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In today's competitive world shorter product life cycles, customers rapid demands and quickly
changing business environment is putting lot of pressures on manufacturers for quicker
response and shorter cycle times. Now the manufacturers put pressures on their suppliers. One
way to ensure quick turnaround is by holding inventory, but inventory costs can easily become
prohibitive. A wiser approach is to make your production agile, able to adapt to changing
customer demands. This can only be done by JUST IN TIME (JIT) philosophy. JIT is both a
philosophy and collection of management methods and techniques used to eliminate waste
(particularly inventory).

Waste results from any activity that adds cost without adding value, such as moving and
storing. Just-in-time (JIT) is a management philosophy that strives to eliminate sources of such
manufacturing waste by producing the right part in the right place at the right time.

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

The basic elements of JIT manufacturing are people involvement, plants, and system. People
involvement deal with maintaining a good support and agreement with the people involved in
the production. This is not only to reduce the time and effort of implementation of JIT, but
also to minimize the chance of creating implementation problems. The plant itself also has
certain requirements that are needed to implement the JIT, and those are plant layout, demand
pull production, Kanban, self-inspection, and continuous improvement. The plant layout
mainly focuses on maximizing working flexibility. It requires the use of multi-function
workers”. Demand pull production is where you produce when the order is received. This
allows for better management of quantity and time more appropriately. Kanban is a Japanese
term for card or tag. This is where special inventory and process information are written on the
card. This helps in tying and linking the process more efficiently. Self-inspection is where the
workers on the line inspect products as they move along, this helps in catching mistakes
immediately. Lastly continuous improvement which is the most important concept of the JIT
system. This simply asks the organization to improve its productivity, service, operation, and
customer service in an on-going basis.

In a JIT system, underutilized (excess) capacity is used instead of buffer inventories to hedge
against problems that may arise. The target of JIT is to speed up customer response while minimizing
inventories at the same time. Inventories help to response quickly to changing customer demands, but inevitably
cost money and increase the needed working capital.

JIT requires precision, as the right parts must arrive "just-in-time" at the right position (work station at the
assembly line). It is used primarily for high-vPolume repetitive flow manufacturing processes.
The technique was first used by the Ford Motor Company as described explicitly by Henry
Ford's My Life and Work (1922):

"We have found in buying materials that it is not worth while to buy for other than immediate

They bought only enough to fit into the plan of production, taking into consideration the state
of transportation at the time. If transportation were perfect and an even flow of materials could
be assured, it would not be necessary to carry any stock whatsoever. The carloads of raw
materials would arrive on schedule and in the planned order and amounts, and go from the
railway cars into production. That would save a great deal of money, for it would give a very
rapid turnover and thus decrease the amount of money tied up in materials. With bad
transportation one has to carry larger stocks.

They followed the concept of "dock to factory floor" in which incoming materials are not
even stored or warehoused before going into production. This paragraph also shows the need
for an effective freight management system (FMS) and Ford's Today and Tomorrow (1926)
describes one.

The technique was subsequently adopted and publicised by Toyota Motor Corporation of Japan
as part of its Toyota Production System (TPS).

Japanese corporations could afford large amounts of land to warehouse finished products and
parts. Before the 1950s, this was thought to be a disadvantage because it reduced the economic
lot size. (An economic lot size is the number of identical products that should be produced,
given the cost of changing the production process over to another product.) The undesirable
result was poor return on investment for a factory. Also at that time, Japanese companies had a bad
reputation as far as quality of manufacturing and car manufacturing in particular was concerned.

