CHAPTER II

REVIEW OF LITERATURE

1. High inventory holdings are commonly identified as poor management (Boute et al.,
2004). JIT has been depicted as an inventory control technique and the Japanese Auto
Industry is recognised as the developer of JIT inventory and management philosophy
(Aghazadeh, 2003).
2. It is a systematic approach which minimises inventory by having supplies arrive at
production and distribution points only when needed (Lee and Wellan, 1993).
3. Hunglin and Wang (1991) claim that JIT production is a philosophy for reducing work-
in-progress (WIP) inventory, it aid process improvement and reduce process variability.
It can be seen as a new way of thinking, planning, and performing with respect to
manufacturing (Canel et al., 2000). Whereas Gyampah and Gargeya (2001) consider JIT
manufacturing both as a philosophy and disciplined method of production. Just-in-time
manufacturing 61 Stevenson (1996) defines the term JIT manufacturing as a repetitive
production system in which processing and movement of material and goods occurs just
as they are needed, usually in small batches.
4. JIT implementing firms have to produce and deliver finished goods JIT to be sold, sub
assemblies JIT to be assembled into finished goods, fabricated parts JIT to go into the
subassemblies and purchased materials JIT to be transformed into fabricated parts
(Schonberger, 1982a).
5. JIT philosophy is based on the concept of delivering raw materials when needed;
producing products when there is a need, improve quality of product. The fundamental
objective of JIT is to eliminate all waste from the entire supply chain and to improve
product continuously (Ptak, 1987; Frazier et al., 1988).
6. The core of the JIT philosophy is CI through the elimination of waste (Chakravorty and
Atwater, 1995). Bicheno (1987) defines JIT as to produce instantaneously with perfect
quality and minimum waste. JIT in its broader sense is an approach of achieving
perfection in a manufacturing company based on the continuously elimination of waste.
In the narrow sense, JIT refers to the movement of material at the necessary place at the
 necessary time (APICS, 1987). It is a disciplined programme for improving overall
productivity and reducing waste (Voss, 1988). In a JIT environment quality parts in the
right quantity and at the right time are produced, while using a minimum amount of
facilities, machinery and equipment, raw and in-process materials and human resources
(Schlesinger and Heskett, 1991).
7. . According to Potts (1986), and Banerjee and Kim (1995), JIT is a philosophy directed
towards the elimination of waste, where waste is anything which adds cost but Singh and
I.S. Ahuja not value to a product. It is a system driven by final product demand where
each item is procured, manufactured, and delivered in the quantities needed JIT to satisfy
demand in the next stage of the supply chain system or in the marketplace (Sadhwani et
al., 1985).
8. Thus, waste is anything associated with the production process that does not add value to
the final product. Thus, waste includes quality defects, inventories of all kinds, time spent
to move material and time spent setting up machines (Demmy and Gordon, 1988).
9. Younus (1991) in his research work has been identifies 12 types of waste and these are
handling, movement, over-production, scrap and rework, idle time, setup times,
transportation the process itself, material or sub-assemblies, rework, improper order and
arrangement, miscommunication. This waste is any form is required to be eliminated.
10. The elimination of waste is achieved through internal elements (manufacturing systems,
human resources) and external elements (suppliers, other organisations with close
relationships with the manufacturer) (Keller and Kozazi, 1993).
11. Wallace (1990) also considered JIT as a path to attain excellence in a manufacturing
company based on continuing elimination of waste and constant development in
productivity.
12. Continuous monitoring of production processes with the goal of eliminating all forms of
waste is a key point in understanding JIT. JIT can be depicted as an operating concept
designed to eliminate waste (Chase et al., 1998; Hernandez, 1989)
13. Ehrhardt (1997) considered JIT as a pull system, in which a production process pulls
material from a prior process (which does not operate unless there is need for its output)
in support of the final assembly schedule, which is closely coordinate with customer
 demand (Ehrhardt, 1997). A common example of pull production system that is used in
industries is Kanban system.
