M7:1 Just-in-Time (JIT) Systems 1.2 Introduction to Just-in-Time (JIT)
Just-in-Time (JIT)
1.1 'Traditional' Systems of Inventory Management and Production ● A system whose objective is to produce or to procure products or components
Just-in-time (JIT) as they are required by a customer or for use, rather than for inventory
● Aims for zero inventory and perfect quality ● A pull system, which responds to demand, in contrast to a push system, in
● Operates by demand - pull which stocks act as buffers between the different elements of the system, such
● Consists of : as purchasing, production and sales
○ JIT purchasing ● Tries to eliminate non-value adding activities, where costs are incurred for little
○ JIT production or no benefit
● Results in: ○ ‘getting things right first time'
○ Lower investment requirements ○ the elimination of (or reduction in) inventory levels, because items held
○ Space savings in inventory have a cost but are not earning anything
○ Greater customer satisfaction ● More of a philosophy or approach to management since it encompasses a
○ Increased flexibility commitment to continuous improvement and the search for excellence in the
design and operation of the production management system.
Traditional systems of inventory management
● Production quantities are planned to meet expected sales demand Just-in-time production
● Management try to avoid running out of inventories of raw materials and ● A production system which is driven by demand for finished products whereby
finished goods, so that the entity can meet demand for production and sales out each component on a production line is produced only when needed for the
of inventories next stage
● Inventory management therefore involves deciding what levels of inventories
should be held, and in what locations. Inventory managers may try to maintain Just-in-time purchasing
inventory levels at a number of weeks' supply ● A purchasing system in which material purchases are contracted so that the
● ‘Efficient’ management receipt and usage of material, to the maximum extent possible, coincide
○ Minimising production costs through long - production runs (reducing
set - up time and costs)
● ‘Efficient’ purchasing and inventory management
○ Buying materials and parts from suppliers in economic order quantities
■ To minimise the combined costs of purchase orders and
holding inventory
Traditional responses to the problems of improving manufacturing capacity and
reducing unit costs of production
● longer production runs
● economic batch quantities for purchasing and production runs
● fewer products in the product range
● reduced time on preventive maintenance, to keep production flowing
,Essential elements of JIT
Preventive Production systems must be reliable and prompt, without
JIT purchasing Parts and raw materials should be purchased as near as maintenance unforeseen delays and breakdowns
possible to the time they are needed ● Machinery must be kept fully maintained, and so
● Using small frequent deliveries against bulk contracts preventative maintenance is an important aspect of
production
Close relationships The responsibility for the quality of goods lies with the supplier,
with suppliers who must operate within the 'right first time' environment that Employee Workers within each machine cell should be trained to operate
JIT operations demand involvement each machine within that cell and to be able to perform
● Minimal checking of deliveries - there must be trust routine preventative maintenance on the cell machines, i.e. to
between the entity and the supplier be multi skilled and flexible
Long - term commitment between supplier and customer The supply chain Because it is important that suppliers should be able to deliver
should be established materials and parts when they are needed, it is often necessary
to monitor the supply chain along its entire length, and not
Uniform loading All parts of the productive process should be operated at a just to establish a close relationship with immediate suppliers.
speed which matches the rate at which the final product is ● Inventory management may therefore involve
demanded by the customer monitoring supplies throughout the supply chain, and
● Production runs will therefore be shorter and there there are software systems that can help companies
will be smaller inventories of finished goods because to do this.
output is being matched more closely to demand, and
so storage costs will be reduced
Set-up time Machinery set-ups are non-value-added activities which should
reduction be reduced or even eliminated
Machine cells Machines or workers should be grouped by product or
component instead of by the type of work performed
● Eliminate space between work stations
Quality Production management should seek to eliminate scrap and
defective units during production, and to avoid the need for
reworking of units since this stops the flow of production and
leads to late deliveries to customers
● Product quality and production quality are important
'drivers' in a JIT system
Pull system A Kanban, or signal, is used to ensure that products /
(Kanban) components are only produced when needed by the next
process
● Nothing is produced in anticipation of need, to then
remain in inventory, consuming resources
● It is important to monitor usage, so that new
production or supply can be arranged to meet
demand. In supermarkets, for example, the sale of
stores items is monitored 'just in time' through the use
of bar codes and automatic scanners at the check-out
points
, 1.3 Value added 1.4 Problems associated with JIT
Value-added costs Problems
● incurred for an activity that cannot be eliminated without the customer's ● Not always easy to predict patterns of demand
perceiving a deterioration in the performance, function, or other quality of a ● Makes the organisation far more vulnerable to disruptions in the supply chain.
