Just In Time
The principle of Just in time (JIT) is to eliminate sources of manufacturing waste by getting right quantity of raw materials and producing the right quantity of products in the right place at the right time. The main purpose of this project is to provide informations to the people who is interesting in knowing JIT. ( Of course, the main intend users are students in this course.)
1. History of Just in Time
Just-In-Time is a Japanese manufacturing management method developed in 1970s. It was first adopted by Toyota manufacturing plants by Taiichi Ohno. The main concern at that time was to meet consumer demands. Because of the success of JIT management, Taiichi Ohno was named the Father of JIT. (Cheng,2)
After the first introduction of JIT by Toyota, many companies followed up and around mid 1970s’, it gained extended support and widely used by many companies.
One motivated reason for developing JIT and some other better production techniques was that after World War II , Japanese people had a very strong incentive to develop a good manufacturing techniques to help them rebuilding the economy. They also had a strong working ethnic which was concentrated on work rather than leisure, seeked continuous improvement, life commitment to work, group conscious rather than individualism and achieved common goal. These kind of motivation had driven Japanese economy to succeed. (Cheng, 3)
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. They worked on "optimal cost/quality relationship". (Cheng, 4)
Before the introduction of JIT, there were a lot of manufacturing defects for the existing system at that time. According to Hirano, this included inventory problem, product defects, risen cost, large lot production and delivery delays. The inventory problems included the unused accumulated inventory that was not only unproductive, but also required a lot of effort in storing and managing them. Other implied problems such as parts storage, equipment breakdowns, and uneven production levels.(4-5)
For the product defects, manufacturers knew that only one single product defects can destroy the producer’s creditability. They must create a "defect-free" process.
Instead of large lot production - producing one type of products, they awared that they should produce more diversified goods. There was also a problem of rising cost, the existing system could not reduce cost any further but remember improvement always leads to cost reduction.
Lastly, the existing system did not manage well for fast delivery request, so, there was a need to have a faster and reliable delivery system in order to handle customers’ needs.
Thus, JIT manufacturing management was developed based on this problems.
2. Introduction Phase for Just in Time
According to Hirano, the introductory phases of JIT involves 5 steps. (14)
Step 1: Awareness Revolution
It means giving up old concept of managing and adopting JIT way of thinking. There are 10 principles for improvement:
1. Abolish old tradition concepts.
2. Assume that new method will work.
3. No excuses is accepted.
4. It is not seeking for perfection, absolutely zero-defect process, few defects is acceptable.
5. Correct mistakes immediately.
6. Do not spend money on improvement.
7. Use you brain to solve problem.
8. Repeat to ask yourself 5 times before any decision.
9. Gather information from several people, more is better!
10. Remember that improvement has no limits. (Hirano, 18)
The idea of giving up old concept was especially for the large lot production, The lot production was felt that "having fewer changeover was better", but it was no longer true. Whereas JIT is a one-piece flow manufacturing. To compare the two, Hirano had this idea:
Lot production: "Unneeded goods...In unneeded quantities...At unneeded times..." (20) JIT: "Needed goods...In needed quantities...At needed times..." (21)
The main point here is to have an awareness of the need of throwing out old system and adopting a new one.
Step 2: 5S’s For Workplace Improvement (Hirano, 28-58)
The 5S’s stand for:
- Proper Arrangement
Seiton - Orderliness
Seiso - Cleanliness
Seiketsu - Cleanup
Shitsuke - Discipline
This 5S’s should be implemented company-wide and this should be part of a total improvement program.
Seiri - Proper Arrangement means sorting what you have, identifying the needs and throwing out those unnecessary.
One example is using red-tags. This is a little red-bordered paper saying what the production is, how many are accumulated and then stick these red tags onto every box of inventory . It enhances the easiness to know the inventory status and can reduce cost.
Seiton - Orderliness means making thing in order. Examples include keeping shelves in order, keeping storage areas in order, keeping workplace in order, keeping worktables in order and keeping the office in order.
Seiso - Cleanliness means having a clean workplace, equipment, etc.
Seiketsu - Cleanup mean maintaining equipment and tools.
Shitsuke - Discipline means following the rules and making them a habit.
Step 3: Flow Manufacturing (Hirano, 64-66)
Flow manufacturing means producing one single piece of product at a time but multi-handling which follows the process sequence.