One motivated reason for developing JIT and some other better production techniques was that

after World War II, Japanese people had a very strong incentive to develop a good
manufacturing technique which would help them rebuild their economy. They also had a
strong working ethic which was concentrated on work rather than on leisure, and this kind of
motivation was what drove Japanese economy to succeed. Therefore Japan’s wish to improve the
quality of its production led to the worldwide launch of JIT method of inventory

Toyota Motors
The basic elements of JIT were developed by Toyota in the 1950's, and became known as the
Toyota Production System (TPS).The chief engineer Taiichi Ohno, a former shop manager and
eventually vice president of Toyota Motor Company at Toyota in the 1950s examined
accounting assumptions and realized that another method was possible. The factory could be
made more flexible, reducing the overhead costs of retooling and reducing the economic lot
size to the available warehouse space.

Over a period of several years, Toyota engineers redesigned car models for commonality of
tooling for such production processes as paint-spraying and welding. Toyota was one of the
first to apply flexible robotic systems for these tasks. Some of the changes were as simple as
standardizing the hole sizes used to hang parts on hooks. The number and types of fasteners
were reduced in order to standardize assembly steps and tools. In some cases, identical
subassemblies could be used in several models.

Toyota engineers then determined that the remaining critical bottleneck in the retooling process
was the time required to change the stamping dies used for body parts. These were adjusted by
hand, using crowbars and wrenches. It sometimes took as long as several days to install a large
(multiton) die set and adjust it for acceptable quality. Further, these were usually installed one
at a time by a team of experts, so that the line was down for several weeks.

Toyota implemented a program called Single Minute Exchange of Die (SMED). With very
simple fixtures, measurements were substituted for adjustments. Almost immediately, die
change times fell to about half an hour. At the same time, quality of the stampings became
controlled by a written recipe, reducing the skill required for the change. Analysis showed that
the remaining time was used to search for hand tools and move dies. Procedural changes (such
as moving the new die in place with the line in operation) and dedicated tool-racks reduced the
die-change times to as little as 40 seconds. Dies were changed in a ripple through the factory as
a new product began flowing.

After SMED, economic lot sizes fell to as little as one vehicle in some Toyota plants. Carrying
the process into parts-storage made it possible to store as little as one part in each assembly
station. When a part disappeared, that was used as a signal to produce or order a replacement.

JIT was firmly in place in numerous Japanese plants by the early 1970's. JIT began to be
adopted in the U.S. in the 1980's.
JIT applies primarily to repetitive manufacturing processes in which the same products and
components are produced over and over again

For Example Cars, Fast Food Chains

The requirements for a proper just-in-time management are:

STANDARDIZATION: Where the supplies are standardized and the suppliers are trustable
and close to the plant. As there is little buffer inventory between the workstations, so the
quality must be high and efforts are made to prevent machine breakdowns. Those organizations
that need to respond to customer demands regularly this system is also being able to respond to
changes in customer demands.

SOFTWARE: For JIT to work efficiently Supply Chain Planning software, companies have in the mean
time extended Just-in-time manufacturing externally, by demanding from their suppliers to deliver inventory
to the factory only when it's needed for assembly, making JIT manufacturing, ordering and delivery processes
even speedier, more flexible and more efficient.

MULTI-FUNCTIONALITY In JIT workers are multifunctional and are required to perform

different tasks. Machines are also multifunction and are arranged in small U-shaped work cells
that enable parts to processed in a continuous flow through the cell. Workers produce pars one
at a time within cells and transport those parts between cells in small lots.

CLEANLINESS Environment is kept clean and free of waste so that any unusual occurrence
are visible.

SCHEDULES: Schedules are prepared only for the final assembly line, in which several
different models are assembled at the same line. Requirements for the component parts and
subassemblies are then pulled through the system. The "PULL" element of JIT will not work
unless production is uniform and lot sizes are low. Pull system is also used to order material
from suppliers (fewer in numbers usually). They make be requested to make multiple
deliveries of the same item in the same day, so the manufacturing system must be flexible.

