just in time

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 togain the most efficient use of limited resources. They worked on "optimal cost/quality relationship.

Eliminating wastes Total quality management Parallel processing Jit purchasing E-commerce and JIT purchasing Reducing inventories through setup

reduction working towards repetitive manufacturing

Involves keeping stock levels to a minimum

Stock arrives just in time to be used in production

Works best where there is a close relationship between manufacturer and suppliers

Goods not produced unless firm has an order from a customer

Aims to get highest volume of output at the lowest unit cost.

Functioning of JIT

Functioning of JIT A method of production

control. No demand - no

production! Finished goods

assembled just in time to be sold to customer

Component parts assembled just in time to become finished goods

Materials purchased just in time to make component parts.

Reduces inventory

Reduces lead time

Reduces setup time

Just-in-Time ManufacturingJust-in-Time ManufacturingTraditional Manufacturing Traditional Manufacturing

Increases inventory to protect against process problems

Increases lead time to protect against uncertainty

Disregards setup timeas an improvement priority

Just-in-Time PrinciplesJust-in-Time Principles

Emphasizes team-oriented employee involvement

Emphasizes pull manufacturing

Emphasizes zero defects

7

Just-in-Time ManufacturingJust-in-Time ManufacturingTraditional Manufacturing Traditional Manufacturing

Emphasizes work of individuals, following manager instructions

Emphasizes push manufacturing

Tolerates defects

• 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.

• Continuous improvement• Build an organizational culture and value

system that stresses improvement of all processes

• Part of everyone’s job

• Respect for people• People are treated as

knowledge workers

• Engage mental and physical capabilities

• Empower employees

• Standard work practice

• Work shall be completely specified as to content, sequence, timing, and outcome

• Internal and external customer-supplier connection are direct

• Product and service flows must be simple and direct

• Any improvement must be made in accordance with the scientific method at the lowest possible level of the organization

Toyota Production System

Capital not tied up in stocks Less space required for stock Closer relationships with suppliers Reduced deterioration Less vulnerability to fashion and

technology changes Reduction in stockholding costs Increase in cash flow

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