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- Essay Name : 988.txt
- Uploader : Claudell Washington
- Email Address :
- Language : English
- Subject : Economics
- Title : Just-In-Time Systems
- Grade : 95%
- School System : College
- Country : USA
- Author Comments : Management paper
- Teacher Comments :
- Date : Fall 95
- Site found at : Excite search engine
- --------------------------------------------------------------
-
- Just-In-Time Systems
-
- In today's companies, new catch phrases and ideas are being
- developed each and every day. One of the more popular ideas that is
- circulating around these days is the idea of just-in-time manufacturing.
- Many magazines and newspapers have documented the efforts of companies
- to develop and implement just-in-time processes. The question can be asked,
- though, what does just-in-time mean? How does a company implement
- just-in-time processes, and what are the results of implementation?
- Just-in-time manufacturing is basically the idea that companies should
- have manufacturing and purchasing strategies that reduce the time between
- the beginning of the manufacturing process and shipment to the customer.
- This sounds easier said than done, for the development and implementation
- of these strategies are some of the most difficult tasks in just-in-time
- manufacturing.
- One key idea that must be understood about just-in-time
- manufacturing is throughput time. This is the time between the start of the
- manufacturing process and the end, where the product is ready to be shipped.
- Five key elements are involved in throughput time. The first element is
- processing time, or the time actually spent working on the product. Next is
- inspection time and moving time. Moving time is simply the amount of time
- spent moving the product from one production department to another, as well
- as back and forth from storage areas. The last two elements of throughput
- time are waiting, or queue, time and storage time. Queue time is the amount
- of time a product is waiting at a production department before being worked
- on, while storage time is the amount of time raw materials, finished goods,
- and works-in-progress actually stay in storage. Just-in-time philosophy says
- that the first element, processing time, actually adds value to the product,
- while the last four key elements do not.1 Thus, there are value-added
- activities and nonvalue-added activities. Just-in-time manufacturing tries to
- decrease the amount of time spent on nonvalue-added activities as much as
- possible.
- Just-in-time philosophy was first used by Toyota in Japan. Since that
- time, many companies around the world have begun to successfully
- implement just-in-time processes, including several companies in the United
- States. The implementation of just-in-time processes have taken on a
- familiar pattern in these companies. Usually it is begun by training everyone
- in the company about the just-in-time philosophy. The basic just-in-time
- concepts that employees would be trained in and made to follow as
- guidelines are listed in Table I.
-
- Table I
- * Visualize the process in as few steps as possible.
- * View inventory as moving, not static.
- * Emphasis should be placed on the synchronization of each process.
- * Simplify, combine, eliminate
- * Wastes are: over and under production, unnecessary steps, and excessive
- inventory and motion.2
-
- These basic ideas are not unique to just-in-time, but are crucial in training
- employees about the just-in-time philosophy.
- Most companies have realized now that the just-in-time philosophy is
- an important component in the idea of total quality management. Total
- quality management has the same goals as just-in-time, but also seeks as few
- errors as possible between each stage of production. Just-in-time philosophy
- is a tool that top-level managers use to implement total quality management.
- Most companies today seek this implementation, and follow the following
- steps.
- The first step to implementing TQM/JIT manufacturing is to train the
- top management in the basic concepts of these ideas. Once this is
- accomplished, the next step is to form a top-level team. This team's
- responsibilities include deciding upon an organizational structure and
- developing a plan to implement TQM/JIT within the company. This plan
- should include the company's goals concerning production, as well as how to
- establish this plan among all employees (i.e. motivation and discipline).
- This plan should then be used to establish the overall philosophy of the
- company concerning TQM/JIT.3
- Next, the system should be implemented to every aspect of the
- company from supplier to distributors. First, each department should
- establish its goals and a specific problem to attack. Then, a team should be
- chosen by each department and team leaders established. The teams should
- focus on the reduction of costs and the elimination of wastes. Data must
- then be collected on the teams' problems. This data should be plotted in
- order to find excess waste or costs. Once this is done, measurements should
- be made as far as average costs, cycle times, and error rates. Manipulation
- of this data should show at least some apparent problems in the current
- system. Further analysis should help in the implementation of TQM/JIT by
- showing problem areas. In addition, the data could be used to show the
- effects of implementing TQM/JIT into the company.4
- After the beginning of implementation, it is crucial that every
- employee believe in the concepts listed in Table I. Otherwise, the system
- could fail. Once implemented, though, just-in-time systems must be
- continually monitored and preventative actions performed. For instance, if a
- fault in a product is discovered because of a faulty wire, that roll of wire is
- removed. In a complete just-in-time system, however, the process does not
- stop there. The manager would check the warehouse and determine if there
- were any more rolls of faulty wire. If he discovered any, then those would be
- thrown out as well. Then, the manager would contact the supplier which
- sold the company the faulty wire and inform him of the situation, hopefully
- to prevent any more shipments of faulty wire. By doing all of this, the
- manager prevents any backlogs and waste in the future. With the
- just-in-time system, every aspect of the company is continuously running.