QUALITY: Quality within JIT manufacturing is necessary, because without a quality program
in JIT, the JIT will fail. Here we think about quality at the source and the Plan, Do, Check,
Action with its statistical process control. Furthermore, techniques are also very important.
The JIT technique is a pull system rather than a pull system, based on not producing things
until they are needed. The well known Kanban card is used as a signal to produce. Moreover,
integration also plays a key role in JIT systems. JIT integration can be found in four points of
the manufacturing firm. The Accounting side, Engineering side, Customer side and Supplier
side. At the accounting side, JIT has concern for WIP, utilization and overhead allocation and
at the engineering side of JIT focuses on simultaneously and participative design of products
and processes.
Just-In-Time Total Quality Management is the mean of market and factory management within
a humanistic environment of continuing improvement. Moreover, it means continuing
improvement in social life, and working life. When applied to the factory, Kaizen means
continual improvement involving managers and workers alike. When it comes to Total Quality
Management, Japans strong industrial reputation is well-known around the world. Total
quality control is the system, which Japan has developed to implement Kaizen or continuous
improvement. The traditional description of Just-In-Time is a system for manufacturing and
supplying goods that are needed. There are several important tools that are important for total
quality management control, but there are seven that are even more important. These are
relations diagram, affinity diagram, systematic diagram or tree diagram, matrix diagram,
matrix data analysis, process decision program chart, and arrow diagram. When used properly,
these seven tools will help the total quality management system by eliminating defective
products. Moreover, they will help in assisting to improve productivity, complete tasks on time,
eliminate waste, and reduce lead time and inventory cost.

Pros of Just-In-Time:
Goals of JIT can vary, but there are a few that should be constant in any JIT system:

1. Increasing the organization’s ability to compete with others and remain competitive
over the long run is very important.
2. The competitiveness of the firms is increased by the use of JIT manufacturing process
as they can develop a more optimal process for their firms.
3. The key is to identify and respond to consumers needs. Customers’ needs and wants
should be the most important focus for business today. This objective will help the firm
on what is demanded from customers, and what is required of production.
4. Moreover, the optimal quality and cost relationship is also important. The organization
should focus on zero-defect production process. Although it seems to be unrealistic in
the long run, it will eliminate a huge amount of resources and effort in inspecting, and
reworking defected goods.
5. Another important goal should be to develop a reliable relationship between the
suppliers. A good and long-term relationship between an organization and its suppliers
helps to manage a more efficient process in inventory management, material
management, and delivery system. It will also assure that the supply is stable and
available when needed.
6. Moreover, adopt the idea of continuous improvement. If committed to a long-term
continuous improvement idea, it will help the organization to remain competitive in the

Cons of Just-In-Time:
Regardless of the great benefits of JIT, it has its limitations:

1. For example cultural differences. The organizations cultures vary from firm to firm.
There are some cultures that tie to JIT’s success, but it is difficult for an organization to
change its cultures within a short time.
2. Also manufacturers that use the traditional approach which relies on storing up large
amounts of inventory for backing up during bad times may have problems with getting
use to the JIT system.
3. Also JIT is quite different for workers, in the sense that due to the shorter cycle time,
lots of pressure and stress is added on the workers.
4. Also the JIT system throws workers off in the sense that if a problem occurs, they
cannot use their own method of fixing the problem, but use methods that have been
previously defined.
5. Moreover, the JIT system only works best for medium to high range of production
volume manufacturers, thus leaving a question to whether it might work for low
volume companies.
Case in which JIT has failed
Just in Time production allows companies to reduce both inventory and the entire production
chain. It encourages the removal of all surplus, including surplus factories. Under normal
business conditions this is not a problem. However, if there is any disruption at any given point
in the supply chain, then all production grinds to a halt.

Evidence of the problem with Just in Time production became clear in the wake of Hurricane
Katrina and Hurricane Rita, both of which hit the US Gulf coast in 2005. At that time, no new
oil refineries had been built in the US since 1976. During that time period, companies actually
shut down several refineries to reduce capacity. The old refineries still operating ran at full
capacity, so no new refineries were needed according to Just in Time theory since they would
only produce surplus gasoline. However, most of these refineries were clustered around the
Gulf coast. When the Katrina hit, 15 oil refineries in Mississippi and Louisiana representing
20% of US refining capacity was shut down. Rita damaged another 16 refineries in Texas,
accounting for 2.3 million barrels per day of capacity shut down.

