Just In Time

Prepared by: Chinmay Halpati Akash Polepagedar Amit Koul Ratan Gohel

Introduction
A repetitive production system in which the processing and movement of materials and goods occur just as they are needed! The focus of JIT is to improve the system of production by eliminating all forms of WASTE.

Definition:
An inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as their needed production process, thereby reducing inventory cost.

JIT Goals (throughout the supply chain)

Eliminate disruptions Make the system flexible Reduce setup times and lead times Minimize inventory Eliminate waste

The Seven Zeros: To identify waste reduction targets

Zero Defects: Quality at the source Zero Lot Size: To avoid batching delays Zero Setups: To minimize setup delay and allow production in small lots Zero Breakdowns: To avoid stopping tightly coupled line Zero Handling: To promote flow of parts Zero Lead Time: To ensure rapid replenishment of parts Zero Surging: Necessary in system without WIP buffers.

Pre-JIT: Traditional Mass Production

Big lot sizes Lots of inventory PUSH material to next stage Big purchase shipments

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Lower per unit cost Big pushes of finished goods to warehouses or customers

Post-JIT: Lean Production

Tighter coordination along the supply chain Goods are pulled along only make and ship what is needed

Smaller shipments

Smaller lots Faster setups Less inventory, storage space PULL material to next stage

Minimal or no inventory holding cost

Goods are pulled out of plant by customer demand

Case 1: Loreal
LOral cosmetics is now the worlds largest toiletries and cosmetics group, with a presence in over 140 different countries. In the UK, the 45 000 square meter purpose-built facility in mid-Wales produces 1300 product types in a spotlessly clean environment, which is akin to a pharmaceutical plant in terms of hygiene, safety and quality. The plant has 55 production lines and 45 different production processes, and the manufacturing systems employed are of a flexibility that allows them to run each of the 1300 product types every two months that means over 150 different products each week. But the plant was not always as flexible as this. It has been forced to enhance its flexibility by the requirement to ship over 80 million items each year. The sheer logistics involved in purchasing, producing, storing and distributing the volume and variety of goods has led to its current focus on introducing JIT principles into the manufacturing process.

Conti.
To help achieve its drive for flexibility and for JIT production, LOral organized the site into three production centers, each autonomous and focused within technical families of products. Their processes and production lines are then further focused within product sub-divisions. Responsible for all the activities within his area, from pre-weighing to dispatch, is the Production Centre Manager, whose role also encompasses staff development, training and motivation. Within the focused production centers, improvement groups have been working on improving shop-floor flexibility, quality and efficiency. One of the projects reduced the setup times on the line which produces hair colorants from 2.5 hours to only eight minutes. These new changeover times mean that the company can now justify even smaller batches, and may give the company the flexibility to meet market needs just-in-time. Prior to the change in setup time, batch size was 30 000 units; now batches as small as 2000 3000 units can be produced cost-effectively.

What did LOral do to help it organise the process of setup reduction?

LOral did several things which probably helped with its overall objective of reducing setup time. It organised the whole factory into three production centres each with separate teams making different types of product. One manager was placed over the whole process from end-to-end in each product area. An alternative would have been to have a separate manager responsible for each stage of manufacturing through which all products would have passed. So, for example, one manager could have been responsible for all pre-weighing, another for the first stage of manufacture, etc. The production centre manager was made responsible for training and staff development. Improvement groups were set up in each focus production centre with clear objectives of improving flexibility, quality and efficiency.

What do you think LOral gained from doing each of these things?
Focusing production cells on the whole set of manufacturing tasks for a particular product helps both to enhance individuals ownership of the process and also helps to identify any problems which occur as products move between one stage and another. Making the production centre manager (in effect the operations manager) responsible for training and staff development made human resource tasks an integral part of operations management. An alternative organisational structure used in many companies is to have separate managers for human resource issues. However, with a JIT philosophy people issues are seen as being totally integrated with more technical issues. Organising shop floor improvement groups harnesses the skills and enthusiasm of the shop floor workers and giving them clear objectives, allows improvement to contribute directly to reduction of changeover time.

If we could halve all changeover times in the factory, what effect would this have on inventory?
It would reduce the cost of changeover substantially. It may even half the cost of changeover. (This is probably unlikely because there is a fixed cost element of a changeover cost.

Case 2: Little Chef

The Little Chef roadside restaurant chain has over 350 sites located on busy roads around the UK. All restaurants trade from 7.00 am to 10.00 pm, 364 days a year, and offer an all-day menu supplemented by part-day menus and various seasonal promotions.

