems to initiate corrective action.

JIT - Background and History

JIT is a Japanese management philosophy which has been applied in practice since the early 1970s in many Japanese manufacturing organisations. It was first developed and perfected within the Toyota manufacturing plants by Taiichi Ohno as a means of meeting consumer demands with minimum delays . Taiichi Ohno is frequently referred to as the father of JIT. Toyota was able to meet the increasing challenges for survival through an approach that focused on people, plants and systems. Toyota realised that JIT would only be successful if every individual within the organisation was involved and committed to it, if the plant and processes were arranged for maximum output and efficiency, and if quality and production programs were scheduled to meet demands exactly. JIT manufacturing has the capacity, when properly adapted to the organisation, to strengthen the organisation's competitiveness in the marketplace substantially by reducing wastes and improving product quality and efficiency of production. There are strong cultural aspects associated with the emergence of JIT in Japan. The Japanese work ethic involves the following concepts.

Workers are highly motivated to seek constant improvement upon that which already exists. Although high standards are currently being met, there exist even higher standards to achieve. Companies focus on group effort which involves the combining of talents and sharing knowledge, problem-solving skills, ideas and the achievement of a common goal. Work itself takes precedence over leisure. It is not unusual for a Japanese employee to work 14-hour days. Employees tend to remain with one company throughout the course of their career span. This allows the opportunity for them to hone their skills and abilities at a constant rate while offering numerous benefits to the company.

These benefits manifest themselves in employee loyalty, low turnover costs and fulfilment of company goals. Just-in-Time (JIT) a production strategy that strives to improve an business' return on investment by reducing in-process inventory and associated carrying costs. Just In Time production method is also called the Toyota Production System. To meet JIT objectives, the process relies on signals or Kanban ( Kanban?) between different points in the process, which tell production when to make the next part. Kanban are usually 'tickets' but can be simple visual signals, such as the presence or absence of a part on a shelf. Implemented correctly, JIT focuses on continuous improvement and can improve a manufacturing organization's return on investment, quality, and efficiency. To achieve continuous improvement key areas of focus could be flow, employee involvement and quality. Quick notice that stock depletion requires personnel to order new stock is critical to the inventory reduction at the center of JIT. This saves warehouse space and costs. However, the complete mechanism for making this work is often misunderstood.

For instance, its effective application cannot be independent of other key components of a lean manufacturing system or it can "...end up with the opposite of the desired result."[1] In recent years manufacturers have continued to try to hone forecasting methods (such as applying a trailing 13 week average as a better predictor for JIT planning,[2] however some research demonstrates that basing JIT on the presumption of stability is inherently flawed.[3]

Just-In-Time Manufacturing:
JIT is a philosophy of continuous improvement in which non-value-adding activities (or wastes) are identified and removed for the purposes of:
Reducing Cost Improving Delivery Improving Quality Adding Flexibility Improving Performance Increase innovativeness

JIT is not about automation. JIT eliminates waste by providing the environment to perfect and simplify the processes. JIT is a collection of techniques used to improve operations It can also be a new production system that is used to produce goods or services. The American Production and Inventory Control Society (APICS) has the following definition of JIT: "a philosophy of manufacturing based on planned elimination of all waste and continuous improvement of productivity. It encompasses the successful execution of all manufacturing activities required to produce a final product, from design engineering to delivery and including all stages of conversion from raw material onward. The primary elements include having only the required inventory when needed; to improve quality to zero defects; to reduce lead time by reducing setup times, queue lengths and lot sizes; to incrementally revise the operations themselves; and to accomplish these things at minimum cost." When the JIT principles are implemented successfully, significant competitive advantages are realized. JIT principles can be applied to all parts of an organization: order taking, purchasing, operations, distribution, sales, accounting, design, etc.

Elimination of Waste:
JIT usually indentifies seven prominent types of waste to be eliminated:

Waste from Overproduction Transportation Waste Processing Waste Waste from Product Defects

Waste of waiting/idle time Inventory Waste Waste of Motion

Summary:
Material related costs are reduced by reducing the number of suppliers a company deals with and developing long-term contracts through creative supplier networking, eliminating the need to count individual parts, reducing order scheduling, eliminating expediting, simplifying receiving systems, eliminating receiving inspection, eliminating most unpacking, eliminating the stocking of inventory, and eliminating excess material spoilage. Manufacturing related costs are reduced by design for manufacture and design for assembly techniques where unnecessary parts or processes are eliminated. They are also reduced through the elimination of excess material handling, inspections, and storage of parts. The primary goal is to eliminate non-value adding tasks. Quick change over techniques replace long set-up times. Cells will replace traditional assembly lines.
Visual controls are often used to schedule the production of parts in place of systems such as MRP. Statistical process control is used to assure that the outcome of production is consistently met with desired results.