There are several main points concerning flow manufacturing:
1. Arrange machines in sequence.
2. U-shaped production line (Cellular Manufacturing).
3. Produce one-piece at a time.
4. Train workers to be multi-skilled.
5. Follow the cycle time.
6. Let the workers standing and walking around while working.
7. Use small and dedicated machines.
The author continued by comparing lot production with flow manufacturing, here is a short summary of comparison.
|Lot Production||Flow Manufacturing|
|1. Floor layout is job-shop type
2. Grouping machines of same type together
3. Large lot product
4. Machines used are large
5. Inventory is easy to accumulate between processes
6. Single-process handling
7. Workers are sitting while working
8. Workers are single-skilled
9. Inspection at the final stage process
|1. Floor layout is U-shaped cell
2. Different types of machines are type together put together into one cell
3. One-single piece at a time
4. Machines used are small
5. Less or even no inventory between processes accumulated
6. Multi-process handling
7. Workers are standing while working
8. Workers are multi-skilled
9. Inspection at the end of each process
So, we can see that there was a need to change from large lot production to flow manufacturing.
Step 4: Standard Operations (Hirano, 102)
Standard Operation means to produce quality safely and less expensively through efficient rules and methods of arranging people, products and machines.
The basis of standard operations are:
1. Cycle time It means how long it would take to "carry out part all the way through the cell". (Hirano, 79) Following are the equations for calculating cycle time. (Hirano, 79)
Daily Quantity Required = Monthly Quantity Needed / Working Days per month
Cycle Time = Working Hours per day / Daily Quantity Required
2. Work sequence
3. Standard stock-on-hand
4. Use operation charts
Step 5: Multi-Process Handling
Multi-process handling means one worker is responsible for several processes in a cell. (Hirano, 110)
Some points that should be aware: (Hirano, 110)
Clearly assign jobs to machines and workers.
· Make a good use of U-shaped cell manufacturing.
· Multi-skilled workers
· Operation should be able to perform multi-machine handling and multi process handling.
Multi-machine handling - a worker should handle several machines at once, this is also called "horizontal handling". (Hirano, 112)
Multi-process handling - a worker should handle several different processes at once, this is also called "vertical handling" and this is the basis for JIT production. (Hirano, 113)
· Uses casters extensively As author written, "Floor bolts are our enemies! Machines must be movable." (Hirano, 119)
The above 5 steps are the basis for introducing JIT. Only after these are completed can JIT be implemented.
3. Elements of Just in Time
According to Cheng, the basic elements of JIT manufacturing are:
· Plants (6)
· System (6)
Maintaining a good support and agreement from people involved in production. This is not only reduce the time and effort in implementation of JIT, but also minimize the chance of creating implementation problem. (Cheng, 6) The attempt to maximize people’s involvement may carry through the introduction of quality circle and total involvement concept. (Cheng, 7)
Manufacturers can gain support from 4 sources.
1. Stockholders and owners of the company -
should maintain a good long-term relationship among them. (Cheng, 6)
2. Labor organization - all labors should be well-informed about the goals of JIT, this is crucial in gaining support from the them. (Cheng, 6)
3. Management support - support from all level of management. The ideas of continuous improvement should spread all over the factory, managers and all shop-floor labor. (Cheng, 7)
4. Government support - government can show their support by extending tax and other financial help. This can enhance the motivation, and also help in financing the implementation of JIT. (Cheng, 7)
Certain requirements are needed to implement JIT, there are:
1. Plant layout - the plant layout is mainly
focus on maximizing working flexibility. It requires the use of
"multi-function workers". (Cheng, 7)
2. Demand pull production - it means to produce when the order is received. This can manage the quantity and time more appropriately. (Cheng, 8)
3. Kanban - a Japanese term for card or tag. Special inventory and process information are written on the card. This helps tying and linking the process more efficiently. (Cheng, 8)
4. Self-inspection - it is carried out by the workers at catch mistakes immediately.
5. Continuous improvement - this concept should be adopted by every members in the organization in order to carry out JIT. This is the most important concept of JIT. This can allow an organization to improve its productivity, service, operation and even customer satisfaction in an on-going basis. (Cheng, 8)
This refers to the technology and process that combines the different processes and activities together. Two major types are MRP(Material Requirement Planning) and MRP II (Manufacturing Resource Planning). (Cheng, 8)
MRP is a computer-based, bottom-up manufacturing approach. This involves two plans, production plan and master production schedule. Production plan involves the management and planning of resources through the available capacity. Master production schedule involves what products to be produced in what time. (Cheng, 8)
MRP II is mainly involved the management or planning of financial resources in order to carry out the operation. (Cheng, 8)
The above three factors formed the element of JIT.
4. Goal of Just in Time
According to Cheng in Just-In-Time Manufacturing – An Introduction, he explains the ideas of Suzaki for the objectives of JIT. (9-10) There are three main objectives:
1. Increasing the organization’s ability to
compete with others and remain competitive over the long run. The
competitiveness of the firms is increased by the use of JIT manufacturing
process as they can develop a more optimal process for their firms.
2. Increasing efficiency within the production process. Efficiency is obtained through the increase of productivity and decrease of cost.
