What is JIT?

In a JIT environment, waste is defined as any activity that does not add value for the customer. It believes in the concept of minimum usage of resources. For example: manpower, equipment, time, space and energy. Waste can be excess of : Inventory Setup times Inspection Materials Movement Rejects/Scrap Waste should be eliminated

JIT Supply Chain: Characteristics

SUPPLIERS Few & Nearby suppliers Repeat business with same suppliers Encouraged to extend JIT buying to their own suppliers Clusters of remote suppliers Buyer plan resists vertical integration & subsequent wipeout of supplier business QUANTITY Steady o/p rate & frequent deliveries in small lot quantities Long term contract agreements & minimal release of paperwork Suppliers encouraged to package in exact quantities

QUALITY Minimum product specification imposed on supplier Helps suppliers to meet quality requirements Close relationships between QA teams of both buyer & supplier Suppliers encouraged to use process control charts instead of lot sampling inspections

SHIPPING Scheduling of inbound freight

SUPPLIERS Locate near buyer Extend JIT techniques to their suppliers Include packaging & routing details Detail ID & routing labels Focus on core competencies

MUTUAL UNDERSTANDING & TRUST

SHIPPING Seek joint scheduling & shipping efficiencies Consider 3rd party logistics Use ASN Ship frequent small orders

QUANTITIES Produce small lots with zero defects Meet mutually developed quality requirements JIT Partnership Characteristics

BUYERS Share customer prefs. & demand forecasts Reduce product specifications & encourage innovation Support supplier innovation & price competitiveness Develop long term relationships Focus on core competencies Process orders with minimal paperwork (EDI, Internet, e procurement,etc)

Characteristics of JIT Suppliers

Good Relationship With Customer Analysis of Demand Quality As A Supply Method Flexible Manufacturing Systems Flexible Workforce Flexible Transport System Distribution Centres

Advantages of JIT Supply

Eliminates need for inbound inspection at the buyers end Delivery lead times are considerably reduced Minimal paperwork involved when orders are processed (using EDI, the Internet, e-Procurement, etc) Helps to develop a long-term business relationship between the buyer & the supplier

Supplier Selection Teams

Should have members from Purchasing, Finance, Quality, Design engineering, Manufacturing engineering and Transportation Purchasing should look at delivery consistency, delivery lead times, product line diversity, price per part and the total cost of the supply. Finance must evaluate financial stability of supplier Quality examines whether the potential supplier has TQC system in place or capable of installing one Design engineer assess the technology & design support capability of the firm in the question Manufacture engineer evaluates the current process & process controls used by the supplier Transportation examines transportation alternatives or planned part pathways.

Quality Certification For Supplier

A supplier must fulfill the following criteria to get quality certified :

Must utilize Statistical Process Control (SPC) Must be committed to on-time delivery Must have a Quality Assurance (QA) Plan in place

Supplier Concerns
Diversification: Suppliers may not want to be restricted to longterm contracts with a single customer. Their perception is that they reduce their risk if they have a variety of customers Scheduling: Many suppliers have little faith in the buyers ability to produce orders with a smooth, coordinated schedule Engineering Changes: Changes in design or specifications will severely impact JIT because the lead time becomes inadequate for suppliers to implement these changes Quality: May be limited by capital budgets, processes, or technology Lot Sizes: Frequent delivery in small lots can be viewed by suppliers as a way of transferring buyers holding costs to them

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