product ● Wide geographical spread, however, makes this difficult
1.5 Modern vs. traditional inventory control systems
There is no reason for the newer approaches to supersede the old entirely
● Restaurant
○ Preferable to use the traditional economic order quantity approach for
staple nonperishable food items
○ Adopt JIT for perishable and 'exotic' items
Just-in-Time (JIT)
1.1 'Traditional' Systems of Inventory Management and Production ● A system whose objective is to produce or to procure products or components
Just-in-time (JIT) as they are required by a customer or for use, rather than for inventory
● Aims for zero inventory and perfect quality ● A pull system, which responds to demand, in contrast to a push system, in
● Operates by demand - pull which stocks act as buffers between the different elements of the system, such
● Consists of : as purchasing, production and sales
○ JIT purchasing ● Tries to eliminate non-value adding activities, where costs are incurred for little
○ JIT production or no benefit
● Results in: ○ ‘getting things right first time'
○ Lower investment requirements ○ the elimination of (or reduction in) inventory levels, because items held
○ Space savings in inventory have a cost but are not earning anything
○ Greater customer satisfaction ● More of a philosophy or approach to management since it encompasses a
○ Increased flexibility commitment to continuous improvement and the search for excellence in the
design and operation of the production management system.
Traditional systems of inventory management
● Production quantities are planned to meet expected sales demand Just-in-time production
● Management try to avoid running out of inventories of raw materials and ● A production system which is driven by demand for finished products whereby
finished goods, so that the entity can meet demand for production and sales out each component on a production line is produced only when needed for the
of inventories next stage
● Inventory management therefore involves deciding what levels of inventories
should be held, and in what locations. Inventory managers may try to maintain Just-in-time purchasing
inventory levels at a number of weeks' supply ● A purchasing system in which material purchases are contracted so that the
● ‘Efficient’ management receipt and usage of material, to the maximum extent possible, coincide
○ Minimising production costs through long - production runs (reducing
set - up time and costs)
● ‘Efficient’ purchasing and inventory management
○ Buying materials and parts from suppliers in economic order quantities
■ To minimise the combined costs of purchase orders and
holding inventory
Traditional responses to the problems of improving manufacturing capacity and
reducing unit costs of production
● longer production runs
● economic batch quantities for purchasing and production runs
● fewer products in the product range
● reduced time on preventive maintenance, to keep production flowing
,Essential elements of JIT
Preventive Production systems must be reliable and prompt, without
JIT purchasing Parts and raw materials should be purchased as near as maintenance unforeseen delays and breakdowns
possible to the time they are needed ● Machinery must be kept fully maintained, and so
● Using small frequent deliveries against bulk contracts preventative maintenance is an important aspect of
production
Close relationships The responsibility for the quality of goods lies with the supplier,
with suppliers who must operate within the 'right first time' environment that Employee Workers within each machine cell should be trained to operate
JIT operations demand involvement each machine within that cell and to be able to perform
● Minimal checking of deliveries - there must be trust routine preventative maintenance on the cell machines, i.e. to
between the entity and the supplier be multi skilled and flexible
Long - term commitment between supplier and customer The supply chain Because it is important that suppliers should be able to deliver
should be established materials and parts when they are needed, it is often necessary
to monitor the supply chain along its entire length, and not
Uniform loading All parts of the productive process should be operated at a just to establish a close relationship with immediate suppliers.
speed which matches the rate at which the final product is ● Inventory management may therefore involve
demanded by the customer monitoring supplies throughout the supply chain, and
● Production runs will therefore be shorter and there there are software systems that can help companies
will be smaller inventories of finished goods because to do this.
output is being matched more closely to demand, and
so storage costs will be reduced
Set-up time Machinery set-ups are non-value-added activities which should
reduction be reduced or even eliminated
Machine cells Machines or workers should be grouped by product or
component instead of by the type of work performed
● Eliminate space between work stations
Quality Production management should seek to eliminate scrap and
defective units during production, and to avoid the need for
reworking of units since this stops the flow of production and
leads to late deliveries to customers
● Product quality and production quality are important
'drivers' in a JIT system
Pull system A Kanban, or signal, is used to ensure that products /
(Kanban) components are only produced when needed by the next
process
● Nothing is produced in anticipation of need, to then
remain in inventory, consuming resources
● It is important to monitor usage, so that new
production or supply can be arranged to meet
demand. In supermarkets, for example, the sale of
stores items is monitored 'just in time' through the use
of bar codes and automatic scanners at the check-out
points
, 1.3 Value added 1.4 Problems associated with JIT
Value-added costs Problems
● incurred for an activity that cannot be eliminated without the customer's ● Not always easy to predict patterns of demand
perceiving a deterioration in the performance, function, or other quality of a ● Makes the organisation far more vulnerable to disruptions in the supply chain.
product ● Wide geographical spread, however, makes this difficult
1.5 Modern vs. traditional inventory control systems
There is no reason for the newer approaches to supersede the old entirely
● Restaurant
○ Preferable to use the traditional economic order quantity approach for
staple nonperishable food items
○ Adopt JIT for perishable and 'exotic' items
