Management/Just-In-Time Systems term paper 18360

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Just-In-Time SystemsIn today's companies, new catch phrases and ideas are beingdeveloped each and every day. One of the more popular ideas that iscirculating around these days is the idea of just-in-time manufacturing.Many magazines and newspapers have documented the efforts of companiesto develop and implement just-in-time processes. The question can be asked,though, what does just-in-time mean? How does a company implementjust-in-time processes, and what are the results of implementation?Just-in-time manufacturing is basically the idea that companies shouldhave manufacturing and purchasing strategies that reduce the time betweenthe beginning of the manufacturing process and shipment to the customer.This sounds easier said than done, for the development and implementationof these strategies are some of the most difficult tasks in just-in-timemanufacturing. One key idea that must be understood about just-in-timemanufacturing is throughput time. This is the time between the start of themanufacturing process and the end, where the product is ready to be shipped.Five key elements are involved in throughput time. The first element isprocessing time, or the time actually spent working on the product. Next isinspection time and moving time. Moving time is simply the amount of timespent moving the product from one production department to another, as wellas back and forth from storage areas. The last two elements of throughputtime are waiting, or queue, time and storage time. Queue time is the amountof time a product is waiting at a production department before being workedon, while storage time is the amount of time raw materials, finished goods,and works-in-progress actually stay in storage. Just-in-time philosophy saysthat the first element, processing time, actually adds value to the product,while the last four key elements do not.1 Thus, there are value-addedactivities and nonvalue-added activities. Just-in-time manufacturing tries todecrease the amount of time spent on nonvalue-added activities as much aspossible. Just-in-time philosophy was first used by Toyota in Japan. Since thattime, many companies around the world have begun to successfullyimplement just-in-time processes, including several companies in the UnitedStates. The implementation of just-in-time processes have taken on afamiliar pattern in these companies. Usually it is begun by training everyonein the company about the just-in-time philosophy. The basic just-in-timeconcepts that employees would be trained in and made to follow asguidelines are listed in Table I. Table I* Visualize the process in as few steps as possible. * View inventory as moving, not static. * Emphasis should be placed on the synchronization of each process. * Simplify, combine, eliminate* Wastes are: over and under production, unnecessary steps, and excessive inventory and motion.2These basic ideas are not unique to just-in-time, but are crucial in trainingemployees about the just-in-time philosophy. Most companies have realized now that the just-in-time philosophy isan important component in the idea of total quality management. Totalquality management has the same goals as just-in-time, but also seeks as fewerrors as possible between each stage of production. Just-in-time philosophyis a tool that top-level managers use to implement total quality management.Most companies today seek this implementation, and follow the followingsteps. The first step to implementing TQM/JIT manufacturing is to train thetop management in the basic concepts of these ideas. Once this isaccomplished, the next step is to form a top-level team. This team'sresponsibilities include deciding upon an organizational structure anddeveloping a plan to implement TQM/JIT within the company. This planshould include the company's goals concerning production, as well as how toestablish this plan among all employees (i.e. motivation and discipline).This plan should then be used to establish the overall philosophy of thecompany concerning TQM/JIT.3Next, the system should be implemented to every aspect of thecompany from supplier to distributors. First, each department shouldestablish its goals and a specific problem to attack. Then, a team should bechosen by each department and team leaders established. The teams shouldfocus on the reduction of costs and the elimination of wastes. Data mustthen be collected on the teams' problems. This data should be plotted inorder to find excess waste or costs. Once this is done, measurements shouldbe made as far as average costs, cycle times, and error rates. Manipulationof this data should show at least some apparent problems in the currentsystem. Further analysis should help in the implementation of TQM/JIT