Modern Trend Inventory

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

Planning for just-in-time (JIT) Management Basically JIT is a programme directed towards ensuring that the right quantities are purchased or produced at the right time, and that there is no waste in terms of material or money anywhere in our supply chain. JIT fits well under the TQM umbrella, for many of the ideas and techniques are very similar and, moreover, JIT will not work without TQM in operation. It is essentially: • A series of operating concepts that allows systematic identification of operational problems. • A series of technology –based tools for correcting problems following their identification. An important outcome of JIT is a disciplined programme for improving productivity and reducing waste. This programme leads to cost-effective production or operation and delivery of only the required goods or services, in the correct quantity, at the right time and place. This is achieved with the minimum amount of resources – facilities, equipment, materials, and people. The successful operation of JIT is dependent upon a balance between the suppliers’ flexibility and the users’ stability, and of course requires total management and employee commitment and teamwork. 1

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

AIMS OF JIT The fundamental aims of JIT are to produce or operate to meet the requirements of the customer exactly, without waste, immediately on demand. In some manufacturing companies JIT has been introduced as ‘continuous flow production,’ which describes very well the objective of achieving conversion of purchased material or service receipt to delivery, i.e. from supplier to customer. If this extends into the supplier and customer chains, all operating with JIT, a perfectly continuous flow of material, information or service will be achieved. JIT may be used in non-manufacturing in administration areas, for example, by using external standards as reference points. The JIT concepts identify operational problems by tracking the following: 1.

Material Movements – when material stops, diverts or turns backwards, these always correlate with an aberration in the ‘process.’

2.

Material accumulations – these are there as a buffer for problem, excessive variability, etc., like water covering up ‘rocks’.

3.

Process flexibility –an absolute necessity for flexible operation and design.

4.

Value-added efforts – much of what is done does not add value and the customer will not pay for it.

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

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THE OPERATION OF JIT The tools to carry out the monitoring required are familiar quality and operations management methods, such as: • • • • • • •

Flowcharting Method study and analysis. Preventive maintenance. Plant layout methods. Standardized design. Statistical process control. Value analysis and value engineering.

But some techniques are more directly associated with the operation of JIT systems: 1. Batch or lot size reduction. 2. Flexible Workforce. 3. Kanban or cards with material visibility. 4. Mistake- proofing. 5. Pull-scheduling. 6. Set-up time reduction 7. Standardized containers. In addition, joint development programmes with suppliers and customers will be required to establish long-term relationships and develop single sourcing arrangement that provide frequent deliveries in small quantities. These can only be achieved through close communications and meaningful certified quality.

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

3 THE OPERATION OF JIT There is clear evidence that JIT has been an important component of business success in the Far East and that it is used by Japanese companies operating in the West. Many European and American companies that have adopted JIT have made spectacular improvement in performance. These include: • Increased flexibility (particularly of the workforce). • Reduction in stock and work-in-progress, and the space it occupies. • Simplification of products and processes. These programmes are always characterized by a real commitment to continuous improvement. Organizations have been rewarded, however, by the low cost, low risk aspects of implementation, provided a sensible attitude prevails. The golden rule is to never remove resources – such as stock –before the organization is ready and able to correct the problems that will be exposed by doing so. Reduction of the water level to reveal the rocks, so that they may be demolished, is fine, provided that we can quickly get our hands back on the stock while the problem is being corrected. Successive phases of JIT may well become self-financing by rapid simplification of systems and work flows, JIT must never be regarded at the intermediate stage as the ‘quickfix’. Management must contemplate:

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

4 THE OPERATION OF JIT 1. Long implementation times – typically 2-3 years. 2. A total or company- wide quality and just-in-time management programme. 3. Never ending improvement and reduction of waste. The primary objective of JIT is the improvement of quality through elimination of waste. It demands that inventory is kept minimum, for inventory costs (insurance, interest, obsolescence, etc.) can be as high as 26 per cent of stock value, and significant improvements in costs and quality can be achieved by the reduction of inventory. Defective parts, materials, and workmanship are detected promptly and quickly fed back to the producing process. Where the problems are identified and corrected on the spot. In addition to quality improvement, there is no requirement for a profusion of warehouses, fleets of forklift trucks, rows of racks, scores of employees, and piles of cash to purchase, handle, and move the inventory.

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

5 THE OPERATION OF JIT In some engineering and process industry applications the major obstacle in producing small lots is the set-up times of equipment and machines. Long set-up time make the small lot size uneconomical so, clearly, cutting set-up times is one of the first tasks.

This will also reduce

equipment downtime; work-in-progress costs associated with obsolescence, materials handling and control, and quality control. Shorter set-up times also result in shorter lead times, which provides greater flexibility for processes to adapt to changes in the market demand and requirements.

