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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