Just-In-Time (JIT) Manufacturing

TYPICAL DECISION PROBLEM

(A Case Study of U S Filters) - Part I

U.S. Filter is a major supplier of air filters for cars & trucks to
the " big three auto-makers in the United States. Recently
they have received notice that Ford Motor Company, a major
customer, is going to begin using a just-in-time approach to
manufacturing. After meeting with Ford, Joe Franks, the
president of U.S Filter, commented on the situation as follows-

They want us begin delivering filters four times a day in small

quantities. Presently, we send them about one truck load a
week. Are three guys crazy? The freight alone is going to
cost a fortune.

Ford also wants a long-range contract with us as a sole

source. I like that idea, but the catch is that we must
guarantee a 2 % price reduction each year. How in the world
can we do that with inflation, higher wages, and the price
increases of every year?
 Ford also wants to see our cost records for the
filters before negotiating prices with us. It will be a
cold day before I let them go through our cost records.
They also want us to ensure perfect quality and deliver
directly to their assembly line without receiving or
inspection. That is probably a good thing for our
company; we should be producing perfect quality
anyway, but how are we going to do it?
I would certainly like to know how we are going to
meet these demands from Ford. What they are asking
seems unreasonable to me.

Q: If you are made to occupy the chair of Mr. Joe

Frank,
what is your decision -

To accept the supply terms of Fords ?

 U S Filters Part II
At this point, Dona Smith V P (Mfg.) offered a comment :

If you can't beat them , join them. May be we should go to a JIT

system too.
I have been doing some reading about JIT and have talked to several
people, including Ford, and it seems to me we may be able to gain the
productivity improvements and price decreases - they are asking for if
we also adopt a JIT system. As a matter of fact, we could improve our
ROI substantially even with these changes. Ford will stabilize their
schedule, which will help us. We have to request Ford to arrange a co-
operative round robin milk-run pick-up for all suppliers in our area
to help reduce costs.
We will have to also convince our other customers to go along
with a stable schedule and convince our suppliers to accept a
program similar to the one Fordis shoving down our throats, I don't
think we have any choice but to go along with this JIT
approach. It seems like the wave of the future. Some of our other
customers, like Caterpillar, Cummins Engine, and General Motors are
also talking about JIT, so Ford may be only the first one to make
these demands.
 APICS Definition of JIT
The primary elements of Just-in-Time
are to:
have only the required inventory
when needed,
improve quality to zero defects,
reduce lead times by reducing setup
times,
queue lengths, and lot sizes,
incrementally revise the operations
themselves, and
 JIT Synonyms
IBM - Continuous Flow Manufacturing
HP - Stockless Production
Repetitive Manufacturing System
GE - Management by Sight
Boeing - Lean Manufacturing
Motorola - Short Cycle Manufacturing
Japanese - The Toyota System
 Traditional View of
Manufacturing
Key objective : to fully utilize capacity, produce
more with fewer workers and machines.
How? : With large queues of in-process inventory
waiting at work centers.
Workers and machines never had to wait.

Result:
Products / Materials spent most time just waiting,
that is unacceptable in todays time-based
competition.
 Time-Based Competition
It is not enough to be high-quality and low-cost
producers.
Today, the firm must also be first in getting
products and services to the customer fast.
To compete in this new environment, the order-
to-delivery cycle must be drastically
reduced.
JIT is the weapon of choice today to reduce the
elapsed time of this cycle.
 Successful JIT Applications
Most successful JIT applications have been in
repetitive manufacturing,
(batches of std. products, at high speeds and
volumes)

Successful use of JIT is rare in large, highly

complex job shops where production planning
and control is extremely complicated.

Smaller, less complex job shops have used JIT,

but operations have been changed so that they
behave somewhat like repetitive manufacturing.
 Changes Required for JIT
JIT requires certain changes to the
factory and the way it is managed:

Stabilize production schedules

Improve product quality
Cross-train workers
Reduce equipment breakdowns
Develop long-term supplier relations
 Elements of JIT
Manufacturing
Eliminating waste / Reducing inventories
Enforce problem solving and cont.
improvement
People make JIT work : Employee
Empowerment
Total Quality Management (TQM)
Parallel processing
Kanban production control
JIT purchasing
Working toward repetitive manufacturing
 Problem Solving and Continuous
Improvement
JIT is a system of enforced problem solving.
One approach is to lower inventory gradually
to expose problems and force their solution.
With no buffer inventories to offset
production interruptions, problems are highly
visible and cannot be ignored.
The job of eliminating production problems is
never finished.
Continuous improvement -- or kaizen -- is
central to the philosophy of JIT.
 JIT: A Pull System

In a push system, such as an MRP

system, we look at the schedule/
forecast to determine what to
produce next.

In a pull system, such as JIT, we

look only at the next stage of
production and determine what is
needed there, and then we produce
only that.
 Kanban Production Control
At the core of JIT manufacturing at Toyota is
Kanban, an amazingly simple system of
planning and controlling production.

Kanban, in Japanese, means card or marquee.

Kanban is the means of signaling to the

upstream workstation that the downstream
workstation is ready for the upstream
workstation to produce another batch of parts.
 Benefits of JIT
Inventory levels are drastically reduced:
frees up working capital for other projects
less space is needed
customer responsiveness increases
Total product cycle time drops
Product quality is improved
Scrap and rework costs go down
Forces managers to fix problems and
eliminate waste .... or it wont work!
 Uncovering Production
Problems
We must lower the water level!
Production
Problems
Machine
Breakdowns
Out-of-Spec
In-Process Workload
Materials
Inventory Imbalances
Worker Material Quality
Quality
Absenteeism Shortages Problems
Problems