Just In Time Overview

Just-in-time, or JIT, is an inventory management method in which goods are received from suppliers
only as they are needed. The main objective of this method is to reduce inventory holding costs and
increase inventory turnover.
The just-in-time (JIT) inventory system is a management strategy that aligns raw-material orders from
suppliers directly with production schedules. Companies employ this inventory strategy to increase
efficiency and decrease waste by receiving goods only as they need them for the production process,
which reduces inventory costs. JIT inventory ensures there is enough stock to produce only what you
need, when you need it. The goal is to achieve high volume production with minimal inventory on
hand and eliminate waste. JIT inventory management ensures that stock arrives as it is needed for
production or to meet consumer demand, but no sooner. The goal is to eliminate waste and increase
the efficiency of your operations. Since the main objective is often quality and not the lowest price,
JIT requires long-term contracts with reliable suppliers.
JIT is what’s known as a lean management process. In JIT, all parts of any production or service
system, particularly people, are interconnected. They inform each other and are mutually dependent
on generating successful outcomes. This practice’s origin comes from Kaizen, a Japanese term
meaning “change for the better.” Originating in Japan, the business philosophy looks to continuously
improve operations and involve all employees, from assembly line workers to the CEO. Like JIT, the
goal is to reduce waste and improve quality.This method requires producers to forecast demand
accurately. Just-in-time manufacturing is also known as the Toyota Production System (TPS) because
the car manufacturer Toyota adopted the system in the 1970s.

JIT PROCESS STEPS

Steps in Cycle of Continuous Improvement for JIT Inventory
Design: The JIT process begins with a review of the essential manufacturing building blocks: product
design, process design, personnel and manufacturing planning. Then plans are put into place to
eliminate disruption, minimize waste and build a flexible system.
Manage: A Total Quality Management (TQM) review ensures there is continuous improvement
throughout the process. A management review defines workers’ roles and responsibilities, defines and
measures statistical quality control, stabilizes schedules, and checks out load and capacity schedules
and levels.
Pull: Educate the team on production and withdrawal methods using signaling methods like Kanban.
Review lot size policies and reduce lot sizes.
Establish: Vendor relationships are vital to the success of JIT. Review vendor lists. Settle on
preferred suppliers, negotiate contracts, discuss lead times, delivery expectations and usage metrics
and measures. Learn how to make the most of them in the supply chain.
Fine-tune: Determine inventory needs, policies, controls and reduce inventory movements.
Build: Inform your team about the skills and capabilities it needs to complete its work and conduct
team education and empowerment sessions to educate them.
Refine: Reduce the number of parts and steps in production by refining, standardizing and reviewing
the entire process.
Review: Define and implement quality measures and metrics and conduct a root cause analysis of any
problems. Emphasize improvements and track trends to improve every aspect of JIT.

BENEFITS OF JIT
1. Waste Reduction: The JIT inventory management model eliminates overordering and excess
of all kinds.
 Reduce Obsolete Inventory and Dead Stock: Low inventory levels significantly
reduce the risk of inventory going unsold and sitting in the warehouse obsolete.
 Reduce Defective Product Loss: Defective inventory items are easier to identify and
fix when production levels are low, which reduces scrap costs.
2. Improved Efficiency: JIT eliminates the costs that come with extra raw materials, unneeded
inventory and product storage.
 Inventory Turnover Ratios: Greater efficiency brings higher inventory turnover.
 Minimal Inventory Obsolescence: The high inventory turnover rate keeps items from
sitting in your facility for too long and becoming obsolete.
 Minimize Raw Materials on Hand: Receiving deliveries in the smallest possible
quantities—sometimes multiple times per day—virtually eliminates raw material
inventories.
  Local Sourcing: When suppliers are located near a company's production facility, the
shortened distances contribute to timely deliveries. On-time, reliable delivery of
goods reduces the need for safety stock.

3. Greater Productivity: JIT enhances productivity by reducing the time and resources
involved in manufacturing processes.
 Faster Product Turnaround: Manufacturers can more quickly produce products.
 Shorter Production Runs: With JIT, manufacturers can deliver new products more
quickly and easily.
 Simplify Change Orders: Having less raw material stock to draw down before
product changes makes it easier to implement engineering change orders to existing
products.
4. Smoother Production Flow: JIT can eliminate bottlenecks and delays across the entire
production process.
 Shorter Production Cycles: JIT shortens manufacturing time, which decreases lead
times for customers.
 Reduce Product Defects: Production mistakes can be spotted faster and corrected,
which results in fewer defective products.
 Shorter Production Runs: Fast equipment setup times reduce production runs,
lowering investment in finished goods.
 More Functional Production Cells: Employees walk individual parts through the
processing steps in a work cell, which reduces scrap levels. Cell models also
eliminate work-in-process queues that build up at more specialized workstations.
 Compressed Operations: Arranging production work cells near each other limits the
amount of work-in-process inventory moving between cells.