The lack of surplus in oil refining caused a shock to the United States. Gasoline prices surged.
Had companies not shut down refineries in order to reduce capacity according to Just in Time
theory, particularly refineries on the west coast, then it is likely that gasoline prices would have
remained stable.

US regular grade gasoline prices were $2.154 per gallon on November 28, 2005, down from a
spike of $3.09 on September 19, 2005 in the immediate aftermath of the hurricane Katrina
The work described in this case study was undertaken in a young, rapidly expanding company
in the financial services sector with no previous experience with Total Quality Management
(TQM). The quality project began with a two-day introductory awareness program covering
concepts, cases, implementation strategies and imperatives of TQM. The program was
conducted for the senior management team of the company. This program used interactive
exercises and real life case studies to explain the concepts of TQM and to interest them in
committing resources for a demonstration project.

Step 1. Define the Problem

1.1 Selecting the theme: A meeting of the senior management of the company was held.
Brainstorming produced a list of around 10 problems. The list was prioritized using the
weighted average table, followed by a structured discussion to arrive at a consensus on the two
most important themes -- customer service and sales productivity.

Under the customer service theme, "Reducing the Turnaround Time from an Insurance
Proposal to Policy" was selected as the most obvious and urgent problem. The company was
young, and therefore had few claims to process so far. The proposal-to-policy process therefore
impacted the greatest number of customers.

An appropriate cross functional group was set up to tackle this problem.

1.2 Problem = customer desire – current status. Current status: What did the individual
group members think the turnaround is currently? As each member began thinking questions
came up. "What type of policies do we address?" Medical policies or non-medical? The latter
are take longer because of the medical examination of the client required. "Between what
stages do we consider turnaround?" Perceptions varied, with each person thinking about the
turnaround within their department. The key process stages were mapped:

Several sales branches in different parts of the country sent proposals into the Central
Processing Center. After considerable debate it was agreed at first to consider turnaround
between entry into the computer system at the Company Sales Branch and dispatch to the
customer from the Central Processing Center (CPC). Later the entire cycle could be included.
The perception of the length of turnaround by different members of the team was recorded. It
was found that on an average Non-Medical Policies took 17 days and Medical Policies took 35

Customer desire: What was the turnaround desired by the customer? Since a customer survey
was not available, individual group members were asked to think as customers -- imagine they
had just given a completed proposal form to a sales agent. When would they expect the policy
in hand? From the customer's point of view they realized that they did not differentiate
between medical and non-medical policies. Their perception averaged out six days for the
required turnaround.

"Is this the average time or maximum time that you expect?" they were asked. "Maximum,"
they responded. It was clear therefore that the average must be less than six days. The
importance of "variability" had struck home. For 99.7 percent delivery within the customer
limit the metric was defined.

Therefore the average customer desire was less than 6 days and the current status was that of
64 days for non-medical policies and for medical policies it was 118 days. Therefore the
problem was to reduce the non-medical policies from 64 to 6 days and medical policies from
118 to 6 days.

The performance requirement appeared daunting. Therefore the initial target taken in the
Mission Sheet (project charter) was to reduce the turnaround by 50 percent -- to 32 and 59 days

Step 2. Analysis of the Problem

In a session the factors causing large turnaround times from the principles of JIT were
explained. These were Input arrival patterns

• Waiting times in process.

o Batching of work.
o Imbalanced processing line.
o Too many handovers.
o Non-value added activities, etc.
• Processing times
• Scheduling
• Transport times
• Deployment of manpower

Typically it was found that waiting times constitute the bulk of processing turnaround times.
Process Mapping (Value Stream Mapping in Lean) was undertaken. The aggregate results are
summarized below:

Number of operations 84
Number of handovers 13
In-house processing time (estimated) 126 man-mins.
Range of individual stage time 2 to 13 mins.