MATERIAL FLOW
Efficient and Stream-lined processes are required to remain competitive in today's marketplace. Material flow, distribution, logistics, purchasing and planning are all important factors for success and competitiveness. Inventory Solutions can help you by optimizing your material flow. Material flow involves Production Planning, Purchasing, Just-In-Time (JIT), and Inventory Management / Inventory Control. Optimization of Material Flow can have the following benefits:

Improve Product Quality Reduce Purchasing Costs Reduce Freight / Transportation Cost Reduce Manufacturing Waste Increase Production Improve Customer Satisfaction Reduce Downtime Reduce Product Cost Increase Cash Flow

Inventory Solutions can help to train the following personnel and help your company reduce costs:
Materials Planners Purchasing Agents Quality Assurance personnel Inventory Control personnel Production Engineers Materials Management Professionals

Inventory Solutions Logistics Corp. has a network of overseas manufacturers to provide you with the highest quality products available, reduce your cost and improve your cash flow. We have built a very highly qualified group of manufacturers in China, Mexico, Asia, South America and Europe that can easily produce your goods at minimal cost to you.

Services include:
Manufacturing products to your specifications with: Wood

Textile Plastic Rubber Kit / Component Building Chinese Manufacturing Supply Chain Management Reduced Labor Cost Reduced Raw Material / Purchasing Cost Import / Export Services
Inventory Solutions Logistics Corp. can help you Import & Export your products at the lowest costs and shortest lead times possible. Take advantage of low-cost manufacturing in China, Mexico, Asia, and South America to reduce your cost and improve cash flow & profit. Inventory Solutions Logistics Corp. can help you import your products and get them to your customer at minimal cost.

We can import product through several port locations depending on your situation and expedite your product to our distribution centers or to you directly as needed.

Truck Transportation
Inventory Solutions Logistics Corp. will shorten your lead times and reduce your cost to give you an advantage against your competition. We will move your inventory and deliver it to our distribution centers or to you as required.

We can reduce your freight cost and improve your shipping performance at the same time. This improves customer satisfaction and adds cash to your bottom line. Let Inventory Solutions Logistics Corp. analyze your manufacturing, inventory control and distribution processes to show you how you can benefit from our services. Distribution Centers
Inventory Solutions Logistic Corp. has 4 major distribution centers across the USA to provide you with optimal distribution services at lowest cost: Storage & Warehousing Pick / Packing Shipping / Delivery Materials Management Real-time Status View On-line Our distribution centers are strategically located in the following states to deliver your products: North Carolina

Texas California Illinois

Inventory Solutions Logistics Corp. can import your product through several port locations and expedite it to our distribution centers or to you directly as required. Our distribution centers can receive containers, store, pick-pack and distribution your products to any point in the United States. We also create and warehouse your optimal inventory stocking levels to minimize your cost and boost your cash flow.

Supply Chain Management:

A supply chain is the process of moving goods from the customer order through the following stages: Raw Materials --> Supply

--> Production --> Distribution --> Customer

All organizations have supply chains of varying degrees, depending upon the size of the organization and the type of product manufactured. These networks obtain supplies and components, change these materials into finished products and then distribute them to the customer. Managing this process is known as supply chain management. Effective management must take into account coordinating all the different pieces of this chain as quickly as possible without losing any of the quality or customer satisfaction, while still keeping costs down. In addition, key to the success of a supply chain is the speed in which these activities can be accomplished and the realization that customer needs and customer satisfaction are the very reasons for the network.

BENEFITS OF SCM:

Customer Satisfaction Lower Operating Costs Faster Delivery Flexibility

Reduced Inventories Product Availability Reduced Lead Time Competitiveness

KEY ELEMENTS OF SCM:

Production
Inventory Transportation Supply Location Information

SUMMARY:
Supply chain management (SCM) involves all of the activities associated with moving goods from raw materials stage through to the end user or customer. This includes procurement, production scheduling, order processing, inventory control, transportation ,warehousing and customer service. It coordinates and integrates all of these activities into a seamless process. It links all of the partners in the chain (departments, vendors, carriers, third-party companies, information systems).

What is Master Production Schedule or MPS?