3. Reducing wasted materials, time and effort. It can help to reduce the costs.
Other short-term and long-term objectives(Cheng, 11) are:
1. Identify and response to consumers needs.
Customers’ needs and wants seem to be the major focus for business now, this
objective will help the firm on what is demanded from customers, and what is
required of production.
2. Optimal quality/cost relationship. The organization should focus on zero-defect production process. Although it seems to be unrealistic, in the long run, it will eliminate a huge amount of resources and effort in inspecting, reworking and the production of defected goods.
3. Reduce unwanted wastes. Wastes that do not add value to the products itself should be eliminated.
4. Develop a reliable relationship between the suppliers. A good and long-term relationship between organization and its suppliers helps to manage a more efficient process in inventory management, material management and delivery system. It will also assure that the supply is stable and available when needed.
5. Plant design for maximizing efficiency. The design of plant is essential in terms of manufacturing efficiency and utility of resources.
6. Adopt the work ethnic of Japanese workers for continuous improvement. Commit a long-term continuous improvement throughout the organization. It will help the organization to remain competitive in the long run.
Some other similar ideas are presented by Melnyk and Denzler(387-388):
1. Reduction of Inventory. JIT reduces inventory
at all level of the organization.
2. Reduction of Lead Time. Lead time such as setup time and move time and waiting time is reduced.
3. Quality Control. JIT improves the quality control by increasing its efficiency of managing shop floor production and increasing its commitment to its suppliers.
4. Improvement for Performance. In JIT manufacturing, the organization can obtain a greater impact/control over its suppliers. With fewer suppliers, organizations have larger control because the amount purchased is usually large. And, organizations can obtain a tighter requirement on products from their suppliers.
5. Total Preventive Maintenance. JIT provides preventive maintenance to lessen the risk of machine breakdowns.
6. Continuous Improvement. JIT is a never-ending method in operation management.
7. Strategic Gain. JIT helps organization to remain competitive in the market place.
8. Reduction of Wastes. JIT helps significantly in reducing wastes.
There are seven wastes discussed in the book.
wastes – waste from producing too much.
· Waste from waiting time – unproductive waiting time for job processing.
· Waste from transportation – unnecessary movement of jobs.
· Waste from process – unnecessary operation of products.
· Waste from inventory – excess accumulation of products.
· Motion Waste – unnecessary human activity. · Product defects waste – waste resulted from scrap, rework, etc.
JIT can help organization remains competitive by offering consumers higher quality of products than their competitors, it is very important in the survival in the market place.
These major objectives are suitable for all organizations. But each organization is unique in some way, adjustments of JIT objectives for each form should be made in order to complement the overall production process.
Regardless of the great benefits of JIT, it has its limitation, according to Cheng(11-14), JIT has the following major limitations:
Differences The organizational cultures vary from firm to firm. There are
some cultures that tie to JIT success but it is difficult for an
organization to change its cultures within a short time.
· Traditional Approach The traditional approach in manufacturing is to store up a large amount of inventory in the means of backing up during bad time. Those companies rely on safety stocks may have a problem with the use of JIT.
· Difference in implementation of JIT Because JIT was originally established in Japanese, it is somehow different for implementing in western countries. The benefits may vary.
of individual autonomy This is mainly due to the shorter cycle times which
adds pressures and stress on the workers.
· Loss of team autonomy This is the result of decreasing buffer inventories which lead to a lower flexibility of the workers to solve problem individually.
· Loss of method autonomy It means the workers must act some way when problems occur, this does not allow them to have their own method to solve a problem.
· JIT success is varied from industry to industry Some industries are benefit more from JIT while others do not.
· Resistance to change JIT involves a change throughout the whole organization, but human nature resists to change. The most common resistance are emotional resistance and rational resistance. Emotional resistance are those psychological feeling which hinder performance such as anxiety. Rational resistance is the deficient of the needed information for the workers to perform the job well.
Some other limitations are pointed out by Melnyk and Denzler(428-429):
between management and employees is important A mutual trust must be built
between management and employees in order to have effective decision making.
· Employee commitment Employees must commit to JIT, to enhance the quality as their ultimate goal, and to see JIT as a way to compete rather than method used by managers to increase their workload.
· Production level JIT works best for medium to high range of production volume.
· Employee skill JIT requires workers to be multi-skilled and flexible to change.
· Compensation Compensation should be set on time-based wages. This allow the workers to concentrate on building what the customers wants.
Just in Time Summary
1. Efficient Techniques Reduce Leeway ( Maintaining Continuity)
In this articles, Dave explained the new trend for business companies, especially those Middle-size market companies. The new trend he focused on are efficiency-improving strategies and just-in-time inventory practices.
We all should aware that more inventory is not doing any food for any company. Most of the time, the accumulation of inventory may become a deadly disease for a company. Therefor, companies should aware the amount of inventory in order to control production efficiency. Dave suggested several ways to improve production efficiency and reduce leeway-margin of wine. One among those is just-in-time inventory techniques reduces the leeway as now the companies do not need to store inventory for several months or even years before they are needed. It saves time and money.