To check this estimate it was decided to collect data -- run two policies without waiting and
record the time at each stage. The trial results amazed everyone: Policy No. 1 took 100 minutes
and Policy No. 2 took 97 minutes. Almost instantly the mindset changed from doubt to desire:
"Why can't we process every proposal in this way?"
Step 3. Generating Ideas

In the introductory program of TQM during the JIT session the advantages of flow versus
batch processing had been dramatically demonstrated using a simple exercise. Using that
background a balanced flow line was designed as follows:

1. Determine the station with the maximum time cycle which cannot be split up by
reallocation 8 minutes.
2. Balance the line to make the time taken at each stage equal 8 minutes as far as possible.
3. Reduce the stages and handovers -- 13 to 8.
4. Eliminate non-value added activities -- transport -- make personnel sit next to each
5. Agree processing to be done in batch of one proposal.

Changing the mindset of the employees so they will accept and welcome change is critical to
building a self-sustaining culture of improvement. In this case, the line personnel were
involved in a Quality Mindset Program so that they understood the reasons for change and the
concepts behind them and are keen to experiment with new methods of working. The line was
ready for a test run.

Step 4. Testing the Idea

Testing in stages is a critical stage. It allows modification of ideas based upon practical
experience and equally importantly ensures acceptance of the new methods gradually by the
operating personnel.

Stage 1: Run five proposals flowing through the system and confirm results. The test produced
the following results:

Average turnaround time: < 1 day

In-house processing time: 76 mins.

There was jubilation in the team. The productivity had increased by 24 percent.

Stage 2: It was agreed to run the new system for five days -- and compute the average
turnaround to measure the improvement. It was agreed that only in-house processing was
covered at this stage and that the test would involve all policies at the CPC but only one branch
as a model. This model, once proved, could be replicated at other branches.

The test results showed a significant reduction in turnaround:

1. For all non-medical policies from 64 to 42 days or 34%

2. For policies of the model branch from 64 to 27 days of 60%

The Mission Sheet goal of 50 percent reduction had been bettered for the combined model
branch and CPC. Further analysis of the data revealed other measures which could reduce the
turnaround further. Overall reduction reached an amazing 75 percent. Turnaround, which had
been pegged at 64 days, was now happening at 99.7 percent on-time delivery in 15 days.

Step 5. Implementing the Ideas

Regular operations with the new system was planned to commence. However, two weeks later
it was still not implemented. One of the personnel on the line in CPC had been released by his
department for the five-day trial to sit on the line but was not released on a regular basis. The
departmental head had not attended the TQM awareness program and therefore did not
understand why this change was required.

There were two options -- mandate the change or change the mindset to accept the change.
Since the latter option produces a robust implementation that will not break down under
pressures it was agreed that the group would summarize TQM, the journey and the results
obtained in the project so far and also simulate the process with a simple exercise in front of
the department head. This session was highly successful and led to the release of the person
concerned on a regular basis.

Step 6. Follow-up
• The process was run for one month with regular checks. The results obtained were
marginally better and average time reduced to 11 days.
• Customer reaction: Sales management and sales agents (internal customers) clearly
noticed the difference. For instance one sales manager reported that a customer had
received a policy within a week of giving a proposal and was so amazed that he said,
"If you give such service I will give you the next policy also!"
• Adoption of a similar process at the CPC and the model branch for medical policies has
already reduced the average turnaround time by 70 percent -- from 118 days to 37 days.
The corresponding all-India reduction was from 118 days to 71 days -- a 60 percent
• The project objective of 50 percent in the first stage has been achieved.

A quality improvement story was compiled by the project Leader for training and motivating
all employees.