A Master Production Schedule or MPS is the plan that a company has developed for production, inventory, staffing, etc. It sets the quantity of each end item to be completed in each week of a short-range planning horizon. A Master Production Schedule is the master of all schedules. It is a plan for future production of end items.

MPS INPUTS:
Forecast Demand

MPS OUTPUT (production plan):

Amounts to be Produced

Production Costs Inventory Costs Customer Orders Inventory Levels Supply Lot Size Production Lead Time Capacity

Staffing Levels Quantity Available to Promise Projected Available Balance

The Master Production Schedule gives production, planning, purchasing, and top management the information needed to plan and control the manufacturing operation. The application ties overall business planning and forecasting to detail operations through the Master Production Schedule. The Master Production Schedule will drive detailed material and production requirements in the Material Requirements Planning module. Contact Inventory Solutions for help on implementing or optimizing a master production schedule for your company and realize the benefits today!
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 days 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

just-in-time
Definition
A strategy for inventory management in which raw materials and components are delivered from the vendor or supplier immediately before they are needed in the manufacturing process.

Just in Time (JIT) Manufacturing and Inventory Control System:

Learning objectives of the article:
Define and explain the concept of just in time manufacturing and inventory control system. What are advantages and disadvantages of just in time manufacturing system?

Traditionally manufacturers have forecasted demand for their products into the future and then have attempted to smooth out production to meet that forecasted demand. At the same time, they have also attempted to keep everyone as busy as possible producing output so as to maximize "efficiency" and (hopefully) reduce costs. Unfortunately, this approach has a number of major drawbacks including large inventories, long production times, high defect rates, production obsolescence, inability to meet delivery schedules, and (ironically) high costs. Non of this is obvious-if it were, companies would long ago have abandoned this approach. Managers at Toyota are credited with the insight that an entirely new approach, called

just in time (JIT) was needed. Definition of Just in time manufacturing Just-In-Time concept Benefits / Advantages of just in time manufacturing system Limitations / Disadvantages of Just in Time Manufacturing List of Companies that use just in time System

Definition and Explanation of Just in Time Manufacturing:

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 customer demand. When Companies use Just in Time (JIT) manufacturing and inventory control system, they purchase materials and produce units only as needed to meet actual customers demand. In just in time manufacturing system inventories are reduced to the minimum and in some cases are zero. JIT approach can be used in both manufacturing and merchandising companies. It has the most profound effects, however, on the operations of manufacturing companies which maintain three class of inventories-raw material, Work in process, and finished goods. Traditionally, manufacturing companies have maintained large amounts of all three types of inventories to act as buffers so that operations can proceed smoothly even if there are unanticipated disruptions. Raw materials inventories provide insurance in case suppliers are late with deliveries. Work in process inventories are maintained in case a work station is unable to operate due to a breakdown or other reason. Finished goods inventories are maintained to accommodate unanticipated fluctuations in demand. While these inventories provide buffers against unforeseen events, they have a cost. In addition to the money tied up in the inventories, expert argue that the presence of inventories encourages inefficient and sloppy work, results in too many defects, and dramatically increase the amount of time required to complete a product.

Just-In-Time Concept:
Under ideal conditions a company operating at JIT manufacturing system would purchase only enough materials each day to meet that days needs. Moreover, the company would have no goods still in process at the end of the day, and all goods completed during the day would have been shipped immediately to customers. As this sequence suggests, "just-in-time" means that raw materials are received just in time to go into production, manufacturing parts are completed just in time to be assembled into products, and products are completed just in time to be shipped to customers. Although few companies have been able to reach this ideal, many companies have been able to reduce inventories only to a fraction of their previous level. The result has been a substantial reduction in ordering and warehousing costs, and much more efficient and effective operations. In a just in time environment, the flow of goods is controlled by a pull approach. The pull approach can be explained as follows. At the final assembly stage a signal is sent to the preceding work station as to the exact amount of parts and materials that would be needed over the next few hours to assemble products to fill customer orders, and only that amount of materials and parts is provided. The same

signal is sent back to each preceding workstation so a smooth flow of parts and materials is maintained with no appreciable inventory buildup at any point. Thus all workstations respond to the pull exerted by the final assembly stage, which in turn respond to customer orders. As one worker explained, "Under just in time system you don't produce any thing, any where, for any body unless they ask for it some where downstream. Inventories are evil that we are taught to avoid". The pull approach described above can be contrasted to the push approach used in conventional manufacturing system. In conventional system, when a workstation completes its work, the partially completed goods are pushed forward to the next work station regardless of whether that workstation is ready to receive them. The result is an unintentional stockpiling of partially completed goods that may not be completed for days or even weeks. This ties up funds and also results in operating inefficiencies. For one thing, it becomes very difficult to keep track of where every thing is when so much is scattered all over the factory floor. An other characteristics of conventional manufacturing system is an emphasize on "keeping every one busy" as an end on itself. This inevitably leads to excess inventories particularly work in process inventories. In Just in time manufacturing, the traditional emphasize of keeping everyone busy is abandoned in favor of producing only what customers actually want. Even if that means some workers are idle.