14. JIT is the classic pull system. The basic fundamental is that production at one level only
happens when request is initiated at the higher level. Other pull systems other than
Kanban system given by Hyer and Wemmerlov (2002) are paired-cell overlapping loops
of cards with authorisation (POLCA), constant work-in-progress (CONWIP) and drum-
buffer-rope (DBR).
15. No inventory Decrease in lead time Difficult to implement Applied where demand
uncertainty is high Demand driven Production and distribution Pull strategies Where as a
push system supports batch manufacturing operations. In batch manufacturing, a schedule
prepared by taking into consideration the lead times of various components and
subassemblies is released by the material-planning department of an organisation
(Vollmann et al., 1997). E
16. stimating release lead-times, modelling future requirements for different products,
determining the safety lead-times and stock have been the key issues identified by
Krishnamurthy et al. (2004) in modelling a push system
17. (Sohal et al., 1989). Heeley (1991) considers JIT as a state of mind for achieving
competitive excellence by creating an attention to CI through 100% 64 G. Singh and I.S.
Ahuja involvement to eliminate all waste, institutionalising only value adding activities
with 100.
18. It is agree that the objectives of JIT are to remove waste and to enhance the flow of
materials. Once this is accomplished, costs can be lowered, quality enhanced and the firm
becomes more flexible. Application of JIT results in competitive advantage (Fuller,
1995).
19. The typical topics covered under JIT include the systems operating procedures and
characteristics, implementation strategies, and benefits (theoretical and actual) such as
efficiency improvements, cost savings, quality improvements, and modifications of the
supplier/producer relationship. On the whole, they present JIT from a perspective that has
an economic focus (Peters and Austin, 1995).
20. The JIT system is driven by final product demand, where each item is procured,
manufactured, and delivered in the quantities needed JIT to satisfy demand in the next
stage of the supply chain system or in the marketplace (Sadhwani et al., 1985).
21. It is widely accepted that the implementation of JIT can improve firm performance.
22. Schonberger (1986) provides anecdotal evidence that companies have substantially cut
lead times, drastically reduced raw material, work-in-process, and finished goods
inventories, and effectively increased asset turnover. Implementation of JIT in an
industrial organisation is based on two principles, elimination of waste, and utilisation of
men, machine and material to its optimum levels. Just-in-time manufacturing
23. G. Singh and I.S. Ahuja improve the work culture and mindset of organisation Just-in-
time manufacturing 67 to increase the efficiency of the workers by providing them
training, incentive and to make each worker multi-skilled to improve the quality of
product to reduce the cost of product to ensure that minimum breakdowns should
occur in the industrial organisation to ensure that each part is to be procured or
produced as and when required so as to reduce waste inventory levels and lead time in
an industrial organisation should be reduced to minimum there should be optimum
utilisation of men, machine and material. There are many factors that facilitate JIT
manufacturing and the effect of these factors on JIT implementation is depicted
24. According to Maskell (1987), the world of manufacturing is changing so fast that there
seems to be a new buzzword every day and a new concept every couple of weeks. There
are some factors that facilitate JIT and ultimately organisation reaps the benefits of JIT. 5
Relationship of JIT with other manufacturing practices JIT production is called by many
names like Zero inventory production system, Minimum inventory production system,
Kanban production, Kaizen production, stockless production, pull through production,
and quick response inventory system
25. (Biggart and Gargeya, 2002). It is system that produces the required items at the time and
in the quantities needed (Gunasekaran and Lyu, 1997).The main aim of JIT is to produce
the parts used for subassemblies JIT, to assemble these parts into subassemblies JIT, to
bring together these subassemblies to form assemblies JIT and ultimately deliver finished
goods JIT, so as to eliminate waste, to maintain quality and to satisfy customers. The
achievement of all these goals is possible if JIT is implemented along with the other
 manufacturing techniques. There are a number of manufacturing techniques and
philosophies used by the organisations. The adoption of philosophies such as JIT, TQM,
benchmarking (BM), business process reengineering (BPR) and CI has in most cases led
to operational and strategic gains for manufacturing and service organisations in
particular (Yasin et al., 2004b).