But one important thing about just-in-time inventory practice is that companies should build trust and have good relationship with their suppliers because just-in-time practice requires stable, fast and flexible supply of materials. Only if they have food relationship can this be done.
Dave continued discussing the main focus for middle-size business companies. Here are his mail points:
1. Prepare a disaster plan, e.g. firing protection or backing-up data. He believes that the better the disaster plan, the larger chance the companies will survive after disaster.
2. Cost -reduction strategies.
3. Develop long-term continuity plan.
4. Identify critical functions and estimate the time, the company can afford without such function.
5. Identify potential alternative suppliers.
6. avoid too complicated continuity plan.
7. Evaluate risk before any decision.
8. Conducting continuity tests.
Dave suggested that efficient techniques can reduce the time involved in production, in other words, increase production efficiency, production capacity and decrease cost. Even though the strategies he gave are focused on middle-size market companies, they are also ideal for any business.
2.Effect of Just In Time
Effect of Just-In-Time Purchasing Relationships on Organizational Design, Purchasing Department Configuration, and Firm Performance
Just-in-time purchasing requires close relationship and co-operation on product development and specification(product and information flow). It also involves joint product design, extensive verification of supplier quality and shared production plan.
Three questions are addressed in this articles:
1. Is JIT purchasing associated with overall organizational design?
2. Is JIT purchasing associated with the configuration of purchasing?
3. Is JIT purchasing associated with performance?
To answer these questions, we have to first look at the factors that related to each of the question. In consideration of overall organizational design, four different aspects are discussed: formalization, decentralization, integration and specialization.
Formalization refers to formal internal performance control, formal benchmark control and the strategic formalization of the purchasing function. It is found that the more JIT purchasing, the more internal and benchmark control are implemented. The reasons for that are 1) JIT represents the exact process management, so more performance information is needed to ensure that the remaining inventory meets the specification. 2) JIT provides feedback which are essential to the succeed of JIT implementation. And also, with the increase of JIT purchasing, a written statement of shared vision(goal) of the firm is needed.
Decentralization consists of line-operating decision and scheduling. JIT purchasing is related to decentralized decision-making because a higher employees involvment will result in higher performance. JIT purchasing is positively related to line-operating and negatively related to scheduling.
Integration is the lateral communication. While there are more JIT purchasing, it is very important to have a stable and good communication among departments within a firm. Thus, JIT is positively related to integration.
Specialization focuses on division of labor. As more JIT purchasing, more labor is needed to perform a faster production schedule. So, it is positively related to JIT. It is very obvious that JIT purchasing is associated with overall organizational design.
To address the second question, we have to look into two aspects. They are the number of layers for the purchasing function and the span of control of the senior purchasing executive. The authors found out that JIT purchasing is negatively related to the number of layers for the purchasing function and positively related to the senior purchasing executive’s span of control.
For the third question - Is JIT purchasing associated with performance? JIT is expected to be related with efficiency, financial performance and market performance. And it is found out that JIT is negatively related to weeks of inbound inventory, positively related to financial performance and market performance.
From this study, two managerial implications can be drawn. First, implementing JIT exchange with suppliers. The relationship between buyer and seller is now toward relational exchange as the JIT purchasing is more frequently used. Second, JIT purchasing correlates with performance.
3. Just in Time Total Quality Management
Just-in-time Total Quality Management Just in time is a mean of market and factory management with in a humanistic environment of continuing improvement. According to Imai(1986), " Kaizen means improvement. Moreover it means continuing improvement in social life, and working life. When applied to the factory Kaizen means continuity improvement involving everyone-managers and workers alike."
When it comes to total Quality management, Japans’ strong industrial reputation is well known around the world. Total quality control is the system, which Japan has developed to implement Kaizen or continuing improvement. Total quality control is a forty-year plus improvement on the teachings of Deming, and who brought the concept of quality to Japan. The traditional description of just-in- time is a system for manufacturing and supplying goods that are needed. The people in the workplace, using their mind, gaining experience, and sweating their way to improvement, don’t define just in time this way. For total quality management, Just-in-time means to decrease losses. When just in time is internalized, the waste around a factory will go away. To do this, traditional and fixed ideas are useless. As I mentioned, Japan has progressed industrially because of holding on the workplace and taking full advantage of total quality management. According to Asaka (1990) , the seven new tools play a vital roll for the Japanese society on quality control technique development. There are several importance tools for total quality management control:
1. relations diagram
2. Affinity diagram
3. Systematic diagram ( Tree diagram)
4. Matrix diagram
5. Matrix data analysis
6. Process derision program chart
7. Arrow diagram
From seven tools, it help Japanese product quality to meet following total quality management: · The ability to eliminate defective products
· The ability to improve productivity
· The ability to complete tasks on time
· The ability to increase product value-driven
· The ability to completely eliminate waste
· The ability to reduce lead time and inventory cost
Sullivan (1986) note that "the seven tools for developing total quality management is very important." "Because each tools use a reptilians diagrams to examine the problem solving process." Without it, the manufacturing of Japanese system must be not constantly to improve quality, reduce cost, decrease throughput time and lower in process inventory.