Benefits / Advantages of Just in Time Manufacturing System:

The main benefits of just in time manufacturing system are the following:

1. Funds that were tied up in inventories can be used elsewhere. 2. Areas previously used, to store inventories can be used for other more productive
uses.

3. Throughput time is reduced, resulting in greater potential output and quicker 4.

response to customers. Defect rates are reduced, resulting in less waste and greater customer satisfaction.

As a result of advantages such as those cited above, more companies are embracing just in time manufacturing system each year. Most companies find, however, that simply reducing inventories is not enough. To remain competitive in an ever changing and ever competitive business environment, must strive for continuous improvement.

Real Business Examples:

PCs Just In Time Management: 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 has enabled the company to grow at five times the industry rate. How does the company's just in time system deliver lower costs? "While machines from Compaq and IBM can languish on dealer shelves for two months Dell does not start ordering components and assembling computers until an order is booked. That may sound like no biggie, but the price of PC parts can fall rapidly in just a few months. By ordering right before assembly, Dell figures it s parts, on average, are 60 days newer than those in an IBM or Compaq machine sold at the same time. That can translate into a 6% profit advantage in components alone."
Source: Gray McWilliams, "Whirlwind on the web, "Business Week, April 7, 1997.

Slashing Process Time: American Standards uses cell manufacturing to cut inventories and reduce manufacturing time. At its plant, England, it used to take as long as three weeks to manufacture a vacuum pump and another week to process the paper work for an order. Therefore customers had to place orders in advance. "Today Leeds has switched to manufacturing cells that do every thing from lathing to assembly in quick sequence. The result is a break through in speed. Manufacturing a pump now takes six minutes."
Source: Shawn Tully, "Raiding a company's Hidden Cash," Fortune, August 22, 1994, PP 82-87.

Disadvantages of Just in Time Manufacturing System:

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.

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.
Source: "Toyota to Recalibrate ,'" International Herald Tribune, February 8, 1997.

List of Companies that use just in time (JIT):

Harley Davidson Toyota Motor Company General Motors Ford Motor Company Manufacturing Magic Hawthorne Management Consulting Strategy Manufacturing Inc.

Definition and Explanation:

A Kanban system is a means to achieve just in time (JIT) production. It works on the basis that each process on a production line pulls just the number and type of components the process requires, at just the right time. The mechanism used is a Kanban card. This is usually a physical card but other devices can be used Two types of such cards are usually used. Withdrawal KANBAN Production KANBAN

A withdrawal Kanban: Specifies the kind and quantity of product which a

manufacturing process should withdraw from a preceding process. This card (illustrated below) shows that the preceding process which makes this part is forging, and the person carrying this card from the subsequent process must go to position B-2 of the forging department to withdraw drive pinions. Each box of drive pinions contain 20 units and the shape of box is "B". This Kanban is the 4th of 8 issued. The item back number is an abbreviation of the item.

Example of Withdrawal Kanban

A production ordering Kanban: Specifies the kind and quantity of the product
which the preceding process must produce. The one illustrated below shows that the machining process SB-8 must produce the crankshaft for the car type X50BC-150. The crankshaft produced should be placed at store F26-18. The production ordering Kanban is often called an in-process or simply a production Kanban.

Example of Production Kanban

Using KANBANS on production lines:

Each process (area, cell) on the production line has two KANBANS "post-boxes", one for withdrawal and one for production ordering KANBANS. At regular intervals a worker takes withdrawal KANBANS that have accumulated in his process post-box, and any empty pallets, to the location where finished parts (components, assemblies) from the preceding process are stored. Each full pallet has attached to it one or more production ordering KANBANS which he removes and puts in the appropriate post-box belonging to the process that produced the parts. The worker now attaches a withdrawal Kanban to the pallet and takes it back to his own process area. When this new pallet begins to be used, its withdrawal Kanban is put back into the withdrawal post-box. At each process on the line, production ordering KANBANS are periodically removed from their post-box and used to define what parts and quantities to produce, next.