26. JIT is a backbone of lean manufacturing system. For long people associated JIT only with
the process of manufacturing, but in actual practice JIT consists of JIT purchasing, JIT
manufacturing and JIT selling.
27. Ahuja and Khamba (2008) have depicted a direct relationship between JIT and lean
manufacturing philosophies (Figure 5). From this figure, it is also clear that JIT plays a
vital role in lean manufacturing.
28. Vuppalapati et al. (1995) discussed relationship of JIT with TQM. The connections
between JIT and TQM from conceptual, philosophical, and implementation perspectives
are examined. It is summarised that implementing both JIT and TQM jointly will
outperform the organisations that have implemented only one of these, or none. Figure 6
has explained three views about JIT and TQM implementation.
29. Venkatesh et al. (2007) have discussed relationship between three letters syndrome for
revitalising manufacturing. The three letter syndromes in manufacturing are mentioned as
JIT, TQM, total productive maintenance (TPM), supply chain management (SCM) and
theory of constraints (TOC). The relationship between above mentioned manufacturing
techniques with performance of manufacturing is discussed. The theoretical framework
of relationship of these techniques is shown in
30. (Sandanayaka et al., 2008). JIT is also associated with Kanban. Kanban is another name
of JIT material flow system. It is a pull based system. Flow of material in an industrial
organisation is classified into two types, push and pull systems. The Kanban system is
typical pull system while most conventional systems are push systems (Karmarkar,
1989).
31. The basic difference between pull and push is that a pull system initiates production as a
reaction to current demand, where as push system initiates production in response to
expected, forecasted, future demand.
32. Singh et al. (1990) discussed a case study about implementation of Kanban system. The
lead-time between the entries of the parts to the completion of the assembly operation
was reduced because the materials would not be delivered to the usage area until they
were needed. From the above studies, it is clear that JIT bears a direct or indirect
relationship with other manufacturing practices..
33. Schermerhorn (1996) has put forth the theory that the effectiveness of JIT
implementation hinges on a wide range of special support that includes: high quality
supplies, strong management commitment, a manageable supplier network, geographic
concentration, efficient transportation, and materials handling. Before a manufacturing or
service organisation can enjoy the fruits of JIT, the firm must accept JIT as an
organisational philosophy.
34. G. Singh and I.S. Ahuja cases its organisational culture (Yasin et al., 2004a). Figure 8
explains the modifications in an organisation prior to JIT implementation. Figure 8
Organisational modifications prior to JIT implementation Main aim of JIT manufacturing
is to reduce inventories.
35. Maskell (1987) mentioned four types of inventory procurement problems and their
solution. Table 5 Inventory procurement problems and their solutions Problem Solution
Supplier lead times Closer supplier relationships Inflexible production planning Closed-
loop MRP-II system Large batch sizes Reduced setup time Long queue times Plant layout
and MRP-II Cooperation of supplier is a vital first step for inventory control. Industrial
organisation can reap benefits of JIT if suppliers will give industrial organization shorter
lead times, deliver smaller quantities more often, guarantee a low reject rate and perform
quality-assurance inspection at source. More frequent deliveries of smaller quantities of
material supplied by supplier should be such that each delivery should be just enough to
meet organisations immediate production schedule. This will keep inventory as low as
possible. It is often thought that component manufacturers who supply on a JIT basis
must be located in close proximity, and certainly within the same customs region, as the
end-product manufacturer (Rooks, 1989).