byshowing problem areas. In addition, the data could be used to show theeffects of implementing TQM/JIT into the company.4After the beginning of implementation, it is crucial that everyemployee believe in the concepts listed in Table I. Otherwise, the systemcould fail. Once implemented, though, just-in-time systems must becontinually monitored and preventative actions performed. For instance, if afault in a product is discovered because of a faulty wire, that roll of wire isremoved. In a complete just-in-time system, however, the process does notstop there. The manager would check the warehouse and determine if therewere any more rolls of faulty wire. If he discovered any, then those would bethrown out as well. Then, the manager would the supplier whichsold the company the faulty wire and inform him of the situation, hopefullyto prevent any more shipments of faulty wire. By doing all of this, themanager prevents any backlogs and waste in the future. With thejust-in-time system, every aspect of the company is continuously running.The just-in-time system helps companies spotlight those areas that are fallingbehind and need improvement. There are methods by which a company can perform preventativemaintenance. The first is through planning a well-developed, goal-orientedsystem and establishing a written policy on quality and waste reduction.Second, the management of each department should work together to try andeliminate problems, and not place blame on any one department. Blame hasnever accomplished anything, and therefore is a nonvalue-added item. Next,designers should be knowledgeable of manufacturing requirements andlimitations so that there is not a contradiction between designs and actualproducts. This results in waiting time, another nonvalue-added item. Last,but most important, is ample training. Employees that have been trainedthoroughly can handle minor problems on the spot without having to hold upthe entire manufacturing process and call for a manager. Employees withoutsuch training are problems waiting to happen.5Once all of the training, goal setting, and team forming are complete,the time has finally come to implement the TQM/JIT system. Onceimplemented, a company must find a way to organize all of the teams,including who is on what team and what their goals are. In order to do this,some companies have developed what is called a team tracking and status

report. An example of this kind of report is shown in Table II. Table II6Status PhaseMeetingMainName of TeamA B C DLeader TimeGoal Top-LevelNon-ApplicableR. WilsonMon 1pmSystem Implem. & ManagementCorrective ActionSupplier MgmtX X X R. KlimoMon 10:30Improve VendorPerformanceExcess InventoryX X X XBGThur 7amReduce ExcessInventoryGlass StainsXRCWed 8:30Reduce Stainsfrom Curr. LevelFunctional ImprovementSecretaryX XD. BoggsTues 9amImprove CopierEffic. & QualEngineeringX X X XPWTues 10amReduce Doc. ErrorsCust. ServiceXB. MurrayThur 8amReduce SalesOrder CycleTime & DefectsPurchasingX X X XR. KlimoFri 7:30Improve Qual ofRequisitionsQual EngineeringX X X XJ. FishWed 10amReduce PlanningDefectsJIT Line AX X XB. YongTues 1pmReduce Lint inCoil DefectsJIT Line CXP. TipaTues 2pmReduce ChipDefectsSpecial TeamsKANBAN H. WongTues 8amRebalance JITLine ASetup G. KnodelFri 8amReduce TesterSetup TimesSPCK. GangkaiMon 4pmMove SPC In-Line for JITLine FAs indicated in Table II, many teams are required to successfully run aTQM/JIT operation. Now that we have discussed how just-in-time philosophies can beimplemented along with the entire total quality management scheme, it canbe questioned whether or not large United States companies can completelyimplement just-in-time systems. The answer is yes. Before the idea of just-in-time was widely accepted, economicrecessions and recoveries played havoc with American businesses. During aperiod of economic well-being, for example, a company would anticipatefurther economic growth and stockpile both labor and products. This was afine idea, until the economy hit a recession. Companies were stuck withenormously large inventories and low customer demand. The only waycompanies could respond was to cutback on labor, resulting in large layoffs.Then, once the economy took an upswing, companies were eventually facedwith labor shortages, and large scale hiring began. This cycle continuedeach time the economy fluctuated. That is, except for companies whodecided to implement just-in-time manufacturing, which broke the cycle. Asmore and more companies bought into the just-in-time philosophy, "theresult was smaller inventories of both parts and final products."7 Withsmaller inventories, billions of dollars were freed up for investment purposes.This protects companies during the lean years when demand may exceedproduction. This also means that with such little room for inventory