Just-in-Time+Production

=Just-in-Time Production (JIT)=

toc "In an industry where cooperation is critical and supply chain efficiency determines success, an e-business strategy based on lean techniques is the only way to stay competitive" (Lopker & Gray). The structure of production is changing from traditional mass production to individualization and customized production; ‘where de-massification is replacing massification’. This trend is affecting the large corporations and small companies that function under the conventions of the mass production age. However, in order for the conglomerates to stay afloat in the New Economy, many corporations, from car manufacturers to fashion retailers, have implemented a restructuring plan which turns traditional manufacturing processes and thinking on its head.

Just-in-Time Production (JIT), based on the success of Japanese business organizations, revolutionizes the way that inventory is controlled, and changes the emphasis of business logistics from a supply driven ‘push’ concept to a customer focused ‘pull’ emphasis. In traditional supply chains, a business will estimate turnover for forthcoming periods, and periodically (for fashion chains often 2 to 3 major lines per year) order large amounts of inventory to cope with demand of the coming time period.

Just-in-time production is a type of upstream logistics activity, where rather than having goods pushed through production and supplying customers from stock, it depends on customers' requests to pull goods through the production system. Just-in-time processes focus on producing exactly the amount required at exactly the time customers require it. This minimizes the slack that can exist in many areas across a business. This system of inventory stocking has advantages and disadvantages. Having large amounts of reserve stock means that if there are peaks in demand, the business can keep supplying customers and not fall short, thus taking advantage of any profitable opportunities that may arise. However, there are certain costs associated with this method. For instance storage of stock in warehouses may cost the business through rent, insurance and maintenance of facilities. Another risk, faced particularly by fashion retailers, is that the stock they hold may become quickly obsolete in the face of changing fashion trends, resulting in heavy discounting and fire sales in order to shift stock, and possibly having to sell below cost.

JIT proposes to do away with these problems, as stock would be made to order, if not for individual customers, then at least made to be ready for the exact time that the manufacturer would ship it to the retailer. This stock would immediately be put on the shelves for sale, dramatically reducing the lead time between production and consumption. In the fashion industry, for example, this could result in lines being produced every month rather than by season (spring/summer, autumn/winter lines), which goes hand in hand with segmentation. In the case of online fashion retailer Zara (Wall Street Journal, 2001), no product is stocked on the shelves of its retail outlets for more than 4 weeks, and positioning of products in store is changed every week, in order to create the illusion of new fashion, and creating a limited time period of purchase for the consumer, thus giving them extra incentive to buy now.

There are a number of assumptions to a successful JIT system that companies deciding on implementing JIT have to overcome. The first of these is market power. In order to have stock on demand, they must have significant power over their suppliers. In the auto industry companies such as Toyota source parts from an array of smaller companies. Due to Toyota’s massive market capitalization and market dominance, it is able to demand the quantity, quality and precise timing for all the parts ordered in its cars. While smaller companies operating a JIT system depends almost solely on the large corporations, such as Toyota, for their business. If one of their crucial suppliers walked out, it would throw their entire business plan into jeopardy.

JIT relies on extremely accurate forecasting of sales figures so that the exact quantities of what will be consumed can be ordered and delivered to the right place at the right time. This requires an extensive volume of quantitative data based predominantly on previous sales figures, figures which new companies do not have access to, simply because they have no previous sales! Therefore no matter how much market research is conducted prior to the manufacturing process (which also needs to be subjected to cost/benefit analysis), there will inevitably be some guesswork in their estimates. It is better for these establishing companies under a JIT production process to under-order so that cash flows are not impaired at such an early juncture.

In accordance with JIT production, progressive technology, including the web, serves as an important medium in communication. Database technology and a ‘pull’ inventory system could implement an automated inventory control. This allows orders from suppliers to be placed electronically via the web when stock levels are running low, say at 30% of ‘full’ levels. This saves labour time and costs, and also avoids shortages by preordering before selling out of a particular line. Although JIT production is a fitting system for companies with the prevalence of demassification in today’s society, there is a fine line between success and failure.

=Key Elements of JIT=


 * Stabilize and level the Master Production Schedule (MPS) with uniform plant load.** It creates a uniform load on all work centers through **Constant Daily Production** to prevent changes in the production plan for certain period of time and **Mixed Model Assembly** produce roughly the same blend of products each day using. To meet fluctuation demand
 * Reduce or eliminate setup times.** With better planning, process redesign, and production design to eliminate setup times to single digit (less then 10 minutes).
 * Reduce manufacturing and purchase lot sizes.** Since more frequent deliveries will be requires, close cooperation with suppliers is necessary to achieve reduction in order lot size for purchased items.
 * Reduce production and delivery land times.** Production lead times is reduced by moving work station closer, applying group technology and cellular manufacturing concepts, reducing number of job waiting to be processed, and improving the coordination and cooperation between processes. Delivery lead time is reduced through closer cooperation with suppliers.
 * Preventive maintenance.** To use machine and worker break time to maintain equipment in order to stay away from mechanical breakdown.
 * Flexible work force.** Worker is trained to be able to operate several machines, such as to perform maintenance tasks or to perform quality inspection
 * Require supplier quality assurance and implement.** Since there are no shields of excess parts, errors leading to defective items must be eliminated.

=**The Advantages of JIT**=

The key benefits offered by JIT are increases in production efficiency and a strengthening of competitiveness. These result from the elimination of waste of time, raw materials and other resources, thus saving on inventory costs. Implementing just-in-time production can:


 * prevent over-production
 * minimise waiting times and transport costs
 * save resources by streamlining production systems
 * reduce the capital tied up in stock
 * dispense with the need for inventory operation
 * decrease product defects

=**The Disadvantages of JIT**=

However, a number of risks are associated with JIT. Changing a business from a traditional stocking business to one that uses Just in Time production normally involves high cost. The process of overhauling the business to support the new production method might at times outweights the benefits of using this system. With no stocks to fall back on, a minor disruption in one of the key suppliers could force production to cease at very short notice. Without multiple supliers, disruption in production could be costly for the company.

=**References**=

Ecommerce Program//.// (n.d). //Ebusiness information//. Available online at: http://www.ecommerceprogram.com/ecommerce/Ebusiness-Info.asp, retrieved on February 20, 2006.

Lopker, P., and Gray, C. (n.d.). Staying in business with e-Business, __Gray Research__. Available online at: http://www.grayresearch.com/ebusiness.htm, retrieved on February 20, 2006.

Siddiqui, N., O’Malley, A., McColl, J.C., and Birtwistle, G. (2003). Retailer and consumer perceptions of online fashion retailers, //Journal of Fashion Marketing and Management, 7//, p. 345-355.

Just-in-time production. __Business Link__. Available online at: [|http://www.businesslink.gov.uk/bdotg/action/detail;jsessionid=BqhhBOSzedimRQMgQsQXlkHMGqJH1XaZqDiM7e5lEsJoWueNeEX1%211684878017%211101717793434?type=RESOURCES&itemId=1074405965], retrieved on February 27, 2006. //Stitching up the on-line market.// (2004, July 6). __Penrith Press__.

Untitled. (2001, May 18). __The Wall Street Journal__.