Customers receive a table service of cooked-to-order meals. Target times are 30 minutes for a starter plus main course with an extra 10 minutes for a dessert.
To achieve a high standard of customer service, it is necessary to forecast demand as accurately as possible and then to provide for sufficient resources (staff, food, etc.) to meet that demand. In practice, an all-yearround core of regular staff is maintained, supplemented by seasonal staff at peak periods. Staff planning is undertaken at three levels: The quarterly manpower plan. The main input to this plan is the forecast number of customers for each of the 12 weeks of the forecast period. The weekly forecast. The sales forecast from the quarterly plan is updated and broken down into daily sales. The daily plans, which allocate duties between staff.

Conti.
All materials (food, cleaning items and crockery) are supplied from a single supplier. This helps to ensure that goods are up to a consistent standard. Each restaurant has three deliveries a week, typically Monday, Wednesday and Friday, with orders being placed the same morning. A weekly stock-take provides consumption of each item. The manager uses a locally determined re-order level combined with forecast daily sales to compute material orders. Most foods are delivered and stored frozen. Only salads and cured meats arrive date-coded, usually with four to five days shelf-life after delivery. Bread and milk are delivered daily by local suppliers. Stock-holding amounts to about seven days at any one time. Each restaurant has a menu manual, which specifies the ingredients, cooking procedures and presentation standards for every item on the menu. Orders are added to the cooks order pad, including the time when the waitress took the order.

Conti.
Orders are marked once cooking has started, and marked again when cooking has finished. The cooking process is simple. The cooking equipment is also simple griddles, fryers and preprogrammed microwave ovens. Similarly, a housekeeping board enables, at a glance, staff to see jobs which need to be done. Standard cleaning products and methods are used throughout the company, and each cleaning task is broken down into how, what, when elements. To help ensure that standards are maintained across the network, quality audits are conducted every three months by the local training officer. Tasks fall into eight categories; there is usually enough flexibility to react on a daily basis to changing needs, however. The categories are: reception/cashier cooking/production beverage production sweet/salad production

Conti.
serving to tables relaying tables

washing up
cleaning/toilet checks. Staff are cross-trained for greater flexibility (50 per cent of staff can cook). At quiet times, one person may perform more than one task. Facility flexibility is assisted by moveable tables and chairs so that parties of varying sizes can be accommodated.

Although different from a manufacturing company, some of the principles which apply in the Little Chef case are similar to those used in a JIT manufacturer: What are they?
Several issues are very similar to a JIT manufacturer. Some are listed below. Limited product range this helps to simplify the materials control task. The operation only produces runners and repeaters. Simple products which only require basic production equipment. Pull scheduling known customer orders are used to pull meals from the kitchen to the restaurant according to actual demand. There are no buffer stocks. The signal to make more is the order from the waitress. The routine is simple but strict: order one, make one, supply one in response to specific customer demand

Conti.
A batch size of one orders are not held up (or batched) until a sufficient number have been accumulated, nor are they produced in advance; they are made on receipt of the order.
Flexibility a standard time for serving a customer is aimed for irrespective of the demand level. This is done by flexing the number of staff on duty. JIT supply replenishment stocks are ordered on a short (daily) cycle from Little Chefs sole supplier. Visibility recipes, preparation methods, pictures of ideal finished products and cleaning checklists are all examples of how key data can be made visible to all staff, both for control and audit purposes.

Advantages of JIT
Listed below are some of the advantages overviewed throughout this paper: Possible increase in profits Quality products Quicker setup Eliminates costs of storage facilities More flexible employees Quality relationships with suppliers

Elimination of waste
No down time

Disadvantages of JIT.
Is not applicable everywhere, should be discrete production and/or assembly environment.

Higher amounts of machine/worker idle time.

JIT is quite efficient when the demand pattern is stable. If not, the amount of idle time will be even worse. When there is a sudden change in the demand pattern it will take time for JIT system to react since there is no central information unit. An MRP system on the other hand would update all the levels immediately. Further idle time during machine breakdowns or flow interruptions. Production rates may be decreased. Requires more training, more consciousness and employee commitment. More difficult goals to be attained. Coordination with customers and suppliers should be much better and disciplined.

Doesnt make much use of forecasting information.

Multiple sourcing is not possible. Success probability is lower.

Thank You