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Tuesday 20 August 2013

MS 56 IGNOU MBA Solved Assignment -How does JIT differ from MRPII? Briefly discuss the basic requirements and assumptions of JIT implementation.

How does JIT differ from MRPII? Briefly discuss the basic requirements and assumptions of JIT implementation.
Ans :
Just-In-Time
JIT is a company philosophy for maintaining a competitive advantage based
0n the concept of continuous improvement and elimination of waste.
JIT is a system by which work is pulled through the various operations by signals
(called Kanban) from the user to the supplier (preceding operator). Kanban is the
Japanese word for card. Kanban systems first used containers with detachable cards
telling the supplier what and how many to make, where to send and when to send it.
Examples of other type of Kanban (signals) is electronic signal.
Pure JIT is appropriate for repetitive production line that manufactures a limited
number of standard products and has consistent demand.
JIT concept relies heavily on "high quality" product and components manufactured, and a capable and precise logistics system to manage materials and physical distribution. It proposes that materials be available when it is needed-not earlier or later.
JIT thinking is (1) toward prevention of variation and searching for permanent solution and (2) less use of reaction (response method).

Ultimate objective of JIT is: Flow Process; Flexible manufacturing. ( quick and flexible response to customer demands);Lowering operating costs; Increasing operating efficiency; improving product quality; Minimum inventory; Zero failure.

JIT systems are designed to manage lead-time and eliminate waste with an emphasis on short, consistent lead-time. Inventory reduction is a result of JIT. Fundamental IDEA behind JIT is that "inventory exists to cover up problems." Reducing inventory will direct managers to identify "problem areas" and as a result to improve operations processes.
JIT results in a more coordinated scheduling with vendors and create improvement.
JIT [with closer coupling of production and consumption] has faster quality monitoring and response capacity.
JIT is appropriate when system (operation process) is stable.

JIT systems characteristics:
(1)Production Design:
Few bill of material levels; Manufacturability in production cells; achievable quality; appropriate quality; Standard Parts; Modular Design.
(2)Process Design: Setup/lot size reduction; Quality improvement; Manufacturing cells
Limited work-in-process; no stockroom; Service enhancements.
(3)Manufacturing Planning and control: Pull systems; Rapid flow times; Small container sizes; Paperless systems; Visual systems; Level loading; Close purchasing/vendor relationship; Reduced production reporting/ Inventory transaction processing.
(4)Human/Organizational elements: Cross training/job rotation; Flexible labor; continual improvement; Limited direct/indirect labor distinction; Information system improvement; Leadership commitment and involvement.
There are a number of differences between JIT and traditional approaches to inventory management:
(1)JIT attempts to eliminate excess inventory for both buyer ad seller. Critics propose that JIT forces the seller to carry inventory for the buyer. Successful JIT applications show that inventory is significantly reduced for both parties.
(2) JIT requires short production runs and frequent changeover from one product to another. Controlling and minimizing frequent changeover cost is critical to JIT success .
(3) JIT minimizes waiting lines by having materials and components delivered when and where needed.
(4) JIT uses short and consistent lead-time to satisfy demands. Suppliers tend to locate facilities near their customers.
(5) JIT systems rely on high-quality inbound logistics operations.
(6) JIT requires a strong, mutual commitment between buyer and seller who emphasizes quality. JIT cannot succeed if firms only push inventory back to another channel member (in chain of suppliers ).
Successful JIT application place a high priority on efficient and dependable production and manufacturing processes.
JIT relies heavily on the accuracy of the forecasting process used to anticipate finished product demand.
In JIT system, the master production scheduling are repeated frequently as compared with a master production scheduling based on economic order quantity (EOQ).
In JIT lead-times are highly predictable.
Material Requirements Planning (MRP):
Material requirements planning (MRP) is a flow-control system designed to make sure parts and components (items with dependent demand )are available when they are needed.
MRP is a computer-based information system designed to handle ordering and scheduling of dependent demand inventories.