5. Lower Costs: Receiving goods on an as-needed basis reduces inventory costs.

 Reduce Working Capital: The low inventory levels that come with JIT limit the amount of
working capital needed.
 Lower Holding Costs: Inventory holding costs (like those for warehousing) are minimal
because less space is used.
 Lower Cash Investment: Companies invest less cash in inventory because JIT doesn’t require
having a lot of stock on hand.
 Reduce Large Raw Material Spends: In JIT, businesses order raw material when needed, so
cash is available for other uses that could be more valuable to the company.
 Reduce Labor Costs: Labor expenses are lower since the number of person-hours required to
fulfill orders is usually fewer than full-time production.

6. Improve Quality: A flexible workforce can focus on making quality products with lower
defect rates. Better outcomes increase customer satisfaction and reduce the cash outlay for
production.
 Reduce Work-in-Progress Goods: Fewer items moving on the shop floor allows
teams to focus on building high-quality products.
 Less Damage: Since minimal inventory is on hand, storage-related accidents decline.
 Certified Quality: Suppliers guarantee quality in advance. So, deliveries go straight to
production areas instead of being held in receiving to await inspection.
 To support these goals, you can invest in new technology or update existing solutions
that will link your system with your suppliers to coordinate the delivery of parts and
materials.
PRINCIPLES OF JIT
1.Total Quality Management
Total Quality Management (TQM) is the belief that an organization can achieve higher customer
satisfaction and long-term success when all members focus on quality. According to TQM, this can be
best achieved through continuous improvement (ongoing process improvement for gradual, long-
lasting process efficiency and financial gains). Here quality is the highest priority; it is even more
important than cost.

2.Production Management
Production management is the efficient use of the 6M’s (manpower, materials, money, machine,
mother nature and measurement) to turn raw materials into finished goods. In JIT, production
management focuses on a pull-based system rather than a push-based system. In a push-based system,
inventory needs are forecasted in order to meet consumer demand. In a pull-based, consumer demand
drives inventory needs.

3.Supplier Management
Supplier management is about building long-term relationships with suppliers that will benefit the
organization. In JIT, for example, this means working together with suppliers, enabling them to
provide you with the exact amount of defect-free components when needed. That way, you don’t
waste time inspecting them. And should problems occur, they should be communicated to the supplier
in a positive manner.

4.Inventory Management
Inventory management is about having the right amount of stock at the right place, time and cost at all
times. This is important since JIT is not about controlling stock. You should hold little-to-no
inventory and only have the exact amount that will be sold (zero inventory). No safety stocks or
works in progress WIP).