Total quality management based on seven tools, extended the measurement concept from implementation on the production quality control to the design of the whole process to frying excellent products to customers. Therefore, it is without doubts that through seven important tools process which frying forth or sustain the product are made more competitive. Suppose customer satisfaction and cost are selected as the major quality attributions, the focus of total quality management is to improve calve, and hence competitive advantage.
4. Just in Time Inventory and Productive Management
Generally speaking, most of the company and factories must manage the inventory material efficiently and effectively. Therefore, reducing levels of inventory stock in company and factory is an internal and external matter. In terms of supply and demands management, the Just-In-Tim (inventory Management ) are linked strategically and operationally. Take Japan for an example. Japan has encouraged the adoption of just-in-time methods and quality management methods. That is the reason why Japan can do a good job on economic performance. As to Technological advances, it also play an important role on inventory management.
Essential Aspects inventory Management influence on Just in Time
Lessons have been learnt from Japanese methods where substantial efficiencies are gained from frequent deliveries of small quantities to meet immediate demands. This compares with methods of stock control such as the economic inventory management approach.
· Reduction inventory in supply chains
· Reduce transit time
· Reduce manufacture cost
· Increase management efficiency and effective
· Reliable delivery
· Short distances between client and server
· Consistent quality so that server performance and throughput is unaffected
Stable, produce table production schedules and ability to respond quickly
Take Toyota for an example, the Toyota use the Just-In- time production system to control immediate material flows between a work station and another down-stream . The company management department receives order on small, fixed quantities from customers. On sending the supplies, a production" kanban" is generated requesting the previous upstream server to supply a replacement quantity. Therefore, users "pull" off supplies as required direct communication between client and supplier replaces instructions issued by a remote center control point. At the same time, materials requirements planning and other systems get rapid feedback on progress or delays. It is the integration of computer systems internally and externally. Thus, all the systems can quick response to changes. It will help the importance planning (medium and longer-term planning) to be fulfill for capacity along the supply chain. Finally, all of the data and instructions can flow between the linked systems.
JIT system developments need also to be seen against major associated improvements in production and materials management systems. Take Japanese for an example. Japan successes were not only based upon a different industrial culture, but they were also based on an ability to better integrate a range or production and control methods that were already available. In comparison with Western management tended to be less able than the Japanese in bringing these different operational systems together. Therefore, we can say Japan which take full advantage Just-In-Time inventory management. The Japanese are typical of good example on production environments - at integrating technical, production applications. Among many theories on inventory management, one of the well-known is Kaizen- a Continuous Quality Improvement Culture which influence Japan inventory control management very much. According to Imai (1986), "Kaizen means improvement. Moreover it means continuing improvement in personal life, social life, and working life. When applied to the workplace Kaizen means continuing improvement involving everyone-mangers and workers alike." He relates quality and inventor to Kaizen by stating that " In its broadest sense, quality is anything that can be improved." Thus the adoption of JIT systems tended also to be associated with other strategies, tools and techniques - many learned or re-learned from Japanese practice. Therefore, we can say Quality management systems" that emphasized a 'right first time' principles for both products and processes. Total quality management approaches also promoted the "empowerment" of employees via team development, quality circles and training.
If change is piecemeal and management attention, then JIT may fail., An integrated perspective is needed with coherent strategic and strongly in productivity effectiveness at each operational Level. If we can do that, then most of the company and factory will create a competitive advantage.
As a result, JIT is an important operational system for manufacturing and supplying companies to adopt and implement. Generally speaking, procedurally and managerial it requires attention to
· consideration of the buyer-supplier partnership and the possibility of strategic collaboration.
· assessment of requirements
· programs to change the structure of production, materials handling, manufacturing
· processes and distribution facilities
· improved methods of controlling unit supply costs
Even though inventory management for Just-in-time play an important role, we also should integrate with "Total Productive Maintenance " which consideration of the buyer-supplier partnership and the possibility of strategic collaboration. If we can fulfill inventory and productive management, Just-in-time will help all the organization to manage even more effective and efficient with competitive advantage. According to Nakajima (1988), "Total Productive Maintenance is productive maintenance carried out by all employees through small group activity." In Productive Management, the machine operation is responsible for the maintenance of the machine, as well as its operation. It also is related to inventory management. Since, without well- inventory management, it will not offer good material to operation management. Therefore, The implementation of Productive Management can generate considerable cost savings through increased productivity of the machinery. The greater inventory management , the greater the cost reduction generated by productive management. As a consequence, booth management play an important role on Just-In-Time.