error, onemistake could mean thousands in lost revenues. For example, in 1993, oneGeneral Motors engine plant in New York had repeated productionproblems. This resulted in the underproduction of 90,000 cars. Still,General Motors is completely dedicated to the just-in-time philosophy. Thisstrong belief held in TQM/JIT by General Motors, as well as thousands ofUnited States companies, may improve the nation's economy over the longhaul.8Some companies have found ways to place the burdens of estimatingsales and keeping the exact amount of inventory upon someone else. Thesecompanies have paid "middleman" companies a specific amount to be incharge of their inventories. One such "middleman" company is Owens &Minor, a hospital supplies distributor. For example, UCLA Medical Centerallowed Owens & Minor to buy their inventory. Owens & Minor workerstake daily inventory and report to the home office what each individualhospital needs for the next day. The items are delivered, and all UCLAMedical Center has to do is pay for the items it uses, thereby saving millionson inventory costs. In addition, Owens & Minor works with the hospital tofind unnecessary items and help eliminate waste, keeping costs to aminimum.9 This coincides with the principles of the just-in-time philosophy. According to recent studies, just-in-time systems have helped keepinventories of American companies down. Ratios of inventory-to-sales havebeen declining for the past four years. However, due to the economy growingvery slowly, finished goods inventories have increased over the past year.10To combat this growth, companies have turned to improving theirrelations with their suppliers. By sharing sales forecasts as well asproduction forecasts with their suppliers, materials are shipped according tothe demand from the company. For example, say an automobile productioncompany produces one hundred cars in a day. They will need two hundredbucket seats. They will place an order to their suppliers for two hundredseats within a certain, predetermined time period. This time period allowsfor the seats to arrive the day that they are needed, therefore, no seats will beplaced in inventory. This sounds wonderful, but companies still must makeestimates many months before hand using an unstable economy. This meansthat some companies may end up with sales estimates that are over or underreal sales. This brings us back to the overall concept of just-in-time being a toolused in total quality management. Take, for instance, American Standard,Inc. American Standard manufactures bathroom fixtures, air conditioningunits, and braking systems for cars. They believe that this type ofmanufacturing is demand-driven by their customers. This demand-flow typeof production fits right in with the concept of total quality management.American Standard also believes in allowing their workers to manage theirown production process. This was not always the case, however. AmericanStandard began to implement just-in-time systems as early as 1979. It metwith moderate success, but when the recession of 1990-91 hit, they had debtin excess of three billion dollars. That is when they decided to implementtotal quality management, and use just-in-time as a major tool. Throughdemand-flow manufacturing, efficiency improved and cycle time decreased.In addition, inventory and waste also declined. American Standard believesin the philosophy of improving relations with suppliers, but it also believesin demanding total quality control from its suppliers.11 With AmericanStandard, as well as other companies, insisting on TQC from their suppliers,the total quality management idea is being spread nationwide. Just-in-time systems are being implemented in most companies,though some more than others. Those companies that acknowledgejust-in-time philosophies and implement them fully as part of a completetotal quality management system are quickly becoming players in the worldmarket. Those companies that do not implement total quality managementwith an emphasis on just-in-time systems may be left behind as we go intothe twenty-first century. Bibliography1. Polimeni, Ralph S., et. al., Cost Accounting, Third Edition (New York: McGraw-Hill, Inc., 1991) 446. 2. Ryan, John M., The Quality Team Concept in Total Quality Control (Milwaukee: ASQC Quality Press, 1992) 17. 3. Ryan, 11. 4. Ryan, 11. 5. Ryan, 29-30. 6. Ryan, 54-55. 7. Howard Gleckman, "A Tonic for the Business Cycle," Business Week April 4, 1994: 57. 8. Gleckman, 57. 9. Suzanne Oliver, "Cut Costs, Add a Middleman," Forbes April 25, 1994: 135. 10. David Fischer, "Sitting on Excess Supplies," U.S. News & World Report September 18, 1995: 88. 11. Michael Barrier, "When 'Just In Time' Just Isn't Enough," Nation's Business November 1992: 30-31.


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