5.Human Resource Management

Human resources management allows you to manage people in ways that make them more
productive.
 Involving everyone in continuous improvement and problems solving
 Encouraging open communication and high interaction among employees
 No micromanagement of employees so they take pride and ownership in their work
 Making employees feels supported and empowered
SEVEN WASTES IN JIT
1.Overproduction
The most serious of the wastes, overproduction can cause all other types of wastes and results in
excess inventory. Stocking too much of a product that goes unused has obvious costs: storage, wasted
materials, and excessive capital tied up in useless inventory.
Depending, of course, on the product in question, overproduction can have very serious
environmental effects. More raw materials than necessary are consumed; the product may spoil or
become obsolete, which requires that it be tossed; and, if the product involves hazardous materials,
more hazardous materials than necessary are wasted, resulting in extra emissions, extra costs of waste
disposal, possible worker exposure, and potential environmental problems resulting from the waste
itself.
2.Inventory
Inventory waste refers to the waste produced by unprocessed inventory. This includes the waste of
storage, the waste of capital tied up in unprocessed inventory, the waste of transporting the inventory,
the containers used to hold inventory, the lighting of the storage space, etc. Moreover, having excess
inventory can hide the original wastes of producing said inventory.
The environmental impacts of inventory waste are packaging, deterioration or damage to work-in-
process, additional materials to replace damaged or obsolete inventory, and the energy to light—as
well as either heat or cool—inventory space.
2.Motion
Wasteful motion is all of the motion, whether by a person or a machine, that could be minimized. If
excess motion is used to add value that could have been added by less, than that margin of motion is
wasted. Motion could refer to anything from a worker bending over to pick something up on the
factory floor to additional wear and tear on machines, resulting in capital depreciation that must be
replaced.
There are many environmental costs from excess motion. One obvious one is the needless waste of
materials used to replace worn machines; another one could be the health resources for overburdened
employees, who might not have needed them if motion had been minimized.
3.Defects
Defects refer to a product deviating from the standards of its design or from the customer’s
expectation. Defective products must be replaced; they require paperwork and human labor to process
it; they might potentially lose customers; the resources put into the defective product are wasted
because the product is not used. Moreover, a defective product implies waste at other levels that may
have led to the defect to begin with; making a more efficient production system reduces defects and
increases the resources needed to address them in the first place.
Environmental costs of defects are the raw materials consumed, the defective parts of the product
requiring disposal or recycling (which wastes other resources involved in repurposing it), and the
extra space required and increased energy use involved in dealing with the defects.
4.Over-processing
Over-processing refers to any component of the process of manufacture that is unnecessary. Painting
an area that will never be seen or adding features that will not be used are examples of over-
processing. Essentially, it refers to adding more value than the customer requires.
The environmental impact involves the excess of parts, labour, and raw materials consumed in
production. Time, energy, and emissions are wasted when they are used to produce something that is
unnecessary in a product; simplification and efficiency reduce these wastes and benefit the company
and the environment.
5.Waiting
Waiting refers to wasted time because of slowed or halted production in one step of the production
chain while a previous step is completed. To take the classic example, the production line, if one task
along the chain takes longer than another, than any time the employee in charge of the next task
spends waiting is wasted. The task that takes more time must be made more efficient, other employees
must be hired to help, or the workflow must be better coordinated or scheduled in order to make up
for this wasted time.
The environmental impact comes from the wasted labor and energy from lighting, heating, or cooling
during the waiting period. Additionally, material can be spoiled, and components could be damaged
because of an inefficient workflow.
6.Transport
Transport is moving materials from one position to another. The transport itself adds no value to the
product, so minimizing these costs is essential. This means having one plant closer to another in the
production chain, or minimizing the costs of transportation using more efficient methods. Resources
and time are used in handling material, employing staff to operate transportation, training, implement
safety precautions, and using extra space. Transport can also cause the waste of waiting, as one part of
the production chain must wait for material to arrive.
Environmental costs to waiting include gas emissions, transportation packaging used, possible
damage to the product en route, as well as a whole host of other wastes involving transporting
hazardous materials.

KANBAN SYSTEMS
Kanban is an inventory control system used in just-in-time (JIT) manufacturing. It was developed by
Taiichi Ohno, an industrial engineer at Toyota, and takes its name from the colored cards that track
production and order new shipments of parts or materials as they run out. Kanban is the Japanese
word for sign, so the kanban system simply means to use visual cues to prompt the action needed to
keep a process flowing.
The kanban system can be thought of as a signal and response system. When an item is running low at
an operational station, there will be a visual cue specifying how much to order from the supply. The
person using the parts makes the order for the quantity indicated by the kanban and the supplier
provides the exact amount requested.
Kanban is a visual method for controlling production as part of Just in Time (JIT) and Lean
Manufacturing. As part of a pull system it controls what is produced, in what quantity, and when. Its
purpose is to ensure that you only produce what the customer is asking for and nothing more. It is a
system of signals that is used through the value stream to pull product from customer demand back to
raw materials.
The kanban system can be used easily within a factory, but it can also be applied to purchasing
inventory from external suppliers. The kanban system creates extraordinary visibility to both suppliers
and buyers. One of its main goals is to limit the buildup of excess inventory at any point on the
production line. Limits on the number of items waiting at supply points are established and then
reduced as inefficiencies are identified and removed. Whenever a limit of inventory is exceeded, it
points to an inefficiency that needs to be addressed.

ORIGIN OF KANBAN
As with Just in Time manufacturing the idea behind kanbans comes very much from Toyota and their
observation of a supermarket (Piggly Wiggly) operated in the US. The supermarket would only
replenish what was taken by the customers from the shelves; this meant that shelves never overflowed
with excess stock or ran empty. This pull was transferred from the customers all the way back to the
various suppliers.
Just in Time was implemented and designed at Toyota by Taiichi Ohno who took over 15 years to
perfect their system. During the 1970’s many western visitors would bring back Kanban cards and
want to implement the systems within their own manufacturing facilities; often with little real
understanding of how they worked. It was not until the 1980’s that Kanban control really started to be
understood in the West.

Push Production vs. Pull Production

The main focus of JIT is to pull production through the process as the customer actually takes what
they want. The ideal flow being a single part manufactured as required; although this is not always
possible with many processes without significant redesign or investment. This is very different to
what most companies have traditionally done.
Traditionally production processes are scheduled, raw materials ordered, and then manufactured to
create stock based on a forecast of what the customer is expected to order. This is push production
and is driven very much by the materials being fed into the start of the process and all processes being
controlled through a schedule or MRP. This typically produces products in large quantities or batches
and ties up a huge amount of your capital in stock and Work in Progress (WIP).
Pull production however works in reverse, when a customer takes a product from the end of your
production process a signal is then sent back down the line to trigger the production of the next part.
Just as a supermarket will fill the empty shelf each preceding process in the flow will request the parts
that it needs from its preceding process. This process is controlled through the use of a Kanban.

