JIT (Just-in-time)

JIT system is a philosophy which adopts the idea of improving output without having a large number of inventories.

Inventory is an accumulation of any item or resource used in a company. There are costs that need to be taken into account in holding a certain numbers of stock/inventories. The costs include the costs for handling, breakage, depreciation, taxes, storage facilities, insurance, and
pilferage and obsolescence. All these costs are the consideration of having lower inventories and this is where the JIT system comes into place.

Just-in-time (JIT) Manufacturing is a manufacturing strategy that aims to achieve a high-volume production using a minimal volume of inventories. The trick in this method is to deliver the inventories of parts to the each workstation exactly when they are needed. It is advisable to combine JIT philosophy with TQM (total quality control) which constantly checks for the causes of defects and eliminate them all together.

Just-in-time (JIT) delivery is considered a pull system delivery as products will only be delivered whenever there is an order.

First of all, a manufacturing strategy has to be established in order to link the production and customers vertically and horizontally as one unity and to figure out if the JIT system can be embedded in the process. It is critical to link customers’ needs and manufacturing operations’ requirements and performance as it will determine the capabilities to satisfy the target market. The main objectives of this link are to ensure correct performance requirements strategies for aspecific operation are in place. The steps to organise that link are as follows:

1. Identify the customers demands, preference, demand patterns.
2. Segment market into different product groups.
3. Determine the profit margins of different products
4. Determine what the customers want and need.
5. Convert what the customers want into specific products requirements.
6. Decide which products/product groups fit together in which they have similar demands or market performance characteristics.
7. Figure out the best manufacturing strategy to be adopted.

This table is the example of how two products have different manufacturing requirements:

Kanban

Kanban is some type of a signalling system, the signalling system can be cards or containers to identify where materials are stored. Where the containers are empty, the cards or the container itself can be used as the indication for the operators to produce more products.

The number of kanban cards can be determined by using this formulae :
                                        Demand*Lead time*(1+Safety Stock)
No of kanban cards= -------------------------------------------------
                                             The number of units produced


To understand it further, consider the example below:


Gorge Pty Ltd, a company that makes different types of steel dies, is going to change its manufacturing system to a kanban pull system. One
of the parts required to produce a product 001 is part A and part As are made in batches of 20 units. The manufacturing cell which makes part
A can respond to an order for a batch of part A in 2 hours. The assembly cell which assembles product 001 has an assembly rate of 10 per hour. The production manager has decided to have 10% buffer in case there is a change in the number of demand for part A. Now it is necessary to determine the number of kanban card needed.

Solution:

The demand for part A is 10 units / hour
The number of unit produced is 20 units
The lead time to replenish part A is 2 hours
The buffer /safety stock is 10% of the expected demand
                                     10*2*(1+2)
No of kanban card=------------------ = 3
                                             20
Thus, we need four kanban card sets.

Note: in all cases, if the number of kanban card is not a whole number, that number has to be always rounded up as we need to work with full containers of parts.