These are the speaker’s notes for a presentation on Just-In-Time manufacturing. I have saved the slides as a Picasa Web Album: What is JIT?
Slide 1: Cover
Slide 2: What is JIT?
Just-In-Time is a manufacturing system designed to minimize investment in inventory. In a JIT system, materials arrive at the manufacturing process when they are needed rather than waiting in inventory. In order for a JIT system to function properly, the involved parties, including employees, shippers, and supplies, must maintain tight communication. This communication guarantees that materials arrive when they are needed (Gitman, 2009).
Slide 3: International Truck and Engine
International Truck and Engine Corp. is manufacturer of vehicle and vehicle parts. It provides parts for Ford Motor’s truck lines. In 2001, International reported on its successes and failures related to it’s own implementation of JIT (Konicki, 2001).
Slide 4: Cons
The JIT system is not without its problems. Since there is no safety stock, the production process is very susceptible to problems in material supply or quality. A defective batch of parts can result in a total production stoppage as new materials are ordered and delivered. Also, the JIT system only works on products that have a low setup cost per unit. If a product must be manufactured in large batches, then JIT can work efficiently. Finally, the implementation of JIT requires a reworking of the production process. Workers are expected to work differently, and this can be problematic. In the end, the goal is to increase production speed while decreasing product defects. Employees that don’t feel comfortable in this paradigm will eventually be replaced (Atkinson, Kaplan, Matsumura, & Young, 2007). This cultural shift extends beyond the production line. Management must accept the fact that more information must be shared with suppliers in order to guarantee delivery of the right materials at the right time. International, as a supplier of automotive components to Ford, has dealt with management mistrust first hand (Konicki, 2001).
Slide 5: Pros
There are three distinct benefits related to the implementation of JIT. The first is the reduction of cost related to the reduced safety stock. Since the JIT system must operate as flawlessly as possible, a side effect is increased product quality. Employees are encouraged to recognize and report defects as quickly as possible so that production is not held up. Finally, the biggest gain resulting from the implementation of a JIT system is reduced lead time (Atkinson, el al., 2007). This means that when a customer orders a product, they receive it much quicker. For example, International is able to deliver a new bus or truck 24 hours after it is ordered thanks to its JIT manufacturing process (Konicki, 2001).
Slide 6: How do we use it?
A JIT system may be a perfect for for Company X. Implementation of the system requires a reworking of the production process. This new process will maximize efficiency by decreasing production time and defects. Since an open exchange of information between the company and its suppliers is necessary, suppliers will be able to better understand the needs of Company X. Finally, since orders will be processed individually, Company X will be able to offer customized solutions for customers. These special orders should increase Company X revenues.
Slide 7: References
Atkinson, A. A., Kaplan, R. S., Matsumura, E. M., & Young, S. M. (2007). Management accounting (5th ed.). Upper Saddle River, NJ: Pearson.
Gitman, L. J. (2009). Principles of managerial finance (12th ed.). Boston: Pearson.
Konicki, S. (2001). Just-In-Time Autos. Information Week. Retrieved December 24, 2008.