Operations Management

1. Just in Time
Production

3. Emergence of JIT
Evolved in Japan after World War II, as a result of their
diminishing market share in the auto industry.
Toyota Motor Company- first to implement fully
functioning and successful JIT system, in 1970’s.
 Japanese Manufacturers looked for a way to
gain the most efficient use of limited resources. They
worked on "optimal cost/quality relationship.

4. JIT Means …
 Keeping work flows moving
 Eliminating inventories
 Reducing travel distances
 Eliminating defects and scrap
 Maximizing usage of space

5. JIT Demand-Pull Logic
Customers
Sub
Sub
Fab
Fab
Fab
Fab
Vendor
Vendor
Vendor
Vendor
Final
Assembly
Here the customer starts
the process, pulling an
inventory item from
Final Assembly…
Then sub-
assembly work is
pulled forward by
that demand…
The process continues
throughout the entire
production process and
supply chain

6. 6 Three Elements of JIT

7. 7 Three Elements of JIT…
JIT manufacturing focuses on production system to
achieve value-added manufacturing
TQM is an integrated effort designed to improve
quality performance at every level
Respect for people rests on the philosophy that
human resources are an essential part of JIT
philosophy

8. 8 Flexible Resources
Moveable, general purpose equipment:
Portable equipment with plug in power/air
Drills, lathes, printer-fax-copiers, etc.
Capable of being setup to do many different things with
minimal setup time
Multifunctional workers:
Workers assume considerable responsibility
Cross-trained to perform several different duties
Trained to also be problem solvers

9. 9 Respect for People
The Role of Employees:
 Genuine and meaningful respect for associates
 Willingness to develop cross-functional skills
 Bottom-round management – consensus management by committees or teams
 Quality circles – small volunteer teams that solve quality problems

10. 10 Respect for People
Lifetime Employment:
Everyone feels secure/is empowered
Everyone is responsible for quality: understand
both internal and external customer needs

11. 11 Respect for People
The Role of Management:
 Responsible for culture of mutual trust
 Serve as coaches & facilitators
 Responsible for developing workers
 Provide multi-functional training
 Facilitate teamwork
 Support culture with appropriate incentive system including non-monetary

12. 12 Respect for People
Supplier Relationships
Single-source suppliers
Can supply entire family of parts
Build long-term relationships with small number
of suppliers
Fewer contracts
Cost and information sharing
Work together to certify processes

13. Traditional Systems
Compared to JIT

14. Priorities
 Traditionally
 Accept all customer orders
 Provide a large number of options from which customers may order
 JIT
 low cost/high quality within limited market

15. Engineering
Traditional
design custom outputs
JIT
design standard
outputs
incremental
improvements
design for
manufacturability
(DFM)

16. Capacity
Traditional
 excess capacity designed into system just-in-case problem arises
 highly utilized
 inflexible
JIT
 minimize waste of having extra capacity
 flexible capacity
 moderately utilized

17. Transformation System
 Traditional
 job shop
 materials handling equipment
 lots of space to store inventory
 JIT
 mostly used in repetitive production situations
 job shops often converted to cellular manufacturing

18. Workforce
 Traditional
 competitive attitude between workers and managers
 status symbols and privileges
 much of the employees’ time is nonworking time: looking for parts,
moving materials, setting up machines, getting instructions, and so on.
When actually working, they tend to work fast.
 JIT
 broadly skilled flexible workers who can uncover and solve problems
 workteams
 cooperative attitudes

19. Inventories
Traditional
used to buffer
operations
large WIP buffers
JIT
inventory is seen as an
evil
small WIP buffers

20. Suppliers
Traditional
suppliers treated as
adversaries
multiple sourcing
JIT
supplier considered
part of team
single-sourcing
agreements
supplier certification
programs

21. Planning and Control
 Traditional
 focus is on planning
 planning complex and computerized
 JIT
 focus is on control
 procedures kept simple and visual
 rather than planning and forecasting for an uncertain future, the firm attempts to
respond to what actually happens in real time with flexible, quick operations.

22. Quality
 Traditional
 inspect goods at critical points
 scrap rates tracked
 JIT
 goal is zero defects
 workers themselves inspect parts

23. Maintenance
Traditional
corrective maintenance, repairing a machine when it breaks
down
done by experts who do nothing but repair broken equipment
equipment run fast
JIT
preventive maintenance, conducting maintenance before the
machine is expected to fail, or at regular intervals.
done by equipment operators
equipment run slow (minimizes their chance of breakdown while
maximizing their output)

24. Companies adopted JIT

26. • Dell do not have to tie up capital in stock which means they can
invest it in other areas of the business, such as R&D or promotion,
to increase sales.
• Dell require less space for stock which means they save money on
storage facilities which will increase their profit margins.
• Dell have a high dependence on their suppliers and should the
suppliers fail them, it is Dell’s reputation and sales which would
suffer if they were unable to meet demand from their customers.
• Dell may be unable to benefit from bulk-buy discounts which leaves
them with an option of increasing the price to the customer or
reducing their own profit margin.

27. Benefits of JIT
 Cost savings: inventory reductions, reduced scrap, fewer defects, fewer changes
due to both customers and engineering, less space, decreased labor hours, les
rework.
 Revenue increases: better service and quality to the customer.
 Investment savings: less space, reduced inventory, increased the volume of work
produced in the same facility.
 Workforce improvements: more satisfied, better trained employees.
 Uncovering problems: greater visibility to problems that JIT allows, if management
is willing to capitalize on the opportunity to fix these problems.

28. Disadvantages of JIT
 Danger of disrupted production due to non-arrival of supplies
 Danger of lost sales
 High dependence on suppliers
 Less time for quality control on arrival of materials
 Increased ordering and admin costs
 May lose bulk-buying discounts