36. Peters and Austin (1995) are of the view that JIT suppliers are considered partners with
the JIT firm. The relationships between the firm and its suppliers are expected to be long-
term. Since the supplier is a vertical extension of the JIT firms operations system, the
 stake in the JIT firm increases for this stakeholder group. To develop and support
relationships of this intensity, it is usually necessary for JIT firms to reduce their supplier
bases. JIT production requires high quality, small lot sizes, and frequent delivery of raw
materials. A good relationship with suppliers is crucial to achieve these requirements. For
example, the Japanese make their vendors seem like the next level below the start of
production (Zhu and Meredith, 1995).
37. Ramarapu et al. (1995) emphasised that success of JIT in Japan is due to the culture of
their workers and management. Workers in Japan are loyal, cooperative, flexible and
willing to work long hours whenever there is need. Management of Japan is also
characterised by life-time employment, approaching decision making from the bottom-
up, respect for their workers, and a paternalistic approach towards workers. This
distinction between workers and managers has helped Japanese management implement
JIT successfully. Process improvement and maintenance of equipments are also required
before implementation of JIT. For successful implementation of JIT, equipment of the
industrial organisation should be well maintained and function properly. For this
industrial organisation should have to use latest manufacturing techniques and improve
the process regularly.
38. Duclos et al. (1995) described that as part of JIT implementation, organisations must
instill the habit of expecting continuous small improvements in the process. CI or Kaizen
indicates that there is no best, there is only better. The concept of CI involves a change in
attitude towards the overall effectiveness of an organisation. The purpose is to develop
everyones attitude in doing the simple things correctly with gradual improvement
(Chandra and Kodali, 1998).
39. (Schonberger, 1986) There are some conditions to implement the JIT system with
success, and these are uniform production rate (to ensure schedule stability), a pull
control system, small lot sizes, quick and economic setups, high quality levels, preventive
maintenance, supplier long-range relationships, etc. These conditions are called the JIT
elements and are presented by several authors, among which are Gargeya and Thompson
(1994), Zhu and Meredith (1995), Spencer and Guide (1995), and Ramarapu et al. (1995).
40. Implementation of quality control techniques in an organisation can also lead to
realisation of intangible benefits in the form of improved image of the organisation,
 leading to the possibility of increased orders. For the maintenance of quality, TQM is
used nowadays. TQM, in its simplest form, encompasses all actions, values and beliefs of
an organisation which aim to improve and maintain quality standards. Maintaining and
improving quality is an integral part of JIT (Chandra and Kodali, 1998).
41. Holweg and Pil (2004) emphasise the importance of build-to-order strategies to enable
responsiveness to customer demand. The principles and philosophies of JIT are depicted
in
42. . Ohno (1982) identifies seven types of waste and recommends methods for their
elimination; over-production: reduce setup time, compact layout and improve shop floor
visibility; waiting: synchronise work flow and balance loads through flexible workers and
equipment; transportation: establish layout to minimise transport and handling;
processing: use value analysis production; processing may be totally or partially
unnecessary and capable of being eliminated; storage: reduce the waste of stocks in all
production areas (raw material, WIP, finished goods); motion: study motion for improved
economics, productivity and quality; making defective products: build in processes to
eliminate defects in the process.
43. JIT has three main goals, elimination or reduction of all kind of inventory, exposing
process inefficiencies in Just-in-time manufacturing 73 manufacturing process and
reducing/elimination of these inefficiencies by using latest manufacturing techniques.
From Figure 10, it is clear that JIT strategies are having three broad aspects, i.e., JIT
purchasing, JIT production and JIT sales. Figure 10 Strategies of JIT (see online version
for colours) 8 JIT purchasing The JIT concept as applied to purchasing translates into
frequent releases and deliveries (Schonberger and Gilbert, 1983).
44. So JIT purchasing requires frequent, reliable deliveries in exact quantities (Gupta, 1990).
In todays competitive markets, close cooperation between the vendor and the buyer is
necessary to reduce the joint inventory cost and the response time of the vendor-buyer
system (Yang et al., 2007). Lorefice (1998) stressed that a sort of partnership has to be
established among supplier and customer in order to involve the latter into the efficient
process of JIT.