When and how KANBANS are effective:

KANBANS help simply planning and to fine tune production to meet changing customer demand of up to + or - 10%. The system requires planned monthly and weekly production schedules. KANBANS simplify day to day flexibility, and changes to the production schedule need only to be given to the final assembly process and will then automatically work their way back up the line. Kanban systems can be tightened by removing cards or by reducing the number of parts on pallet. The effect will be to speed the flow through the process and hence reduce lead time. However it also makes the system more vulnerable to breakdowns and other causes of dislocation. By identifying

the areas within the line that are causing disruption, efforts can be made to improve them. Thus the overall efficiency of the line is raised by tackling the key points. Other types of Kanban also used are supplier kanbans -to withdraw goods from external suppliers, and two types of Signal Kanban, which are inserted near the bottom of a stack of item. These automatically initiate production of batch produced items when the stock reaches a preset order level.

Single card KANBAN system:

In a single card KANBAN system, parts are produced and bought according to a daily schedule, and deliveries to the user are controlled by a "conveyancing" (withdrawal) KANBAN. In effect, the single card system is a push system for production coupled with a pull system for delivery to the point of use. Single card KANBAN system controls deliveries very tightly, so that the using work center never has more than a container or two of parts and and the stock point serving the work center is eliminated. Single-card systems work well in companies in which it is relatively easy to associate the required quantity and timing of component parts with the schedule of end products. These are usually companies with a relatively small range of end products, or products which are not subject to rapid, unexpected changes in demand levels.

Advantages of KANBAN:
Low costs associated with the transfer of information Provides quick response to changes Delegates responsibility to line workers It is a simple technique not involving computers so its cost is low. Lead times are reduced.

Disadvantages of KANBAN:
It is less effective in shared-resource situations. Suppose the upstream station made several parts. Then a request to make more of the part needed by the downstream station will have to wait if other parts have to be made. A buffer is needed to ensure the downstream station doesn't run out meanwhile. And, because each part needs a separate signaling card, the system becomes more complex than if the resources were dedicated. Surges in mix or demand cause problems because KANBAN assumes stable repetitive production plans. It is less suited to industries where mix and volumes fluctuate. KANBAN in itself doesn't eliminate variability, so unpredictable and lengthy down times could disrupt the system; poor quality in terms of scrap and rework also affect its good functioning. KANBAN systems are not suited for manufacturing environments with short production runs, highly variable product demand, poor quality products, and a multitude of product types. A breakdown in the KANBAN system can result in the entire line shutting down. The throughput of a KANBAN system is not managed but is instead a result of controlled WIP and known cycle times.