5. Just in Time -- Electronic Data Interchange
Generally speaking, "Just-in-Time" Inventory is proven in diverse industries. For example, automotive, fast food, retail, and warehouse. Take some company for example, McDonald’s, IBM and General Motor who have already discovered the profitability of "just -in-time" inventory systems. Recent advances in PC computer power and speed make this technology affordable to smaller companies. If you want to increase your company competitive you could profit from a "just-in-time inventory that we can use Electronic Data Interchange.
(2) To learn more about EDI try the EDI Prime
EDI is currently regarded as the most efficiency solution to many retailer's, distributor’s, and manufacturer's ordering problems. Prior to jumping into a solution, it is often helpful to know the current how the EDI technology works. The electronic multimedia catalogs should be able to retain the reliability of the traditional EDI approaches when greatly increasing the usability and simultaneously converting the cumbersome batch process to an online real-time ordering system to avoid problems in the ordering process. We should make sure that your electronic catalog vendor has a good working knowledge of EDI fundamentals.
EDI is an acronym for Electronic Data Interchange. EDI is a system set forth so that institutions can exchange data in an orderly format. There are actually two different organizations that govern the format of the messages. One of the organizations is the ASC X12 committee. This Committee governs the operation of the North American trade. For the purposes of this paper, we will limit the scope of the information to the North American ASC X12 standards for EDI. Both committees are supposed to merge standards.
The history of EDI is generally traced back in 1948. Army logistics managers had a horrendous time keeping track of supplies moving into Europe. This system was used to electronically interchange messages between Dupont Nemours and Chemical Leahman Tank Lines. Work continued in a non-Structured manned until 1975 with the formation of the Transportation Data Coordinating Committee. The representatives of major companies came together and published the first formal EDI standards. These standards were published by TDCC and made available to the world. This committed publishes the standards that are use throughout Northern America for electronic commerce.
EDI is in an electronic form the standard documents that are used on everyday basis between business. In business communication, buyers of a product send in a Purchase order to a wholesaler of the product. The Purchase order may be mailed, faxed, or read over the telephone. Usually, a copy of the purchase order is sent over to accounting so that when the product comes in it can be matched up to the purchase order and the invoice to generate a payment to the company. The wholesaler takes the purchase order and based on inventory allocation will release the order to the warehouse in the form of the picking ticket. Once picked and shipped, the Bill of Lading is created along with an invoice that is mailed to the buyer's accounting department. The Buyer receives the product and notifies accounting that the product has been received. Assuming that the buyer has some sort of computerized inventory and ordering system, a purchase order is actually initiated when the buyer types the necessary information into his computer. The Purchase Order sends it to his wholesaler. The wholesaler must input the purchase order from paper into his inventory control system to create the picking ticket and invoice. EDI allows the information to be entered into the computer system once and only once. There are no transcription errors and no delay to enter the data into the computer system. In fact with an electronic catalog, the data entry step may be accomplished with a simple mouse interface.
(6) Examples of EDI implementation in various industries and future electronics
EDI tell you why it's important and what to expect when adopting the technology Even though EDI is revolutionizing the way we do business, it still suffers from an image problem. It's like dietary fiber. We all know it's good for us, but do we really have to spend time reading about it? The answer, in a word, is yes. Whether you're a line or MIS manager or in the executive suite, EDI is simply too important to ignore. In this article, three Canadian managers discuss how they moved to EDI and why it's a must on the corporate technology menu. When it comes to future electronics most of the MIS manager for EDI at Future Electronics agrees that ongoing dialogue with trading partners is an essential part of developing a mutually acceptable EDI system. Future has been using EDI for three and a half years. The company wrote an interface to the purchasing system that allowed it to extract and transmit orders to suppliers electronically. Fully 50 per cent of supplier purchases are now made via EDI. The creation of an interface between the EDI system and Future's order entry application system also allows Future's customers to benefit from the technology. Currently, Future does not have its own dedicated network, preferring to use the General Electric Information Services network. However, the company is considering moving to a supplier-managed, private network to handle the large transaction volumes between it and one of its major suppliers. Beyond the benefits of quicker transaction times and improved accuracy, the technology both demands and enables the streamlining of business processes. To sum up, we should all be striving for electronic data interchange usage in terms of Just-in-time. It really helps us business world.
