Just-in-Time Inventory Management

Just-in-Time Inventory Management

Just-in-Time Inventory Management Definition: Produce the right items in the quantities needed by subsequent processes at the time needed. Goals: Eliminate WIP Eliminate Waste Eliminate finished goods inventory JAPAN : LIMITED RESOURCES

Land (000 Sq. Miles) Japan U.S. California 145 3,539 156 Resources Millions

120 226 23 JAPAN : LIMITED RESOURCES Any scrap = unacceptable Large inventory is EVIL Save more, waste none KANBAN SYSTEM: MECHANISM FOR JIT

COORDINATION OF MATERIAL FLOW BY KANBAN A. Subsequent process comes to PRECEDING process to withdraw parts in the QUANTITY needed at the TIME needed. B. Preceding process produces only the exact QUANTITY withdrawn by SUBSEQUENT process. KANBAN A. Japanese word: CARD or VISIBLE

RECORD. B. Information included: * ITEM * QUANTITY to be withdrawn or produced. * STOCKING LOCATION OPERATING RULES FOR KANBAN SYSTEM A. ONE Kanban for each CONTAINER. B. SUBSEQUENT process must go to PRECEDING process to get parts (PULL SYSTEM).

C. Containers can be moved only with KANBAN. D. EXACT quantity of GOOD parts in container. E. NUMBER of KANBAN controls inventory level. TABLE 16.3 Advantages of Just-in-time System Reduce space requirements. Reduce inventory investment in purchased parts, raw materials, work in process, and finished goods. Reduce manufacturing lead times. Increase the productivity of direct labor employees,

indirect support employees, and clerical staff. Increase equipment utilization. Reduce paperwork and require only simple planning systems. Set valid priorities for production scheduling. Encourage participation by the work force. Increase product quality. TABLE 16.4 Disadvantages of Just-in-Time Systems Require workers and first-line supervisors to take responsibility for shop-floor production control and productivity improvements.

Require an atmosphere of close cooperation and mutual trust between the work force and management. Require daily production schedules that are virtually identical for extended periods. Require actual daily production to closely approximate the daily schedule. Cannot respond rapidly to changes in production design, product mix, or large demand volumes. Disadvantages (Con.) Require a large number of production setups and frequent shipments of purchased items from suppliers.

Require parts to be produced and moved in the smallest containers possible. Not well-suited for irregularly used parts or specially ordered products. May require layout changes. May require changes in reward systems. Require revision of purchase agreements as the number of suppliers shrinks. REQUIREMENTS FOR SUCCESSFUL JIT 1. Uniform Final Assembly Schedule.

2. Short Setup Time. 3. Low Machine Failure or Defects. 4. Flexible Equipment and Work Force. 5. Reliable Suppliers.

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