Just-In-Time (JIT) is a Japanese manufacturing management method that was developed in the 1970’s. It was first adopted by Toyota manufacturing plants by Taiichi Ohno. One motivated reason for developing JIT was a need of a better production technique after World War II. Japanese people had a very strong incentive to develop a good manufacturing technique to help them rebuild the economy. They also had a strong working ethnic which was concentrated on work that caused continuous improvement. These kinds of motivation had driven Japanese economies to succeed. Because of the natural constraints and the economy constraints after World War II, Japanese Manufacturers looked for a way to gain the most efficient use of limited resources. The Toyota Company implemented this into their plant and turned the management and accounting principles around to effectively and efficiently move inventory in and out very quickly while also concentrating on the manufacturing aspects of their cars. After the first introduction of JIT by Toyota, many companies followed up and around mid 1970s’and it gained extended support and widely used by many companies around the world.
Just in Time is an inventory strategy implemented to improve the return on investment of a business by reducing in-process inventory and its associated carrying costs. JIT can lead to dramatic improvements in a manufacturing organization's return on investment, quality, and efficiency. Just-in-time means, quite literally, that an assembler on a line receives his consignment of parts "just in time" to use them. The system is based on an ideal situation in which a part arrives just in time to be used. The system also operates on the strength of very small lot quantities of replacement parts. This type of system produces only quantities necessary to fulfill the demands of the next operation. The quantity is pulled when it is needed, where it is needed, and in the exact quantity which is needed. The company will also need to ensure that the process has adequate response time to maintain an uninterrupted schedule. Companies can make great strides in JIT by reducing setup and changeover times for machinery. JIT recognizes that any motion which does not add value to a product increases the no value added cost of the product. Reduction of setup and changeover time reduces the no value added costs attached to a product.
With Just in Time management, a company can dramatically improve its product quality.
In addition, on day 105, the reorder quantity was 13,200. This approach was effective as it increased the number of inventory kits available for production. In total, the company used $2,059,000 to increase its inventory levels. The increased inventory levels and the readjustments of reorder points enabled the factory to increase the number of jobs accepted each day as well as to reduce the number of jobs waiting for kits. In addition, there was a high number of kits queued at station one from day 80 which was accompanied by increased utilization of station one. Besides, we were able to reduce the lead time for all the orders and this enabled the company to increase its revenues.
Based on future supplier contracts, shortening lead time for delivery of parts and materials establishing leaner processes, namely addressing wastes identified through implementing a Just-In-Time (JIT) system. A centralized wharehouse system, co-located near the manufacturing plant will reduce shipping and transportation costs or look for larger space with warehousing capacity. Savings, significant enough will be a factor if space with warehousing falls within the
middle of paper ... ... Reduce overhead costs of working with JIT based customers by. o Consider implementing JIT production and inventory methodology. o Reduce order handling overhead by implementing standing JIT orders (i.e. one order for a total quantity over time, instead of a separate order for each delivery).
During this project, I am going to mention the details of TOYOTA production process system which was developed more than 40 years ago by Taiichi Ohno, the president of Toyota Motor company at that time. The production system that Toyota company uses now and before is relevant to the concept of the process costing system which is currently used in all department of the company.
According to Toyota, they have undertaken a manufacturing revolution that has fundamentally changed established practices; all the way back to the product development and design. They have done this by integrating four areas: design, production engineering, procurement, and component supply. They have achieved higher quality at lower costs by creating standardized, multipurpose components. Also the reduction in cost has heightened the value and fortifies the competitiveness of product. To do this, Toyota has required intensive coordination with its suppliers. Another factor of their Integrated Low Cost is that Toyota steadily feeds cost improvements back into the product to raise their value along with the fact that four Toyota’s seven corporate auditors are outside corporate auditors.
The just-in-time (JIT) inventory system was developed in Japan after World War II, in an effort to control costs during fiscally challenging economic times (Waguespack and Cantor, 1996). The challenge that faced many Japanese companies in the post-War era was to find a way to meet the needs of customers and businesses while utilizing as few resources and as little capital as possible. The Japanese developed these set of techniques in order to control production, limit unnecessary products and reinvest the valuable capital left from the savings back into the business structure (Waguespack and Cantor, 1996). Much of the success of many Japanese corporations over the past four or five decades has been was linked to the principles of JIT (Chhikara and Weiss, 1995).
In the competitive environment, it is necessary for moving products involves reception of products at an intermediate location, store, repackage, clear customs and transport to final destination. The other factor in the supply chain logistics is speed given information flows fast in the internet era. The customer expects everything quick accustomed to the instant status access to the information. With the real time inventory, customer expects the location of the product, it is next scheduled movement and the final delivery schedule.
The objective is to become a leader Toyota Motors cost leadership strategy entails minimizing selling prices and controlling costs, such as reducing cost of operations (Thompson, 2016). They accomplish this through the Toyota Production System (TPS). TPS was established based on years of continuous process improvements. The organizations overall objective was creating the ability to produce vehicles more efficiently, effectively, and
(The origin of the Toyota production system, n.d.). These ideals led to the Just-in-Time method, which is a practice of only making what is needed, when it is needed, using only the amount needed. Just-in-Time is incorporated within the continuous improvement method being that if all elements are performed efficiently and effectively, then it is evident that the corporation will have a lesser chance of becoming stagnant. Their ability to focus on research and development allows them to keep their technological advantage at bay amongst their products, which in turn leads to innovation and sales.
Just In Time production concepts originated in Japan, and are generally associated with the Toyota motor company. JIT was initially known as the “Toyota Production System” and its originator was Taiichi Ohno. Ohno examined American manufacturing and devised a new system of production based on the elimination of waste.
According to Srinidhi and Tayi (2004), companies that are flexible enough and are able to change from a JIT system to a traditional inventory system will have a competitive advantage over other firms who do not switch. In such uncontrollable environments, the major benefit of JIT becomes a handicap with the increase in delivery times and the added data handling and coordination required in such times. This leads to a decrease in quick response time, which ultimately leads to increase in costs to the firm.
Inventory management is a method through, which a business handles tangible resources and materials to ensure availability of resources for use. It is a collection of interdisciplinary processes including a full circle from the demand forecasting, supply chain management, inventory control and reverse logistics. Inventory management is the optimization of inventories of manufactured goods, work in progress, and raw materials. According to Doucette (2001) inventory management can be challenging at times; however, the need for effective inventory management is largely seeing more as a necessity than a mere trend when customer satisfaction and service have become a prime reason for a business to stand apart from its competition. For example, Wal-Mart’s inventory management is one of the biggest contributors to the success of the company;
• While making a methodology is challenging, executing it is considerably more troublesome. Numerous organizations comprehend Toyota Production System now, yet at the same time think that it is troublesome to execute and implement.
Toyota has implemented many different systems such as performance monitoring software, the Just in time (JIT) inventory system, electronic quality control system, communication system and information system thought out their value chain which enable to make correct decision during the manufacturing process. They have identified that having large inventories of spares cost them extensive capital and they have implemented the Just in time (JIT) inventory system which advices the suppliers the exact spares that the product line required and provides a time frame. Toyota adopted continuous learning and embraces change allowing their staff to research and innovation (Toyota
In 1950s, Toyota has developed lean thinking. The Toyota Production System aspires to minimize waste and increase efficiency while at the same time enhances its product quality. From this initiative, Toyota managed to widen its competitive edge by employed fewer employees in the car production with a small number of flaw products.