6. Just in Time Accounting: How to Decrease Costs and Increase Efficiency on Manufacturing Company
(1) Decision approach for most of the manufacturing company
JIT is an attempt to change the manufacturing process to eliminate non-value-added activities in order to judge the cost high or low. This method can help organization to monitor itself condition. The name mainly originate from meeting demand just in time instead of having inventory on hand just in case. Element characteristics:
· Minimize raw material
· Minimize defects goods
· Simplify the production process, that is , Continual improvement
· Create timely, multi-skilled work force
Benefits usage for JIT accounting department:
· Lower investment in the cost of purchasing inventory.
· Reductions in carrying and handling costs of inventory.
· Reductions in costs from obsolescence of inventories.
· Lower investment in space for inventories and production.
· Reductions in total manufacturing costs from the better co-ordination needed between departments to operate at lower inventory levels.
· Less paperwork.
(2) Real example: Take the Japanese firms for example. Most of the company emphasized low inventory levels probably because of the high cost of space in Japanese cities. However, a side effect of having fewer inventories in the factory is that you have to co-ordinate your production much better in order to avoid inventory shortfalls. In particular, if there is no "buffer" inventory every manufacturing breakdown and every purchasing error is highlighted. Most of the Japanese company has to have fast, reliable deliveries from suppliers and reliable manufacturing. IF you can achieve this without inventory shortages then you have a very efficient manufacturing plant. Therefore, Japanese company do its utmost best to meet requirements to make JIT work. So, they take some actions to deal with:
· Short set-up times to accommodate smaller lot sizes.
· Pull method of coordinating production steps.
· Fast throughput times.
· Take some measures to deal with cellular manufacturing techniques teamwork
· Decrease cost performance measures for evaluation and cost control
(3)The decrease costs and Increase Efficiency of the approach
Most of the companies stress on total cost of operations. As a result, they are less emphasis on individual labor and overhead variances. Establish performance measures to help minimize non-processing time, such as inspection, moving, queuing, and storage and so forth. Some of the companies eliminate performance measures that encourage the building of inventory, such as direct labor efficiency and machine utilization. Product costs Less tracking of production transactions, and no recording of hours on work orders Direct labor costs may be treated as overhead or period expense is bigger or less than use finished products instead of equivalent units for process costing schedules. According to Common Wealth report, it says some firms use it to reduce the number of manual journal entries. The reporter also suggests the firm get a better-computerized perpetual inventory system. The reporter report "Flow of costs in traditional job order system: raw materials purchased and inventoried is bigger Raw materials, direct labor, overhead, and it also bigger work in process work-in-process bigger finished goods inventory Finished goods. As to the total cost is bigger cost of goods sold" (Common Wealth, 1996)
In this age of Information Technology, it is important that ones get ahead of the pack by reducing her production cost to its lowest possible value but without reduction in quality. We should do our best to reduce our tannery cost and also to widen our manufacture ability. As to modern industrialized technology has brought down the prices of computers, cameras, videos, etc. All this is the result of modern volume production and competition in the market place. How to reduce the cost has become the preferred choice in many urban centers because the prohibitively high cost of later damage involved in our production systems. For reduce production cost, production managers should product satisfy the following organizational needs:
a) Cheap labor, land, and raw materials.
b) Grow offered by just-in-time accounting approach
c) Take advantage of just-in-time accounting control to reduce production cost
7. Kanban Just-in-Time at Toyota
When we talk about Kanban Just-In-Time, you maybe have a question which company set a very good example to fulfill this approach. The answers is Japanese company ------Toyota. Not only did Toyota take advantage of Kanban Just-In-Time, but it also get a very good benefit to operate its company. Kanban just-In-Time helps companies solving many Manufacturing problems. Kanban derives it name from the manufacturing systems and processes implemented at Toyota Motor Manufacturing that are so effective at producing at low cost, high quality, and short cycle times. As a consequence, these systems are highly flexible and responsive to customer requirements. Toyota capabilities are listed below. Kanban Just-In-Time impact on whole Toyota production approach as following:
(a) Standardized work
Simulation of processes and systems
(b) Quality Improvement
In Process Inspection
(c) Continuous Improvement
Toyota manufacturing processes route the product around the plant to various work centers where work is staged to be processed. Implementing manufacturing cells typically increases net income dramatically and reduces cycle time over 50%. The cost of design and implementation is usually recovered within the first year from inventory savings. In this paper, we present the benefits of bringing the processes to the product and discuss the value of simulation as a tool to design and predict cell performance prior to implementation; therefore, reducing financial and technical risk to the company.
On September 10, 1997, Mr. Hoskins presented on "Improve Profits and Reduce Cycle Time with Manufacturing Cells and Simulation" for the National Technology University series on Kanban just-In-Time Manufacturing of this series. On October 27 - 28, 1996 Jerry Hoskins, President presented a paper titled "Developing a Lean Implementation Roadmap" at the SME Kanban Manufacturing Conference in Dearborn, Michigan. The intent of this paper is to provide information to companies on where to start with a Kanban implementation based on where one is currently manufacturing operation. His theory help our many manufactures implement all the elements of Kanban Manufacturing directed at elimination of manufacturing waste as defined by the Toyota Production System. These systems are more flexible, responsive, and profitable than traditional manufacturing systems. And, its theory also help our many participate determine where best to start with a Kanban implementation which usually involves an assessment of current operations. Once plan is developed we design the system to be implemented which may involve layout, cells, JIT, process technology, and process simulation.
