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Just in time (JIT) is a production strategy that strives to improve a business' return on investment by

reducing in-process inventory and associated carrying costs. To meet JIT objectives, the process relies on
signals or Kanban (
, Kanban) between different points, which are involved 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.
JIT relies on other elements in the inventory chain as well. 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."
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;
however, some research
demonstrates that basing JIT on the presumption of stability is inherently flawed.
A surprising effect of JIT was that car factory response time fell to about a day. This improved customer
satisfaction by providing vehicles within a day or two of the minimum economic shipping delay.
Also, the factory began building many vehicles to order, eliminating the risk they would not be sold. This
improved the company's return on equity.
Since assemblers no longer had a choice of which part to use, every part had to fit perfectly. This caused a
quality assurance crisis, which led to a dramatic improvement in product quality. Eventually, Toyota
redesigned every part of its vehicles to widen tolerances, while simultaneously implementing
careful statistical controls for quality control. Toyota had to test and train parts suppliers to assure quality
and delivery. In some cases, the company eliminated multiple suppliers.
When a process or parts quality problem surfaced on the production line, the entire production line had to be
slowed or even stopped. No inventory meant a line could not operate from in-process inventory while a
production problem was fixed. Many people in Toyota predicted that the initiative would be abandoned for
this reason. In the first week, line stops occurred almost hourly. But by the end of the first month, the rate had
fallen to a few line stops per day. After six months, line stops had so little economic effect that Toyota
installed an overhead pull-line, similar to a bus bell-pull, that let any worker on the line order a line stop for a
process or quality problem. Even with this, line stops fell to a few per week.
The result was a factory that has been studied worldwide. It has been widely emulated, but not always with
the expected results, as many firms fail to adopt the full system.

The just-in-time philosophy was also applied to other segments of the supply chain in several types of
industries. In the commercial sector, it meant eliminating one or all of the warehouses in the link between a
factory and a retail establishment. Examples in sales, marketing, and customer service involve applying
information systems and mobile hardware to deliver customer information as needed, and reducing waste by
video conferencing to cut travel time.

Main benefits of JIT include:
Reduced setup time. Cutting setup time allows the company to reduce or eliminate inventory for
"changeover" time. The tool used here is SMED (single-minute exchange of dies).
The flow of goods from warehouse to shelves improves. Small or individual piece lot sizes reduce lot delay
inventories, which simplifies inventory flow and its management.
Employees with multiple skills are used more efficiently. Having employees trained to work on different
parts of the process allows companies to move workers where they are needed.
Production scheduling and work hour consistency synchronized with demand. If there is no demand for a
product at the time, it is not made. This saves the company money, either by not having to pay workers
overtime or by having them focus on other work or participate in training.
Increased emphasis on supplier relationships. A company without inventory does not want a supply
system problem that creates a part shortage. This makes supplier relationships extremely important.
Supplies come in at regular intervals throughout the production day. Supply is synchronized with
production demand and the optimal amount of inventory is on hand at any time. When parts move
directly from the truck to the point of assembly, the need for storage facilities is reduced.
Minimizes storage space needed.
Smaller chance of inventory breaking/expiring.

Juran: Quality Trilogy
Managing for quality consists of three basic quality-oriented processes:
quality planning,
quality control, and
quality improvement.
The role of quality planning is to design a process that will be able to meet established goals under operating
The role of quality control is to operate and when necessary correct the process so that it performs with
optimal effectiveness.
The role of quality improvement is to devise ways to take the process to unprecedented levels of
Juran Trilogy
1. Quality Planning
Quality planning stems from a unity of purpose that spans all functions of an organization.
The subject of planning can be anything -- an engineering process for designing new products, a
production process for making goods, or a service process for responding to customer requests.
Quality Planning involves
Identifying customers, both internal and external
Determining their needs
Specifying the product features that satisfy those needs at minimum cost.
Designing the processes that can reliably produce those features.
Proving that the process can achieve its goals under operating conditions.
2. Quality Control
The process of managing operations to meet quality goals.
The process of Quality Control involves:
Choosing control subjects
Choosing units of measurement
Establishing a measurement procedure
Interpreting differences between measurement and goal.
Taking action to correct significant differences
3. Quality Improvement
Assuming the process is under control, any waste that occurs must be inherent in the design
of the process.
The object of quality improvement is to reduce chronic waste to a much lower level.
The steps in Quality Improvement:
Prove the need for improvement
Identify specific projects for improvement
Organize to guide the projects
Organize for diagnosis -- discovery of causes
Diagnose the causes
Provide remedies
Prove that the remedies are effective under operating conditions
Provide for control to maintain the gains.
Malcolm Baldrige National Quality Award
The Malcolm Baldrige National Quality Award (MBNQA) is presented annually by the President of the United States
to organizations that demonstrate quality and performance excellence. Three awards may be given annually in each
of six categories:
Service company
Small business
Established by Congress in 1987 for manufacturers, service businesses and small businesses, the Baldrige Award
was designed to raise awareness of quality management and recognize U.S. companies that have implemented
successful quality-management systems.
The education and healthcare categories were added in 1999. A government and nonprofit category was added in
The Baldrige Award is named after the late Secretary of Commerce Malcolm Baldrige, a proponent of quality
management. The U.S. Commerce Department's National Institute of Standards and Technologymanages the award
and ASQ administers it.
Organizations that apply for the Baldrige Award are judged by an independent board of examiners. Recipients are
selected based on achievement and improvement in seven areas, known as the Baldrige Criteria for Performance
1. Leadership: How upper management leads the organization, and how the organization leads within the
2. Strategic planning: How the organization establishes and plans to implement strategic directions.
3. Customer and market focus: How the organization builds and maintains strong, lasting relationships with
4. Measurement, analysis, and knowledge management: How the organization uses data to support key
processes and manage performance.
5. Human resource focus: How the organization empowers and involves its workforce.
6. Process management: How the organization designs, manages and improves key processes.
7. Business/organizational performance results: How the organization performs in terms of customer
satisfaction, finances, human resources, supplier and partner performance, operations, governance and social
responsibility, and how the organization compares to its competitors.

Break- even analysis is a generally neglected credit risk assessment to ol. It is very useful in
leaping purposal the business risk profile.
Break-even is the point at which a business makes neither a profit nor a loss, as the total
costs are exactly equal to sales revenue. Break-even is a useful tool in exploring the
serviceability of debt by looking at the margin of safety, in a particular business profile. The
concept is that certain business costs will be volume orientated, i.e. that they will increase
with activity. Certain other business costs will tend to remain fixed or at least almost fixed.
Limitations of Break-Even Analysis
Although, break-even analysis is a very useful risk assessment technique and a useful
device for testing the sensitivities of business performance, the following limitations must be

All costs resolved into fixed or variable
Variable costs fluctuate in direct proportion to volume.
Fixed costs remain constant over the volume range.
The selling price per unit is constant over the entire volume range.
The company sells only one product, or mix of products tends to remain constant.
Volumetric increase is the only factor affecting costs.
The efficiency in the use of resources will remain constant over the period.