- The just-in-time system helps companies spotlight those areas that are falling
- behind and need improvement.
- There are methods by which a company can perform preventative
- maintenance. The first is through planning a well-developed, goal-oriented
- system and establishing a written policy on quality and waste reduction.
- Second, the management of each department should work together to try and
- eliminate problems, and not place blame on any one department. Blame has
- never accomplished anything, and therefore is a nonvalue-added item. Next,
- designers should be knowledgeable of manufacturing requirements and
- limitations so that there is not a contradiction between designs and actual
- products. This results in waiting time, another nonvalue-added item. Last,
- but most important, is ample training. Employees that have been trained
- thoroughly can handle minor problems on the spot without having to hold up
- the entire manufacturing process and call for a manager. Employees without
- such training are problems waiting to happen.5
- Once all of the training, goal setting, and team forming are complete,
- the time has finally come to implement the TQM/JIT system. Once
- implemented, a company must find a way to organize all of the teams,
- including who is on what team and what their goals are. In order to do this,
- some companies have developed what is called a team tracking and status
- report. An example of this kind of report is shown in Table II.
-
- Table II6
- Status Phase Meeting Main
- Name of Team A B C D Leader Time Goal
- Top-Level Non-Applicable R. Wilson Mon 1pm System Implem.
- & Management
-
- Corrective Action
-
- Supplier Mgmt X X X R. Klimo Mon 10:30 Improve Vendor
- Performance
- Excess Inventory X X X X BG Thur 7am Reduce Excess
- Inventory
- Glass Stains X RC Wed 8:30 Reduce Stains
- from Curr. Level
-
- Functional Improvement
-
- Secretary X X D. Boggs Tues 9am Improve Copier
- Effic. & Qual
- Engineering X X X X PW Tues 10am Reduce Doc.
- Errors
- Cust. Service X B. Murray Thur 8am Reduce Sales
- Order Cycle
- Time & Defects
- Purchasing X X X X R. Klimo Fri 7:30 Improve Qual of
- Requisitions
- Qual Engineering X X X X J. Fish Wed 10am Reduce Planning
- Defects
- JIT Line A X X X B. Yong Tues 1pm Reduce Lint in
- Coil Defects
- JIT Line C X P. Tipa Tues 2pm Reduce Chip
- Defects
-
- Special Teams
-
- KANBAN H. Wong Tues 8am Rebalance JIT
- Line A
- Setup G. Knodel Fri 8am Reduce Tester
- Setup Times
- SPC K. Gangkai Mon 4pm Move SPC In-
- Line for JIT
- Line F
- As indicated in Table II, many teams are required to successfully run a
- TQM/JIT operation.
- Now that we have discussed how just-in-time philosophies can be
- implemented along with the entire total quality management scheme, it can
- be questioned whether or not large United States companies can completely
- implement just-in-time systems. The answer is yes.
- Before the idea of just-in-time was widely accepted, economic
- recessions and recoveries played havoc with American businesses. During a
- period of economic well-being, for example, a company would anticipate
- further economic growth and stockpile both labor and products. This was a
- fine idea, until the economy hit a recession. Companies were stuck with
- enormously large inventories and low customer demand. The only way
- companies could respond was to cutback on labor, resulting in large layoffs.
- Then, once the economy took an upswing, companies were eventually faced
- with labor shortages, and large scale hiring began. This cycle continued
- each time the economy fluctuated. That is, except for companies who
- decided to implement just-in-time manufacturing, which broke the cycle. As
- more and more companies bought into the just-in-time philosophy, "the
- result was smaller inventories of both parts and final products."7 With
- smaller inventories, billions of dollars were freed up for investment purposes.
- This protects companies during the lean years when demand may exceed
- production.