To sum up, we should make fully use of Kanban in order to improve the performance of a production line which is under controlled by Kanban. Generally speaking, Kanban is combined with basestock or immediately improvement to create a hybrid production control system. Simulation results based on a Toyota factory show that this policy meets throughput targets with significantly lower inventories than Kanban alone. As a result, Toyota research considers a line production system which purchases raw materials from a supplier, processes them into finished products and delivers them to a buyer just in time. This study focuses on finding the optimal number of raw material orders, finished goods deliveries and Kanbans between work stations for a time-proportionate demand of finished goods.
8. Just in Time-----Manufacturing
Just in Time---manufacturing is a systems method to develop and operate a factory system. It is mainly basis on the total Decrease of waste. As you know, many people think JIT is not a new knowledge field. As a matter of fact, it has been part and plays an important role of the Japanese manufacturing industry adopted method for a long time . It requires all the materials such as equipment, human resources, and management skills are made available only in the amount required and at the time required to do the job. It is based on producing only the necessary units in the necessary quantities at the necessary time by bringing production rates exactly in line with market demand. Generally speaking, JIT means making what the market wants. JIT has been found to be so effective that it increases productivity, work performance and product quality. What’s even more, it plays a vital role to increase productivity and decrease the total cost of manufacturing production.
(2) Planning for JIT
Since each manufacturing process is different, it is up to the individual company to determine the degree of appropriateness and the final application of JIT. However, it is very important to define the plan and objectives before setting up a JIT manufacturing system. It is impossible to establish a new JIT system that can be used successfully without change. Therefore, we should take serious consideration to make a plan for Just-In-Time, which will benefit to our factory performance.
(3) Defining the Planning
JIT manufacturing system requires an understanding of the objectives of JIT, and objectives of the JIT system. After the objectives are set up for the manufacturing, the process of planning becomes one of determining what is required to meet those objectives. The goal of a JIT approach is to develop a system that allows a factory to have only the materials equipment and people by hand required doing the some plan. T o achieve this goal, we should have equipped with at least five fundamental plan:
· Integrating and optimizing every step of the manufacturing process · Reducing manufacturing cost · Producing product on demand · Developing manufacturing flexibility · Produce quality product to maintain commitments and links made between Customers and Suppliers
We also should keep in mind that achieving these obtaining targets do not automatically make a company a JIT manufacturer. On the contrary, it will lead to achieve even one of these objectives will prevent a manufacturer from establishing a successful JIT system. According to Common Wealth on May, 1996 report, it said that " A company cannot decide to implement JIT; they must earn the right to use JIT by revising their quality for system."
(4) Reducing Manufacturing Cost
If we can design products that it will speed up and decrease manufacturing processes. Gradually, it will helps us to reduce the cost of manufacturing and building the product to specifications benefit. One aspect in designing products for manufacture ability is the need to set up a good boss and employee relationship. At least, this is to cultivate and procure the resources of the production experts, and the line employees to develop cost saving solutions. Participatory quality programs utilize employee knowledge about their job functions and review the department performance. It will, finally, encourage with rewards for suggested total cost saving.
(5) Manufacturing Flexibility
According to China time report on August 1996. "Manufacturing flexibility is the ability to start new projects or the rate at which the production mix can be adjusted to meet customer demand." Planning for manufacturing flexibility requires the understanding of the elements in the manufacturing process and understanding elements in the process that restrict flexibility and improving on these areas. The unique feature of Just-In-Time is the modification from between pull and push systems. The main idea behind these approaches are that "work should not be pushed on to the next worker until that worker is ready for it." (Hauser, J.R.) As a result, manufacturing flexibility requires production managers to consider the some important factors, such as supplier lead time, production process time, process setup time and so forth.
(6) Keep in touch between customers and suppliers
For factory main commitment to achieving the internal structures, both customer and supplier are also playing a vital role to support JIT manufacturing. Because it is the primary requirement for developing the JIT system, each other can establish trust and honest between the supplier and the customer which is a must, since every Just-in-Time operation depends on it. Supposed, finally, it leads to failure to keep the commitments each other. Finally, it will be result to a serious form of breakdown manufacturing systems. Therefore, we should pay attention to this kind of serious call. Never be ignorant of this commitment. If we can make use of Just-In-Time (manufacturing approaches), it, eventually, will attain those goal, which are the fundamental concept of producing product only as needed or on demand.