Just-In-Time Inventory Management Strategy & Lean Manufacturing

Overview of Just-in-Time Inventory Management Just-in-time is a movement and idea that has gained wide acceptance in the business community over the past decade. As companies became more and more competitive and the pressures from Japans continuous improvement culture, other firms were forced to find innovative ways to cut costs and compete. The idea behind JIT, or lean manufacturing, is to have the supplies a firm needs at the exact moment that they are needed. In order to accomplish this goal a firm must constantly be seeking ways to reduce waste and enhance value. A recent survey of senior manufacturing executives showed that 71% used some form of JIT in their processes (Pragman). This simple statistic illustrates that JIT is here to stay and also that firms must constantly be searching for ways to cut costs and achieve an advantage. JIT is one way to achieve that end result. In order to understand how JIT works a common vocabulary needs to be established from which to further discuss the topic and gain insight into why so many firms have adopted it. As previously stated, one of the key components of JIT is to reduce waste and add value. There are several activities that a company must monitor as targets for reducing waste. Among these are, excessive waste times, inflated inventories, unneeded people or material movement, unnecessary processing steps, numerous variabilities throughout a firm's activities and any other non-value adding activity. A key example of this is a new plant that Caterpillar is bringing on-line in the near future. By reducing the number of times a bucket had to be repositioned while it was being welded, Caterpillar was able to reduce the amount of time the bucket spent in the welding line, reduce labor costs by limiting idle time at the welding station and increase the efficiency of the entire manufacturing process. The layout and inventories that are part of a JIT strategy may seem the most logical steps to reduce waste and increase value. By simply redeveloping the layout of certain facilities a firm can reduce the time it takes for supplies to get to the next step in process and cut costs associated with that movement. One way to do this is to have work-in-progress close to the next station in the manufacturing chain. Couple this with lowering inventories and a powerful combination is formed to reduce costs. In lowering inventories a firm can reap numerous benefits; batch sizes, set-up times and safety stock are all reduced, ergo costs are trimmed and value is added. But in order to achieve these things a firm must be willing to accept the problems that these actions can either uncover or create. Dell Computers participates in both of these activities and they are now the industry leader. Dell has warehouse space at their manufacturing facilities in which suppliers keep parts directly on-site which is the quintessential JIT layout. In addition, Dell is constantly working to achieve "JIT" inventories of only four days and in doing so are constantly uncovering and solving supply chain problems. Going hand-in-hand with maintaining Just In Time inventory levels is JIT scheduling. By working to reduce inventory to the lowest possible working levels, a firm must constantly be adjusting its schedule of ordering and delivering. In doing so, communication both up and down the supply chain is critical. Frequent orders are placed for supplies and small production runs are constantly being initiated. In order to achieve this breakneck pace of order/production schedule, a firm must constantly be making small changes to orders/production and recognize that kanbans are of incredible importance. Possibly the single piece of JIT that has the most relevance to a study of supply chain management is the partnerships that are essential to making JIT truly work. A firm cannot implement a JIT system by itself; it must have the complete cooperation of its entire supply chain. The sheer amount of information that is needed for a JIT system to operate well demands partnerships to be formed and nurtured, almost to the point at which an entire supply chain operates as one firm. Examples of these kinds of partnerships are everywhere in today's business world. XYZ-Company allows its key suppliers to work directly at their manufacturing sites and place orders as needed for the parts that that supplier supplies. By example Dell has its suppliers store raw materials directly at the manufacturing plants. Other concepts of Just In Time also need to be introduced in order to have a discussion about what truly makes Just In Time a worthy endeavor. By the 1980s the Japanese had achieved manufacturing greatness by practicing continuous improvement, in that a firm is constantly working to improve in every facet of its business functions. To do this a firm must always increase quality, look for innovative ways to solve problems and increase focus on the quality of its suppliers. All of these are cornerstones of a modern JIT system. Lastly, getting the workforce to buy into a JIT lean manufacturing system is important because without the dedication of the workforce, any endeavor is sure to fail. There are several ways to achieve workforce commitment. A simple way is to cross train the workforce members outside of their normal business function and help increase an employee's problem solving ability. In doing so a firm is empowering its workforce to think about their function in a new way while looking for ways to improve and giving them an overall view of the entire firm, not just their single job. When this is coupled with the support of management, an increase in resources to solve problems, and an increase in employee roles and responsibility, a workforce will feel empowered and work to make Just In Time a success for the business. Strengths of JIT There is a lot of strength in incorporating JIT lean manufacturing in a company. JIT makes production operations more efficient, cost effective and customer responsive. JIT allows manufacturers to purchase and receive components just before they're needed on the assembly line, thus relieving manufacturers of the cost and burden of housing and managing idle parts. In that respect, company spokesman for Dell Venancio Figueroa, says "With our pull-to-order system, we've been able to eliminate warehouses in our factories and have improved factory output by double by adding production lines where warehouses used to be" (Songini, 2000). The benefit of carrying smaller amounts of inbound, in-process, and finished goods inventory exists regardless of the firm's operating context (size, production technology, etc.). Just In Time appeals to many companies because it helps prevent manufacturers from being stuck with inventory that may become obsolete. JIT was initially developed and justified based on cost reduction and quality improvement dimensions. Now, companies view JIT as providing an approach to achieving excellence in the elimination of waste (thought of as all things that do not add value to the product),