How Does Kanban Pull Production Work?

In its simplest format a kanban is just a signal back to the proceeding operation to make the next part.
So for a simple process that has single piece flow it would operate just as the simple diagram below:
Kanban Rules
 The later process collects product from the earlier process
 The later process informs the earlier process what to produce
 The earlier process only produces what the later process needs
 No products are moved or produced without Kanban authority
 No defects are passed to the later process

TYPES OF KANBAN SYSTEM

1.Single card
2.Two card
SINGLE CARD
The “one-card” is the simplest implementation of kanban systems. This approach is used
when the upstream and downstream workstations (respectively, the preceding and succeeding
processes) are physically close to each other, so they can share the same stock buffer. The
card is called “Production Order Kanban” (POK). The stock buffer acts either as the outbound
buffer for the first (A) workstation or as the inbound buffer for the second (B) workstation.
Here, each container (the JIT unit load) has a POK attached, indicating the quantity of a
certain material contained, along with eventual complementary information. The POK also
represents a production order for the Workstation A, indicating to replenish the container with
the same quantity. When a B operator withdraws a container from the buffer, he removes the
POK from the container and posts it on a board. Hence, A operator knows that one container
with a specific part-number must be replenished in the stock buffer.
SINGLE CARD KANBAN SYSTEM

TWO KANBAN SYSTEM

In the two-card system, each workstation has separate inbound and outbound buffers . Two
different types of cards are used: Production Order Kanbans (POK) and Withdrawal Kanbans
(WK). A WK contains information on how much material (raw materials / semifinished
materials) the succeeding process should withdraw. Each work-in-progress (WIP) container in
the inbound buffer has a WK attached, as well as each WIP in the outbound buffer has a
POK. WK and POK are paired, i.e. each given part number is always reported both in n POK
and n WK. When a container is withdrawn from the inbound buffer, the B operator posts the
WK on the WK board. Then, a warehouse-keeper operator uses the WK board as a picking
list to replenish the inbound buffer: he takes the WK off the board and look for the paired
POK in the outbound buffer. Then, he moves the corresponding quantity of the indicated
material from the A outbound to the B inbound buffer, while exchanging the related POK
with the WK on the container, restoring the initial situation. Finally, he posts the left POK on
the POK board. Hence, like in the previous scenario, A workstation operator knows that one
container of that kind must be replenished in the outbound stock buffer.

CONSTANT WORK IN PROGRESS (CONWIP)

Constant Work in Progress and developed by Mark Spearman and Wallace Hopp in 1990.
CONWIP are pull-oriented production control systems. Such systems can be classified as pull
and push systems. In a push system, the production order is scheduled, and the material is
pushed into the production line. In a pull system, the start of each product assembly process is
triggered by the completion of another at the end of production line. This pull-variant is
known for its ease of implementation. CONWIP is a kind of single-stage Kanban system and
is also a hybrid push-pull system. While Kanban systems maintain tighter control of system
WIP through the individual cards at each workstation, CONWIP systems are easier to
implement and adjust, since only one set of system cards is used to manage system WIP.
CONWIP uses cards to control the number of WIPs. For example, no part is allowed to enter
the system without a card (authority). After a finished part is completed at the last
workstation, a card is transferred to the first workstation and a new part is pushed into the
sequential process route.
CONWIP is a closed production management system in which a fixed number of containers
(or cards) traverse a circuit that includes the entire production line. When a container reaches
the end of the line the finished product is removed. The container is then sent back to the
beginning of the line where it waits in a queue to receive another batch of items. During each
container's cycle all items in the container are of the same type. The amount of material put
into the container is set by a predetermined transfer lot size. Since CONWIP systems are
closed manufacturing systems, as is Kanban, they have certain advantages over open systems
like : easier control, smaller variances, and smaller average Work In Process (WIP) levels
(and thus also shorter flow times) for the same throughput. They are also self-regulating.

CONWIP SYSTEM

CONWIP advantages over Kanban:

(1) they are very robust regarding changes in the production environment and are easier to
forecast.
(2) they easily handle the introduction of new products and changes in the product mix
(3) they cope with flowshop operation with large set-up times and permit a large product mix
(4) CONWIP systems also yield larger throughput than Kanban Systems for the same number
of containers (maximum inventory), even for systems with yield loses.