JUST IN TIME

Introduction:
In the present scenario of competitive global business environment, the
goal of all manufacturing systems is to survive in a long term race. A manufacturing
company’s probability of surviving in an increasingly competitive market depends on its
ability to produce highest quality products at lowest possible cost and with shortest
possible lead-time. Just-In-Time (JIT) manufacturing is a Japanese management philosophy
applied in manufacturing which involves having the right items of the right quality and
quantity in the right place and the right time. It has been widely reported that the
proper use of JIT manufacturing has resulted in increases in quality, productivity and
efficiency, improved communication and decreases in costs and wastes. The potential of
gaining these benefits has made many organizations question and consider this approach
to manufacturing. For these reasons, JIT has become a very popular subject currently
being investigated by many worldwide organizations. Just-In-Time management involves
the application of old management ideas; however, their adaptation to the modern
manufacturing firm is a relatively new practice. Presently, many firms are studying and
applying the JIT approach in response to an ever more competitive environment. Over
the long run, application of JIT manufacturing may assist these companies in achieving
these goals of manufacturing excellence.

The operations planning and control system is an information system

running throughout the manufacturing environment. Although there is a common system
framework as discussed in Chapter one, systems run in different ways in different
environments. For example, dedicated special facilities are used in make-to-stock
environments; general purpose machines are used in make-to-order environments.
Dedicated production lines can be designed in a balanced way with minimal setups in
order to maximize the flow rate of the materials, while a general purpose machine must
be set up before producing a specific item. In setup operations, the material flow is
interrupted. Manufacturing environments can be changed to make planning and control
systems simpler and more effective. For example, products are designed to have high
similarity in processing and are mixed-up in a dedicated production line with negligible
setups. Since lead-times are shortened, this turns a make-to-stock product into a make-
to-order product. Just-in-time is not only a control technique, but also a way to improve
the manufacturing environment. JIT control systems are only effective in JIT environments.
Introducing kanban systems into a non-JIT environment means nothing to a company. JIT
Control can be incorporated into an ERP system as a control part with a condition that the
system has to be in a JIT environment. The JIT philosophy guides the development of the
JIT environment. The JIT environment provides the foundation for implementing the JIT
control techniques. The JIT philosophy, JIT environment, and the JIT technique can be
expressed in Figure 1.

The whole concept of the JIT is differentiated from traditional productions

systems using push vs pull systems of production. The push system of production pushes
materials to the next stage of the production irrespective of whether time and resources are
needed at the next level of production creating lot of inventories at each level of the production
flow. The traditional manufacturing organizations adopt push system where they produce for
inventory and work in progress. The pull system of production is where the materials are pulled
by next level of the production only when is signaled or required by the next stage of
production. This drastically reduces the inventory held as it does not keep any work in progress.
JIT concept is built based on the concept of pull production which eliminates the total inventory.
Advantages of Dell adopting a JIT system:
There are a wide range of benefits that JIT manufacturing can have on an
enterprise. Firstly JIT appeals to a wide variety of businesses as it helps to prevent manufacturers
from getting stuck with outdated or unusable inventory. Dell only has 2 hours worth of inventory
in their manufacturing plants. This ensures that they are controlling their production of
computers fully. In addition to this it has been found that JIT adoption has significant positive
results on the financial figures of a business. Dell has achieved a cash conversion cycle from
implementing JIT systems. This allows a healthy flow of money within their business, which will
have an encouraging impact on their profitability. Another one of the many advantages to just-in-
time manufacturing is the reduced cost. This is only achieved after the JIT systems has been in
place for quite while, but it reduces capital tied up in stock, which allows a company like Dell to
spend money on other areas of the business such as advertising and marketing. Just-in-time also
has a much faster setup and saves resources by streamlining production systems. This as a result
prevents overproduction of computers, which will therefore help Dell with the elimination of
waste within their company. As a further point JIT systems also abolishes costs of warehouse
space and storage facilities. This also allows Dell to inject cash into other parts of their enterprise
and can also keep travel costs to a minimum.

1)Funds that were tied up in inventories can be used elsewhere.

2)Areas which used for inventory storage can be occupied with other useful use.

3)Though the time is reduced resulting in greater potential output and quicker response to
customer's.

4)Defects rates are reduced,resulting in less waste and greater customer satisfaction.
Implementation of JIT:

We can observe implementation of the JIT concept as a process which must be taken seriously.
How a company will implement the JIT concept depends on many factors. For example, if a
company has more than 100.000 workers and production in different places, then the
implementation of JIT needs to be done in interaction with all departments.

Dell is known throughout the world as a leader in supply chain management and just-in-time (JIT)
manufacturing. Relying heavily on a vendor managed inventory (VMI) model, Dell has nearly eliminated
inventory cost while maintaining a JIT manufacturing strategy. Key to supporting this strategy is the ever
changing and increasing number of suppliers needed to manage inventory for Dell.

Dell's Direct Model allowed Dell to manufacture machines that were “tailored to customer needs” and
based on Just-in-Time inventory. The company assembled computers based on customer orders and
“held no finished goods inventory of standardized machines”. Holding no inventory allowed Dell to
reduce its costs and have a competitive advantage over its rivals. Economies of scale: Dell is the greatest
producer of laptops and therefore has economies of scale in the laptop business. In the United States,
Dell had the highest market share in the laptop (and PC business overall) with a 24.8% market share,
compared to 11.6% for IBM which was the second highest. Economies of scale allow Dell to have more
entry barriers, and hence there was less of a threat of new entrants.Dell's assembly line was quick and
efficient. The production process, from the day the order was made, to the shipping date, took only
about a day and a half (Matching Dell, 8). This was an advantage for Dell because customers were
satisfied with the amount it took for their product to be shipped to them.
After a thorough evaluation, Dell selected World Wide Technology (WWT) for its ability to leverage key
elements of previous supply chain experience, unique end-to-end systems offering and flexibility
demonstrated by the proposed approach.In the legacy environment, each supplier was required to
provide an on-site resource to maintain inventory levels in the factory. Upon implementation of the
WWT solution, WWT became the single partner providing resources on the factory floor, reducing the
overall number of resources required to maintain continuity of supply. WWT also built a dedicated team
of material planners, vendor managers and process consultants to ensure end-to end management and
efficiency of the solution.

Process- WWT brought several process and technical innovations to the Dell team. First, WWT developed
a suite of forecast, inventory and demand planning applications calibrated to fluctuations in Dell's
manufacturing process. Second, WWT opened distribution centers collocated with each Dell factory
reducing lead times to 45 minutes or less. Finally, implementation of a RF based barcode scanning
system used for product acceptance, replenishment requests and invoice reconciliation at the factory
floor. These innovations while removing cost also provided much greater visibility and reliability relative
to continuity of supply.

According to dell's CEO, 'Computer components depreciate anywhere from a half to a full point week.
Cutting inventory is not just better but financial imperative'. Dell reengineered its supply chain so that it
could produce computers with exact features that customer order, ship them within 24 hrs of taking the
order and ultimately invest almost no money in inventory. Product would be produced as they are
demanded and to the customer's specifications. Dell thereby enables customers to build almost
completely custom made computers. This increase customer satisfaction and loyalty. Simply by changing
its inventory method dell experienced an immence change in its finance and gain an enormous
competitive advantage.

Result:
Just in time method is a philosophy which believe that waste can be eliminated by cutting
unnecessary inventory and removing non valued activities in operations. The goals are to
produce goods and service as specification and continous improvement through value additions.