ADINARAYANADEEPAKDWIPANNITASHRUTI

INTRODUCTION•Toyota Motors is73-years old, established on August 28, 1937 in Japan.

•Toyota became the world's largest automaker in the first half of 2008, with sales of more than 4.8 million cars and trucks,

•Toyota ranked 5th of the world's largest corporations in the 2008 FortuneGlobal 500.

•Toyota ranked1st of the world's largest automaker corporations in the 2008Fortune Global 500

•Has53 overseas manufacturing companies, in 27 countries/regions.

•Has168 distributors sell vehicles in more than170 countries/regions.

1) What is Just-in-Time (JIT

1) What is Just-in-Time (JIT)? What kind of suppliers an organization must have in order to practice JIT?

Just-In-Time (JIT)Defined:

•JIT can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods)

•JIT also involves the elimination of waste in production effort

•JIT also involves the timing of production resources (i.e., parts arrive at the next workstation “just in time”)

JIT and LEAN MANAGEMENT

• JIT can be divided into two terms: “Big JIT” and “Little JIT”• Big JIT (also called Lean Management) is a philosophy of operations management that seeks to eliminate waste in all aspects of a firm’s production activities: human relations, vendor relations, technology, and the management of materials and inventory• Little JIT focuses more narrowly on scheduling goods inventory and providing service resources where and when needed

Objectives of JIT system•Produce only the products that customers want•Produce as and when the customer wants•Produce products with perfect quality•Produce with minimum possible lead time•Produce products only with features that customer wants-nothing more•Produce with no wastage

Big lot sizesLots of inventory”PUSH” material to nextstage

Lowerper unit

cost

Big purchase shipments

Big “pushes” of finished goodsto warehouses or customers

???

Pre JIT-

Smaller lotsFaster setupsLess inventory, storage space”PULL” material to next stage

Minimalor no

inventoryholding

cost

Smaller shipments

Goods are pulled out ofplant by customer demand

Post JIT-

Minimizing Waste: Inventory Hides Problems

Work inprocess queues(banks)

Changeorders

Engineering designredundancies

Vendordelinquencies

Scrap

Designbacklogs

Machine downtime

Decisionbacklogs

Inspectionbacklogs

Paperworkbacklog

Example: By identifying defective items from a vendor early in the production process the downstream work is saved

Example: By identifying defective work by employees upstream, the downstream work is saved

◦ Close to production plant◦ Produce Quality components◦ Maintain Good labor relations◦ Fewer suppliers (keiretsu)◦ Contingency plans to cope with disruptions like the effect of bad weather, a truck drivers strike, blocking roads/ports etc.

In order to practice JIT the suppliers of an organization must meet the criteria

Quality Commitment Cost Saving Additional Resources and Capabilities Prior Work Experience Contract Terms Confidentiality Financial Stability

Contd….

2) WHAT ARE THE ADVANTAGES & DISADVANTAGES OF JIT?

LOWER INVENTORY LEVELS LESS PRODUCTION CYCLE TIME QUALITY OUTPUT LESS MATERIAL HANDLING LESS WORKER IDLE TIME IMPROVED EMPLOYEE MORALE

ADVANTAGES OF JIT

 Only 8 weeks required to reach full production capacity

Automatic delivery system and aerial tunnels are developed

There is barely any stock required as most parts are made to order

The need of conventional truck delivery is minimum

BENEFITS FOR

FORD &ITS SUPPLIERS STARTED WORKING AS ONE TEAM

25% SHORTER TIME PRODUCTION TIME NEEDED

SAVING $6+ MILLION PER YEAR ON TRANSPORT

BENEFITS FOR

Limitations of JIT•Higher amount of machine/worker idle time.•More efficient when demand pattern is stable. •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.

It may be difficult and expensive to introduce.

There is little room for mistakes as minimal stock is kept for re-working faulty product.

Production is very reliant on suppliers and if stock is not delivered on time, the whole production schedule can be delayed.

Contd…

Cont. . .It requires more training, more consciousness, more employee commitment.

More difficult goals to be attained.

Coordination between customer and suppliers need to be much better and disciplined.

Toyota the Developer of JIT SystemToyota, the developer of JIT, found this out the hard way. One Saturday, a fire at Aisin seiki Company's plant in Aichi Prefecture stopped the delivery of all break parts to Toyota. By Tuesday, Toyota had to close down all of its Japanese assembly line. By the time the supply of break parts had been restored, Toyota had lost an estimated $15 billion in sales.

DISADVANTAGES FOR TOYOTA

3) Explain with examples (a) Kanban (b) Milk Run Concept. Discuss how these two concepts a help a firm like Toyota to be more efficient and effective. 

Kan-card, Ban-Signal

Small signboard, visual card etc that is a key control tool for JIT production

Communication signal from a downstream process to an upstream process.

KANBAN

HOW KANBAN MOVES???

RAW MATERIAL

WORK STATION 1

FINISHED PARTS

WORK STATION 2

FINISHED PARTS

ASSEMBLYFINISHED

PRODUCTS

• The mechanics of operation consists of moving upstream beginning with the last operation.When final assembly section requires parts from work station 2, it will send a job card/kanban to wk station 2. • This kanban becomes the job order for workstation 2, which starts producing replacements for the parts removed and at the same time sends the kanban to workstation 1 to do the same.• This finally reaches the raw material inventory where withdrawals are also made in small lots, hence orders are supplied equally in small lots and frequently on a daily basis.

With drawal kanban

TYPES OF KANBAN

Production Kanban

Reduce Inventory

Improve work flow

Prevent Overproduction

Improves responsiveness to changes in demand

Minimize risk of obsolete inventory, because inventory is only created as it is needed.

BENEFITS OF KANBAN

Delivery method for mixed loads from different suppliers. A transport and logistic technique for the collection and transport of goods from suppliers with a defined delivery route, in which various stops are planned and executed in terms of quantities and timing. Milk Run is one of the advanced delivery concepts that can improve your transportation management system. Milk Run Delivery means a routing of a supply or delivery vehicle to make multiple pickups or drop-offs at different locations on a regularly scheduled basis.

MILK RUN CONCEPT

SAME FREIGHT COSTS DESPITE INCREASED DELIVERY FREQUENCY AND SMALLER PARTIAL DELIVERIES

REDUCED STOCK IN GOODS RECEIPT AND THUS REDUCED HANDLING EXPENSES

INCREASED INVENTORY TURNOVER

BENEFITS OF MRS