as well as making the company more responsive to short-term customer demand patterns. JIT manufacturing can be a real money-saver for a company. Companies are not only more responsive to their customers, but they also have less capital tied up in raw materials and finished goods inventory, allowing companies to optimize their transportation and logistics operations (UPS, 2003). Overall, JIT manufacturing results in lower total system costs and improved product quality. With JIT, some plants have reduced inventory more than fifty-percent and lead time more than eighty-percent (Droge, 1998). JIT is lowering costs and inventory, reducing waste, and raising the quality of products. Weaknesses of JIT Just as JIT has many strong points, there are weaknesses as well. "In just-in-time, everything is very interdependent. Everyone relies on everybody else" (Greenberg, 2002). Because of this strong interdependence with JIT, a weakness in the supply chain caused by a JIT weakness can be very costly to all linked in the chain. JIT processes can be risky to certain businesses and vulnerable to the supply chain in situations such as labor strikes, interrupted supply lines, market demand fluctuations, stock outs, lack of communication upstream and downstream in the supply chain and unforeseen production interruptions. Labor strikes, stock outs, and port lockouts can quickly disrupt an entire supply chain while JIT processes are in place. "Adhering to the just-in-time concept can be expensive in times of emergency such as at ports" (Greenburg, 2002). When a ship arriving from Asia full of supplies cannot make it to shore, the company using JIT generally has very little inventory to compensate for the emergency. This lack of inventory is exactly what makes JIT so great to companies in reducing costs, yet making it risky as well by in some cases not having enough buffer inventories to react and keep the supply chain moving. Every year markets experience seasonal demand fluctuations as well as fluctuations due to demand from disasters or other unforeseen events. "Just-in-time delivery leaves retailers and manufacturers with little inventory as the holiday season approaches" (Greenberg, 2002). Relying solely on JIT systems would leave supply chains in shock due to the overwhelming seasonal market demand at different times of the year for seasonal products. Not all products should be produced with JIT systems in place. Custom made items will not work well with JIT as JIT systems respond best to mass produced and highly automated production items. Communication is king in a JIT rich supply chain. There is a risk involved with JIT when there is a communication breakdown and the company cannot get the right amount of supplies needed to keep the just-in-time system running smoothly. Technology is playing a big role in JIT number, however, the reliance on technology can lead to breakdowns in the IT systems that can be costly to work around and go back to the 'pencil and paper' methods of doing supply/inventory demand calculations. Companies should always have backup systems in place to help thwart the possibility of technology or communication breakdown. Weaknesses in JIT systems are very important to recognize. "From Cisco routers to Dell computers to the Gap's leather pants, companies have found their just-in-time manufacturing systems have let them down" (Johnson, 2001). Companies must strongly evaluate the pros and cons of implementing JIT systems. The effects and risk to their supply chain must also be heavily considered. Although JIT has its weaknesses, in most cases, the benefits outweigh the risks to the JIT enabled company. Planning for and recognizing when things may go wrong with the JIT system are vital for the success of JIT implementation across all areas of supply chains. JIT in Practice Just in time has an overall strategic focus to provide companies with an exceptional amount of savings. There is a large variety of companies and industries that have experienced these cost savings. For our research we will feature Dell and Toyota as two examples to illuminate the cost saving effects that just in time offers. To begin our discussion, Dell, which participates in the computer technology industry, is the only company within its industry that effectively utilizes just in time. They have "revolutionized the selling of personal computers, using a direct-business model whose fundamental tenets include taking custom orders directly from customers, thereby reducing inventory and streamlining distribution" (DI D RECT, 2001). After Dell has received a customer order, they then begin production of the product that the customer desires. This exemplifies a pull system within the supply chain. A pull system is reactive whereby production is executed in response to a customer order. This unique supply chain provides Dell with a competitive advantage within its industry allowing them to become the market leader over Compaq in 2001 (DI D RECT, 2001). Dell's position within its industry is a result of their strategic focus to reduce inventory and streamline distribution. This strategy has allowed them to keep only five days of inventory on hand (DI D RECT, 2001). This is the smallest amount of inventory of any company within this industry, according to Mike Gray, Supply Chain Evangelist for Dell. He stated that most companies within the computer industry currently hold between 20 and 30 days worth of inventory (Personal Communication March 10, 2005). The limited amount of inventory held by Dell has "created value for their customers. The value created for their customers is a function of integrating the entire value chain: invention, development, design, manufacturing, logistics, service, delivery and sales" (DI D RECT, 2001). Integrating the entire value chain creates visibility and provides stronger relationships between Dell and their customers and suppliers. This visibility allows them to only "invest in what their customers want, rather than trying to guess what they might want" (DI D RECT, 2001). In addition Dell has a philosophy to "only manufacture what their customers ask them to make, when they ask them" (DI D RECT, 2001). This strategy provides Dell with a time-to-market advantage. "They can get their customers the freshest, latest, greatest Pentium 4 and all associated operating systems 85 days faster than HP. This is true in regards to research that shows Hewlett Packard has 63 days of inventory and a distribution channel with 25 to 30 days of inventory as well. Collectively, HP has about

