1. Topics To Be Covered 1. Some Thoughts on Production Management
2. What is Just-In-Time ?
3. How does EOQ Impact JIT ?
4. Motivation For EOQ
5. Impacts of Reducing Inventory
6. Requirements For JIT Implementation
7. Implementation of JIT
8. Things to Remember

2. Thoughts on Production Management
(Fact or Myth?)
Large Batch Sizes Improve Production Efficiency.
Fewer tool changes saves time
Repetitive manual actions are most efficient
Having large amounts of inventory helps smooth production flow
Meet unanticipated demand
Supports production system when a machine breakdown occurs
Demand can be met when lead time varies
Promotes Inefficiency
Buffers cover up problems
Statements are True, given that:
Competition is limited
Technology is dated
Processes are NOT optimized

3. JIT and Inventory Reduction
Lowering the level of inventory will reveal more Productivity Issues.
Success in JIT requires addressing the productivity issues while lowering inventory.
Productivity
Issues
Inventory

4. Impacts of Reducing Inventory
Lower storage capacity requirements.
Less money tied up in inventory.
Less ability to accommodate unanticipated events.
Address through increased flexibility
Requires higher degree of accuracy & implementation of prediction
methods.
Exposes production issues.
inefficient processes
equipment maintenance problems
vendor reliability
excessive scrap rate
excessive rework rate
product design problems
Can we reduce inventory without a corresponding manufacturing change?
Allows focus on “true” constraints of production flow.

5. What is Just - In - Time ?
Simple Definition: A system that provides materials, parts and services when they
are needed and result in zero inventory.
Simple Definition implies that JIT is simply a matter of manufacturing producing or receiving parts in a timely fashion. (JIT is more of an Event)
Simple Definition does not address how this timely delivery and minimal inventory is achieved.
The obtaining of a zero inventory is not feasible in most cases.
Better or Preferred Definition: JIT is a collection of methods and attitudes that foster continuous process improvement that results in minimal inventory while having the flexibility to respond to changes in market conditions.
JIT is not:
1. A physical system
2. An inventory control system
3. A management approach for manufacturing
4. Only applicable to procured items

6. JIT Goals Focused on a Balanced System Eliminate Disruptions
Make the system flexible by reducing setup times & lead times
Eliminate Waste, Especially excess inventory
Reduction in Waste
Excess inventory
Overproduction
Waiting time
Unnecessary transporting
Processing waste
Inefficient work method
Product defects

7. JIT Foundations Product Design Standard parts Modular design
Highly capable production system
Process Design
Small lot sizes
Setup time reduction
Manufacturing cells
Limited Work - In- Process (WIP)
Quality improvement
Production Flexibility
Use of Preventive Maintenance, Cross-train workers, Small sublots,
Off-line buffer, Reserve capacity
Little inventory storage

8. JIT Foundations (con’t)
Personnel/ Organization Elements
View workers as assets
Cross trained workers
Continuous improvement
Cost accounting
Leadership / Project Management
Manufacturing Planning & Control
Level loading
Pull system instead of Push system
Visual system (Kanban)
Close vendor relationships
Reduced transacting process
Preventive maintenance & housekeeping

9. JIT Foundations (con’t)
Activity Based Costing
Form of Cost Accounting
Track traceable hours per job
Machine setups, inspection, machine hours, direct labor costs
movement of materials.
Part cost based on % of activities they consume.
Vendor relationships
Multi-tiered
Quality (Inspection)
Quantity
Delivery Time
Sole Source vs Multisource
Pricing
Transaction types
Logistics
Balancing
Quality
Change
JIT II
Empowering suppliers to assume some of the responsibilities of a company’s buyer

10. Push Vs Pull System How do these two systems differ in terms of :
Push System
MRP 1 2 3 4
Inputs
Outputs
Pull System
MRP 1 2 3 4
Inputs
Outputs
How do these two systems differ in terms of :
Communication, machine downtime, changes in demand,
Level loading

11. How Does EOQ Impact JIT ?
EOQ model focuses on savings due to the balance between holding and
order/setup costs. (Quantity Driven)
EOQ model is a function of
Demand (D)
Ordering/Setup Costs (S)
Holding Costs (h)
Production Rate (P)
If EOQ factors remain constant the optimal order size remains constant.
Which EOQ factors has the most impact on JIT? Why?
How can you change the EOQ factor(s) to support JIT philosophy?
Equipment example(s)
Process example(s)
Is a “one unit” batch size feasible? Why or Why not?
Production Quantity vs Transfer Quantities
Can they be different?

12. Same Concept for Mixed Model Sequencing
Batch Sizing 1 2 3
Irv
Sam
Walt
Part A
Part B
Part C
Final Paint
Same Concept for Mixed Model Sequencing
Ethel 4
Finished part

13. Motivation For JIT What are the Benefits of JIT?
Lower inventory costs.
Lower cycle time.
higher customer satisfaction.
more flexibility.
fewer losses of opportunity costs.
producing defect free & well-designed products.
What Obstacles Must be overcome?
Variability in processes
Variability in delivery
High setup times
High processing times
Products not well designed for efficient manufacturing
Use of Inferior materials
Inefficient or improper manufacturing system design
Improperly trained employees
Communication in manufacturing systems
Management may not be committed or willing to devote resources
Workers & management may not display cooperative spirit
Suppliers may resist change
resource commitment, long term commitment, small delivery sizes, shift of quality burden, engineering changes.

14. Converting to a JIT System
1. Make sure top management is committed and aware of resource
requirements.
2. Study operations carefully, decide which parts will need effort.
3. Obtain Support & cooperation of workers
training, setup reduction options, maintenance of equipment, cross
training, cooperation, problem solving, communication of what
JIT is and why, reassurance about job security.
4. Begin by trying to reduce setup times under current systems
5. Gradually convert operations.
Begin at end and work backwards
Do not begin to reduce inventory until major problems resolved in
each area.
6. Convert suppliers to JIT
7. Be prepared to encounter obstacles to conversion

15. Downside of Conversion
1. Time to convert
2. Cost
3. Small lot sizes
4. Transacting costs
5. Traffic congestion

16. JIT in Services 1. Eliminate disruptions 2. Make system flexible
3. Reduce setup times & processing times
4. Eliminate waste
5. Minimizing Work-In-process
6. Simplify the process

17. Things to Remember….
The problem did not occur over night so be patient on gaining
results.
Change is always viewed with skepticism. (cultural barrier)
One can learn from failure as well as success.
Defining pilot project with a well defined set of metrics helps in
assessment of the benefits gained from JIT.