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    MBA 6011 Partial Mod 19 2013

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    This document discusses lean production and just-in-time inventory management philosophies. It describes key elements of JIT like developing long-term vendor relationships, reducing work-in-process inventory through reducing cycle time, and using pull systems. Performance is measured by inventory turnover, cycle time, and return on inventory investment.

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    MBA 6011 Partial Mod 19 2013

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    sumithaps66469
    48 views11 pages
    This document discusses lean production and just-in-time inventory management philosophies. It describes key elements of JIT like developing long-term vendor relationships, reducing work-in-process inventory through reducing cycle time, and using pull systems. Performance is measured by inventory turnover, cycle time, and return on inventory investment.

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    This document discusses lean production and just-in-time inventory management philosophies. It describes key elements of JIT like developing long-term vendor relationships, reducing work-in-process inventory through reducing cycle time, and using pull systems. Performance is measured by inventory turnover, cycle time, and return on inventory investment.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    48 views11 pages

    MBA 6011 Partial Mod 19 2013

    Uploaded by

    sumithaps66469
    This document discusses lean production and just-in-time inventory management philosophies. It describes key elements of JIT like developing long-term vendor relationships, reducing work-in-process inventory through reducing cycle time, and using pull systems. Performance is measured by inventory turnover, cycle time, and return on inventory investment.

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    Module 19 -partial

    Lean production & JIT Inventory Management

    Just-in-Time (JIT)

    A comprehensive inventory management philosophy that stresses policies, procedures, and attitudes by managers and other workers that result in the efficient production of high quality goods while maintaining the minimum level of inventories Spawned in part by computerized manufacturing and product handling systems

    Just-in-Time (JIT) Philosophy


    Known as the lean production philosophy/culture Includes


    Increased coordination through the value chain Reduced inventory Reduced production times Increased product quality Increased employee involvement and empowerment

    JIT/Lean Approach to Reducing Incoming Materials


    Elements of reducing incoming materials
    1. Developing long-term relationships with a limited number of vendors 2. Selecting vendors on the basis of service and material quality, as well as price 3. Establishing procedures for employees to order materials for current needs directly from approved vendors 4. Accepting vendor deliveries directly to the shop floor or only as needed

    JIT/Lean Approach to Reducing Work-in-Process Inventory


    Key element is reducing cycle time

    Total time required to complete a process

    Cycle time consists of:


    Setup Time Waiting Time

    Processing Time Movement Time Inspection Time

    Materials Push and Pull Systems


    Materials Push System Employees work to reduce the pile of inventory building up at their workstations Employees push the work to the next workstation after completing their operation Materials Pull System Employees at each station work to provide inventory for the next workstation as needed Work stops when inventory units reach a specified limit until that station catches up Known as a Kanban system

    JIT/Lean Approach to Reducing Finished Goods Inventory

    Can be reduced by

    Reducing cycle time

    Reduces the need for speculative inventories

    Better predicting customer demand for finished units

    To improve, adopt a value chain approach to inventory management by which the manufacturer or supplier is working as a partner with its customers to meet inventory needs

    Performance Measures Under Lean Production and JIT

    Goal is to eliminate inventory and reduce cycle time to processing time Performance emphasis on
    Inventory turnover Cycle time Cycle efficiency

    Gross Margin Return on Inventory Investment (GMROI)


    Measures the effectiveness of inventory levels
    GMROI = Gross margin

    Average inventory

    Cycle Time
    Measures the total time required to produce one unit of a product
    Cycle Time =
    Setup Processing Movement Waiting Inspection + Time + Time + Time + Time Time

    The only component that adds value

    Simplified Recordkeeping

    Lean production and JIT enable significant reductions in the number of accounting transactions required for purchasing and production

    Purchasing
    Standing purchase orders allow production personnel to requisition materials directly from vendors Limited quantities are delivered

    Product costing

    Ending inventories are close to nonexistent so costs are insignificant

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