90 days of inventory compared to Dell's five. The minimal amount of inventory held by Dell provides them with an economic advantage, because the value of components and manufacturing materials declines about one per cent per week. The five day inventory also minimizes a customer's ability to change their wants before they receive their computer. For example, if an individual tells a manufacturer what they want today but they do not hear the request for 90 days, chances are by this time the customer wants something else" (DI D RECT, 2001). Dell's use of just in time results in cost savings, superior customer satisfaction, limited waste, and the ability to provide their suppliers with more information. In the end these benefits all result in a cost savings for Dell and higher revenue. Since Dell holds minimal inventory, they do not have to fund raw materials, work in process or finished goods inventory. Toyota Motor Corporation is another company that effectively uses just in time. They are known as the "master and pioneer" of just in time and are currently entering the market to provide customized vehicles to customers with a minimal wait. "Toyota has spent the last six years revamping its ordering, manufacturing and distribution to make it easier for dealers and customers to make changes right before production" (Fahey, 2004). "Their goal is to reduce the average time between dealer order and delivery from Toyota's North American factories from 70 days to 14" (Fahey, 2004). This goal accomplishment "would not only make customers happier but also cut dealer inventory costs and the need for Toyota to spend on rebates for slow-selling vehicles" (Fahey, 2004). In order to seek the benefits of providing customized orders and reducing the average delivery time, Toyota has developed its own software that connects dealers to factories and factories to suppliers. The integration of the value chain creates visibility for all members of Toyota's supply chain. When a request from a dealer is received by Toyota their "software is able to figure out the availability of parts nearby, the time to resequence the assembly line and whether the change would unbalance the line by scheduling, for example, too many models loaded with time-consuming options one right after the other" (Fahey, 2004). Toyota has also adjusted their distribution process to effectively provide customized vehicles in a just in time process. "Toyota now sends finished vehicles to sorting docks where they can be grouped by region. This new process cuts delivery by two days. And in assembling cars, Toyota now considers destination, so that it may, for instance, make vehicles headed to Seattle at the same time" (Fahey, 2004). This process adjustment has provided Toyota with a cost savings in result. Dell and Toyota are two model companies of just in time. They effectively get the right products to their customers when they need it. Both companies have achieved a competitive advantage within their industries due to utilizing the just in time process and allowing visibility between them and other members of the value chain. JIT and Beyond Just-In-Time inventory systems have come a long way through out the years improving the efficiency of purchasing in many companies. But as with most things there is always room for improvement and growth. JIT inventory systems have evolved over the years with many new and exciting twists. Competition in the business world is shifting from being between company and company to supply chain and supply chain. This is why JIT is evolving in many different ways. JIT II is one such evolution of the efficiency of JIT. JIT II is a way to improve the customer-supplier relationship. JIT II uses "systems integration" which allows, "sharing of information so that the relationship is more like a partnership" (Pragman). Essentially this equals more and more visibility throughout the supply chain, which equals better responsiveness and lower costs, the two main goals of supply chain management. "JIT II, a customer-supplier partnership concept pioneered at Bose Corporation and now practiced by major companies and their suppliers, can aid in cutting both design and response lead time" (Pragman). This is accomplished through systems integration, which seeks ways to improve coordination between different functional areas, as well as bridges the gap between customer and supplier. With JIT II the suppliers have a person within the customer's organization full time acting as a purchasing department employee for the customer firm. JIT II has really impacted the following areas: "the administration of the purchasing function, logistics, concurrent engineering and value analysis and material stores and support services. In each of these areas the lead time reductions are greater with JIT II than with conventional JIT" (Pragman). The administrative benefits of JIT II are due to the fact that the supplier is constantly available in-house. JIT II reduces administrative costs for both the customer and supplier because the purchasing costs are not all on the customer and the supplier gets all the business from that specific customer as it wants as long as things go well. Because the supplier is always present "JIT II permits concurrent engineering and value analysis to take place on an ongoing basis, not just during sporadic sales calls" (Pragman). JIT II is not the end of the evolution of just in time systems it is actually just the beginning. ERP is another result that spawns from the premise behind JIT II. The main difference between the two is that JIT II is not computer system based and ERP is based on a computer system that helps ensure the visibility of all functional areas within a company as well as within its supply chain. "ERP helps organizations reduce supply chain inventories due to the added visibility throughout the entire supply chain" (Wisner, Leong, Tan). A major advantage of an ERP system is that it allows managers to make better more informed decisions that effect the entire supply chain. As ecommerce and global operations continue to grow a need for visibility and data exchange between suppliers, customers and foreign offices has emerged. Thus driving ERP more to the forefront with ERP comes decreased inventories as well as responsiveness which is the major idea of JIT systems.