The primary inputs (information) to MRP are:
Master production schedule (MPS)--lists end-items needed, and when items are needed;
Bill of material (BOM)--lists all parts and components with the quantity needed (how they go together); Item Master file--lists inventory data so we can net-out requirements;--Open-order file: status of active orders; Lead-time for each component.
Primary output of MRP is Planned order release listing, rescheduling notice, management reports.
Construction of MRP:
MRP calculates gross quantity requirements of each component of the end product.
MRP subtracts existing stock and scheduled to receipt from the gross requirements (netting) and calculates net requirements (production/purchasing requirements)

WHEN to start production/purchasing?
Starting time will be decided on by back scheduling and by subtracting lead-time ( purchase time/ production) required from the due date.
MRP is considered a push system because we schedule a short period ahead like a week and adjust it daily.
MRP needs 100% accuracy of inventory records (number of items on the record must be equal to actual number of items on shelves).
MRP is flexible in that as production scheduling are updated, so are the material requirements.
MRP attempts to minimize the need for the safety stock inventory.
Manufacturing resource Planning (MRPII) is a more comprehensive plan than MRP is. In addition to production jobs, it calculates resources needed [labor hours, machine hours, tooling, maintenance service and cash flow].
MRPII allows a firm to integrate financial planning with operations and logistics planning.
MRP II projects labor shortage, Projects supporting-staff, Keeps track of tool wear and recommends when to replace or repair a tooling system, keeps track of machine load and projects machine capacity shortage, it treats cash-flow like materials.

It converts planned order releases into cash out flow using unit cost data.
Normal delays for bill paying are fed into computer, and the computer output is a prediction of future cash out flow ( payments to suppliers, payments for shipments, payments of wages, payments of power consumption). It predicts needs for cash for heavy purchasing.
It also uses master production schedule to convert projected good sold to cash inflows.
Past rate of payments on account receivables are used to project the time of cash inflow for good sold.
It helps to describe the likely results of implementing strategies in logistics, manufacturing, marketing, and finance.
"What if" analysis can be used to determine appropriate product movement and storage strategies at and between points in a firm's logistics system.

REQUIREMENTS FOR IMPLEMENTING JIT
Implementation of JIT is not a one day affair. It requires year to pursue the basic ingredients of JIT. Some of the requirement is controllable by the management, while rest is uncontrollable


Training 
Japanese view manpower as a vital asset of the firm. With investment in training and development firm upgrades the skill of workers. Since Japanese culture in industry is of “life-time-employment” type, such investments in manpower are found to be helpful in developing a team of multi-skilled workers, who have better problem solving temperaments. Therefore, better quality production is achieved through training. Alongside, the productivity also improves. The awareness about wastes and improvement of productivity and efficiency is always in focus in these trainings.

Long Term Planning
The implementation of JIT is a long-term process. This requires continuous improvements and trial and error approach. However, it is important to note that the benefits of JIT start coming even at the early stages of its implementation.


Stockholders 
Stockholders are those, who invest int eh company finance. In Japan, the earned profit is reinvested in the firm by stockholders, who are “management worker”. Similar attitude is difficult in our country as major profit is distributed among stockholders as dividend. So, a changed mindset is needed which should be focused on long-term gains rather than annual dividend.


Labor and Union 
Unlike situations in our industry, where there is a demand of specialist workers, JIT demands for multifunctional workers with flexibility to switch over. Union must be enterprise-oriented rather than worker-focussed.


Government Support 
Role of government in relaxing regulations related JIT industries is very important. Better “labor-union-management-government” relation is a must for conducive JIT environment.

Management Support 
Complete management support is needed in the implementation of JIT. For elimination of productivity-related problems and reduction of asset/inventory level, the support of management is a must.


Management and Labour Responsibilities 
Management has to be open in JIT environment, Healthy criticism should be encouraged and hidden problems should be eliminated. Team decision making and cooperative problems solving facilitates JIT implementation.


Cellular Layout and Work Flow 
The functional layout is no more useful in JIT environment. Group technology based cellular layout is needed. He flow of material and arrangement of machines in the cell may preferably be of U-type. This arrangement is useful for reduced inventory, multifunctional workers and elimination of other forms of waste like set-up time, etc.

Department Function
There are major changes in the functions of departments of JIT industries. Workers are better trained to solve quality and engineering problems. In case of any problem, at any worker level, it is attended by entire department even if total production remains disrupted for few minutes. This is called as Jidoka in Japanese industries. Many traditional functions of departments get modified. For example, purchase department works more or quality of raw material rather than dealing with level of inventory and when-to-order.

Supplier Management
JIT advocates single but highly reliable vendor. Suppliers are treated as partner rather than competitors. They are trained in quality and production so that no defective should reach at the shop floor or assembly line. Extreme care is needed in choosing and developing vendors in JIT environment. 


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