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

6 THE KANBAN SYSTEM Kanban is a Japanese word meaning visible record, but in the West it is generally taken to mean a card that signals the need to deliver or produce more parts or components. In manufacturing, various types of record cards, e.g. job orders or tickets and route cards, are used for ordering more parts in a push type, schedule-based system. In a push system a multi-period master production schedule of future demands is prepared, and a computer explodes this into detailed schedules for producing or purchasing the appropriate parts or materials. The schedules then push the production of the parts or components, out and onward. These systems, when computer-based, are usually called Material Requirements Planning (MRP) or the more recent Manufacturing Resource Planning (MRPII).

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

7 THE KANBAN SYSTEM The main feature of the Kanban system is that it pulls parts and components through the production processes when they are needed. Each material, component, or part has its own special container designed to hold a precise, preferably small, quantity. The number of containers for each part is a carefully considered management decision. Only standard containers are used, and they are always filled with the prescribed quantity. There are two cards of Kanbans for each container. The production or P-Kanban serves the work centre producing the part, whereas the conveyance or C-Kanban serves the work centre using it. Each container travels between the two work centres and one Kandan is exchanged for another along the way. No parts may be made at any work centre may come to a halt rather than produce materials or parts not yet requested. The operators will engage in other activities, such as cleaning, maintenance, improvement or quality-circle project work when no P-Kanbans have been submitted. These hold-ups often help to identify and improve bottleneck situations.

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

8 PLANNING JUST-IN-TIME (JIT) MANAGEMENT • JIT fits well under the TQM umbrella and is essentially a series of operating concepts that allow the systematic identification of problems, and tools for correcting them. • JIT aims to produce or operate, in accordance with customer requirements, without waste, immediately on demand. Some of the direct techniques associated with JIT are batch or lot size reduction, flexible, standardized containers. • JIT implementation requires the foundations of quality, low cost, minimum lead times, high flexibility, through the core techniques of pull scheduling, JIT purchasing, buffer stock removal, multifunction workforce and enforced improvement. • As with TQM, a steering committee, a project manager and project teams are enforced improvement. • Purchasing is an important feature of JIT. Long-term relationships with a few suppliers, or ‘co-producers’, are developed in networks of trust to provide quality goods and services.

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

9 KANBAN- STOCK RE-ORDERING SYSTEMS The word ‘kanban’ is Japanese for ‘advertising hoarding’. A kanban card, described later, is merely an advert giving the message ‘Produce Components for me.’ The premise of the system is simple- your supplier will not manufacture components unless they are wanted by yourself. This is a ‘pull’ system, where goods are pulled from further upstream as required, as opposed to a ‘push’ system where you make goods and send them to the next stage, where required or not. Therefore this leads to less inventory, less risk of large scale quality defects and eliminated panic production. (Likewise, you should not be looking to produce unless your customers require the stock.) However, as with most things, there is a slight variation. Your supplier may hold a small amount of stock in order to supply you immediately but as soon as that stock is starting to move then they will trigger production. Remember- your supplier is the person one up the line, not necessarily a separate company, just as your

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

customer is the person one down the line, not the end user.

10 KANBAN- STOCK RE-ORDERING SYSTEMS

THE BRIEF OVERVIEW 1.Manufacturing cell number 2. Number of components types 3. Capacity per 8-hour day 4.Requirements for 5-day week per component [(Item 3*5)/ Item2]

1

2

3

4

3

4

3

2

1.5K

2K

1K

1.5K

2.5

2.5K 1.6K

3.75

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

11 KANBAN- STOCK RE-ORDERING SYSTEMS GETTING THERE If the demand is fairly constant, it can be averaged out over a long time span, or at least regularly modified, and the company can take the decision to follow a set production plan. This entails producing enough of each component to allow every other component to be manufactured before the stock of the first component runs out. For instance, for one weeks rolling manufacturing plan, with components being removed on a daily basis, the weekly demands are as follows: Cell 1 2 3 4 Components 3 4 3 2 Order 1 2 3 4 5 6 7 8 9 10 11 12 Amount 2.5 2.5 2.5 2.5 2.5 2.5 2.5 1.6 1.6 1.6 3.75 3.75 (000s)

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

12 KANBAN- STOCK RE-ORDERING SYSTEMS What do the cards look like? There are a number of different card types-triangular, circular, rectangular, metal, paper etc, every type that you can think of. Do what best suits your needs. However, all of them contain a standard range of information: • Part description • Part number • Quantity per container /card (This is the re-order quantity) • Area where the card is used They may look like the following: Part description Rocker cover

Casting stock 50 per container

Part Number FXZ-1234-WL

JIT APPLICATIONS TO FANS BETHORA- Sashi.Prabhu

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