45. Most relevant factors for the selection of suppliers are not price but to eliminate defective
goods from production cycle and improved quality turn outs. The selection of supplier
 should be based on the criteria such that there should be minimum waste, minimum
inspection, minimum freight costs (with geographic proximity), minimum paperwork and
small and frequent lot size delivery. Despite the importance of frequent small lot
deliveries from nearby suppliers, the quality assurance became the most important
prerequisite to establish a relationship with a company that works JIT. Company working
with JIT should also pursue the one supplier per product objective. To assure a close
relationship with the upstream partner, the company has to be able to open its doors to the
new link of the production chain (Lorefice, 1998).
46. JIT suppliers are considered ally with the JIT firm (Wong and Johansen, 2006). The
association between the firm and its suppliers are supposed to be long-term. Since the
supplier is a vertical extension of the JIT firms operations system, the stake in the JIT
firm increases for this stakeholder group. To develop and support relationships of this
intensity, it is usually necessary for JIT firms to reduce their supplier bases. In the
extreme case, single sourcing may be used (Peters and Austin, 1995).
47. Ansari and Modarress (1988) list the following activities as major JIT purchasing
practices: small purchase lot sizes delivered in definite quantities compared to traditional
large batch delivery; few suppliers, ideally one per component or family of parts rather
than multi-sourcing; selection of suppliers and their evaluation is based on quality and
delivery performance as well as price; quality inspections are performed at the suppliers
location instead of traditional method of incoming inspection;
48. Schonberger and Gilbert (1983) are of the opinion that the supplying plant does not need
to carry much buffer stock unless they sell capacity to other plants, in which case buffer
stocks would be necessary to maintain JIT deliveries and therefore, JIT purchasing works
best if the vendor supplies to one customer
49. . Asl and Nursel (2011) are of opinion that supplier selection and supplier performance
evaluation are necessary tools for successful JIT implementation. Shin et al. (2000) listed
the various criteria to evaluate performance of supplier: these include lead times, on-time
delivery, delivery reliability, quality, and cost.
50. Giuniperio et al. (2005) in Figure 12 has suggested measures of JIT purchasing practices.
9 JIT production In a JIT production system, earliness and tardiness must be discouraged
as early finished jobs increase inventory cost while late jobs lead to customers
 dissatisfaction and loss of business goodwill (Wong et al., 2006). Customers need
products of good quality at right time. To produce product of quality, latest
manufacturing techniques are used. There are three main factors that contribute to JIT
production: workers, management, and process. 9.1 Workers The main aim of JIT is to
reduce waste and eliminate inventories throughout the process.
51. Peters and Austin (1995) pointed out that reduction of buffer inventory between process
stages means that closer integration and synchronisation are required. Due to this
reduction in inventories without compromising with quality an operators latitude and
freedom are reduced, creativity and motivation may in turn also be reduced. So the
operators are helped to achieve reductions in waste and cost by enhancing their skills and
each worker should be allowed to participate in the production/service process. Thus, the
workers will get a chance to make suggestions, propose improvements, and receive
awards (Monden, 1993).
52. A very high quality standard is required for all materials for JIT to function properly. One
programme that is used to attain and maintain high quality is self-stopping. Operators
have the responsibility to stop their operation if they feel that there is a condition that
adversely affects product quality. Before restarting the system, the affected operators and
managers are expected to identify the root cause of the problem and take corrective action
(Peters and Austin, 1995). Worker has to perform many duties at a time for the success of
JIT.
53. Peters and Austin (1995) listed following additional duties to be performed by the
worker/operator: performing several different jobs; maintaining production and inventory
control; inspecting their own work; reworking of their own non-conforming (defective)
parts; setting up production equipment; executing preventive and light maintenance of
their production equipment; receiving or giving training both on and off the job. In a JIT
environment, if machine is operated just for eliminating of idle men or machine,
considered as waste. Nothing can be produced until there is a need from the downstream
operation.