Jit Benefits

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EXECUTIVE SUMMARY

The purpose of this individual assignment is to show how JIT helps in providing the alternative solution in a logistics operation; the disadvantages of this system would also be explored. At the start of this assignment I will try to provide a simple definition of JIT, then demonstrate the benefits and/or problems in this areas; namely raw materials procurement, production control and planning, inbound logistics and lastly warehouse and storage. Following that will be a case study and recommendations for the implementation of this system.

DEFINITION:

JIT is a manufacturing philosophy that was perfected by the Japanese car company Toyota. The concept is simple, to produce products just in time or to look it in another way, to make only what you want to sell. Its main focus is the exclusion of inventory in the manufacturing process and the elimination of wastes and activities deemed not to add any value. Inventory is looked at negatively as it incurs high costs in terms of its storage and also because it’s subjected to service costs and risk costs. Factors like idle time, lead time, defective equipment, material handling etc are considered as wastes. JIT goes hand in hand with the Kanban system - a card system where a production process is initiated only when a card with the required command is tagged on it, without which, the process is at a standstill. The coordination and planning required for this particular system to take off is immense, as every party within the system needs to play their part.

BENEFITS & PROBLEMS OF JIT IMPLEMENTATION IN:

• RAW MATERIALS PROCUREMENT (Suppliers)

BENEFITS:

JIT ensures that the number of source suppliers the company deals with, is streamlined to a select few. This few are selected based on how competitive their prices are and for their track records in their service and products. By trimming the number of suppliers, it will result in faster and easier handling. One other key benefits of JIT is that it forces the supplier to maintain a supply of defect-free materials as any defects detected would cause delays to the production because the materials ordered are just enough, this also meant that quality inspection by the customer is no longer necessary, hence saving time and money . Thus a long term relationship based on trust between both customer and supplier needs to be maintained as the customer totally relies on the supplier to fulfill the time and place utility. Another aspect of JIT is that item that are delivered, are all used for production, i.e. no safety stock or any other inventory kept for a just in case situation. This helps eliminate costs associated with inventory carrying.

PROBLEMS:

The JIT system even though it looks efficient requires a lot of time and detailed planning. This alone may put off companies from implementing it, aside from that, sourcing for a reliable supplier that can fulfill the JIT demands and on top of that to provide quality materials constantly will prove to be a challenge. Implementing JIT also meant the end on dependency of safety stock. So if there were to be any changes to the original plan due to delays, sudden increase in demand etc , then this would cause a big problem as this meant production would be inconsistent.

• PRODUCTION CONTROL AND PLANNING

BENEFITS:

With JIT, the concept of EOQ is not as important, as now the orders are dependent on the demand from the customer and so too is the idea of reorder/replenishment quantity. Implementing JIT will help the company in upping its productivity and efficiency by simplifying its production process. Good house keeping is practiced and wastes like redundant steps, a worker idling, producing defects etc are eliminated. Getting it right the first time is just as important, as production can’t depend on buffer stocks anymore. Overall...
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