1 What is JIT Inventory? The minimum amount of inventory necessary to keep a perfect system running smoothly Objective is to minimize the stock of parts and components by having them delivered just in time for production and to limit the inventory of finished goods by producing them just in time to fill demand

2 Push/Pull View of Supply Chains Procurement, Manufacturing and Replenishment cycles Customer Order Cycle Customer Order Arrives PUSH PROCESSESPULL PROCESSES

3 What is Just-in-Time (JIT)? Supplies and products are pulled through system to arrive where they are needed, when they are needed A management philosophy of continuous and forced problem-solving via a focus on throughput time and reduced inventory JIT’s mandate: Eliminate all waste!

4 Examples of Waste Waste is “anything other than the minimum amount of equipment, materials, parts, space and worker’s time, which are absolutely essential to add value to the product.” Shoichiro Toyoda, President, Toyota Watching machine run (idle time) Waiting for parts (queue) Counting parts (overprocessing) Overproduction Moving parts over long distances Storing inventory Looking for tools (motion) Machine breakdown (idle time) Defects

5 What Does JIT Do? Exposes problems and bottlenecks caused by variability associated with poor processes and customer demands: Eliminate waste Remove variability Improve throughput

6 Basic Elements of JIT Production  Pull production system  Kanban production control

7 Basic Elements of JIT Production  Pull production system  Kanban production control  Small lot size inventories  Small lot production and level schedules  Quick setups  Flexible resources: equipment and workers  Cellular layouts  Quality at the source

8 Quality At The Source Quality by suppliers Quality within firm Quality of design: poka-yoke prevents defects Undercapacity scheduling allows for planning, problem solving & maintenance JIT exposes quality problems by reducing inventory JIT limits number defects with small lots

9 Empower Employees Essence of JIT is willingness of workers to spot quality problems halt production when necessary generate ideas for improvement analyze problems perform different functions JIT requires TQM!!

10 Basic Elements of JIT Production  Pull production system  Kanban production control  Small lot size inventories  Small lot production and level schedules  Quick setups  Flexible resources: equipment and workers  Cellular layouts  Quality at the source  Preventive maintenance

11 Preventive Maintenance (PM) Breakdown maintenance repairs to make failed machine operational Preventive maintenance system of periodic inspection & maintenance to keep machines operating JIT requires reliability!

12 Basic Elements of JIT Production  Pull production system  Kanban production control  Small lot size inventories  Small lot production and level schedules  Quick setups  Flexible resources  Cellular layouts  Quality at the source  Preventive maintenance  Supplier networks

13 Trends In Supplier Characteristics  Reduced number of suppliers  Nearby facilities  Repeat business; long term contracts  Provide analysis to enable desirable suppliers to become or stay price competitive  Certify suppliers and make payments at regular intervals rather than upon delivery  Help suppliers meet quality requirements

14 Benefits Of JIT 1. Reduced inventory 2.Improved quality 3.Lower costs 4. Reduced space requirements 5. Shorter lead time 6.Increased productivity/less waste 7. Greater flexibility 8. Better relations with suppliers 9. Simplified scheduling and control activities 10.Better use of human resources 11.More product variety

15 e JIT Implementation Use JIT to finely tune an operating system JIT isn’t for everyone: Global supply chains Union restrictions High volume/low cost items