- This also means that with such little room for inventory error, one
- mistake could mean thousands in lost revenues. For example, in 1993, one
- General Motors engine plant in New York had repeated production
- problems. This resulted in the underproduction of 90,000 cars. Still,
- General Motors is completely dedicated to the just-in-time philosophy. This
- strong belief held in TQM/JIT by General Motors, as well as thousands of
- United States companies, may improve the nation's economy over the long
- haul.8
- Some companies have found ways to place the burdens of estimating
- sales and keeping the exact amount of inventory upon someone else. These
- companies have paid "middleman" companies a specific amount to be in
- charge of their inventories. One such "middleman" company is Owens &
- Minor, a hospital supplies distributor. For example, UCLA Medical Center
- allowed Owens & Minor to buy their inventory. Owens & Minor workers
- take daily inventory and report to the home office what each individual
- hospital needs for the next day. The items are delivered, and all UCLA
- Medical Center has to do is pay for the items it uses, thereby saving millions
- on inventory costs. In addition, Owens & Minor works with the hospital to
- find unnecessary items and help eliminate waste, keeping costs to a
- minimum.9 This coincides with the principles of the just-in-time philosophy.
- According to recent studies, just-in-time systems have helped keep
- inventories of American companies down. Ratios of inventory-to-sales have
- been declining for the past four years. However, due to the economy growing
- very slowly, finished goods inventories have increased over the past year.10
- To combat this growth, companies have turned to improving their
- relations with their suppliers. By sharing sales forecasts as well as
- production forecasts with their suppliers, materials are shipped according to
- the demand from the company. For example, say an automobile production
- company produces one hundred cars in a day. They will need two hundred
- bucket seats. They will place an order to their suppliers for two hundred
- seats within a certain, predetermined time period. This time period allows
- for the seats to arrive the day that they are needed, therefore, no seats will be
- placed in inventory. This sounds wonderful, but companies still must make
- estimates many months before hand using an unstable economy. This means
- that some companies may end up with sales estimates that are over or under
- real sales.
- This brings us back to the overall concept of just-in-time being a tool
- used in total quality management. Take, for instance, American Standard,
- Inc. American Standard manufactures bathroom fixtures, air conditioning
- units, and braking systems for cars. They believe that this type of
- manufacturing is demand-driven by their customers. This demand-flow type
- of production fits right in with the concept of total quality management.
- American Standard also believes in allowing their workers to manage their
- own production process. This was not always the case, however. American
- Standard began to implement just-in-time systems as early as 1979. It met
- with moderate success, but when the recession of 1990-91 hit, they had debt
- in excess of three billion dollars. That is when they decided to implement
- total quality management, and use just-in-time as a major tool. Through
- demand-flow manufacturing, efficiency improved and cycle time decreased.
- In addition, inventory and waste also declined. American Standard believes
- in the philosophy of improving relations with suppliers, but it also believes
- in demanding total quality control from its suppliers.11 With American
- Standard, as well as other companies, insisting on TQC from their suppliers,
- the total quality management idea is being spread nationwide.
- Just-in-time systems are being implemented in most companies,
- though some more than others. Those companies that acknowledge
- just-in-time philosophies and implement them fully as part of a complete
- total quality management system are quickly becoming players in the world
- market. Those companies that do not implement total quality management
- with an emphasis on just-in-time systems may be left behind as we go into
- the twenty-first century.
-
-
-
-
- Bibliography
-
- 1. Polimeni, Ralph S., et. al., Cost Accounting, Third Edition (New York:
- McGraw-Hill, Inc., 1991) 446.
-
- 2. Ryan, John M., The Quality Team Concept in Total Quality Control
- (Milwaukee: ASQC Quality Press, 1992) 17.
-
- 3. Ryan, 11.
-
- 4. Ryan, 11.
-
- 5. Ryan, 29-30.
-
- 6. Ryan, 54-55.
-
- 7. Howard Gleckman, "A Tonic for the Business Cycle," Business Week
- April 4, 1994: 57.
-
- 8. Gleckman, 57.
-
- 9. Suzanne Oliver, "Cut Costs, Add a Middleman," Forbes April 25, 1994:
- 135.
-
- 10. David Fischer, "Sitting on Excess Supplies," U.S. News & World
- Report September 18, 1995: 88.
-
- 11. Michael Barrier, "When 'Just In Time' Just Isn't Enough," Nation's
- Business November 1992: 30-31.
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