Term Paper on "Just in Time JIT and Lean Manufacturing"

Term Paper 12 pages (3153 words) Sources: 5 Style: APA

[EXCERPT] . . . .

Just-in-Time (JIT) and Lean Manufacturing

Just-in-Time is a strategy put to practice in accounting principles, which induces increases in investment returns of an industry by decreasing work-in-progress stock and all of its related costs. This strategy of JIT is leading to noticeable improvements in the rate of return on investments, productivity and the level of quality of a manufacturing industry's output. Connected with Japanese management techniques, just-in-time production (JIT) are set of rules which help in carrying out organized plans. According to this philosophy of managing production, manufacturing organizations should not hold or stock material more than that is necessary for quick production or circulation. To be exact, a producer should not take delivery of unprocessed materials or goods from its suppliers possibly just hours prior to they will be used in manufacturing, and the output of the firm should be transferred to its consumers as soon as possible after the raw material is completely transformed into manufactured goods and they must not keep a stock of raw or finished goods. Progressively more and more popularity is given to Just in Time production, which is also knows as JIT. The objective of lean manufacturing is "to eliminate the eight wastes of lean-overproduction, motion, inventory, waiting, transportation, defects, underutilized people, and extra processing. Lean targets non-value-added activities.These are the same activities that contribute to poor product quality." (Peterman, 2001, p. 24) in other terminology, lean manufacturing searches for those actions that do not add value and then removes those activities or processes. Anything referred to as non-valued added means it is an "activity that does not add market form or function or is not necessary" (Peterman, 2001, p. 24). Lean manufacturing is projected to remove, decrease, simplify or assimilate non-value added activities.

This research paper gives details about the fundamental concept to attain JIT production and clarify the meaning of Lean manufacturing which is associated with it.

Just-in-Time (JIT) and Lean Manufacturing

Just-in-time is a very wide philosophy that highlights generalization and incessantly reducing waste in each and every part of production activity. This entails that the purpose of the just-in-time philosophy is best aimed at an organization in its entirety. In order for a proficient Just-in-Time operation the theory of backflush accounting is also adopted. The most important seeks of just-in-time are associated with those of total quality management (TQM). The prime focus is on the removal of waste and activities that are of no use hence giving a manufacture of commodities which possess 'zero defects'. Just like TQM, the just-in-time philosophy centers on the on-time-delivery to the purchaser. The philosophy enhances the performance of the departments of purchasing, production and sales. It emphasizes on quick sales so that the price of stocking is reduced. The nonexistence of stock render decisions concerning cost-flow conjectures (such as weighted average or first-in, first-out) or stock costing methods (such as absorption or marginal costing) are insignificant. This is because all of the production costs in accordance to a period, surge directly into cost of goods sold. When the old stock is consumed, the information sent to the manufacturing department for the order of new stock by immediate means is the key to the success of JIT philosophy. This helps in saving the warehousing space and costs required to keep the stock. However the commodity levels in stock are determined by usual demands but in case of a sudden ascend in demand the firm can suffer the problem of customer service. The technique was first used by the Ford Motor Company as described explicitly by Henry Ford's My Life and Work (1922): "We have found in buying materials that it is not worthwhile to buy for other than immediate needs. We buy only enough to fit into the plan of production, taking into consideration the state of transportation at the time. If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever. The carloads of raw materials would arrive on schedule and in the planned order and amounts, and go from the railway cars into production. That would save a great deal of money, for it would give a very rapid turnover and thus decrease the amount of money tied up in materials. With bad transportation one has to carry larger stocks." The Job costing is also decreased by the speedy conversion of direct materials to finished good which are then sold immediately. The established and standard costing systems track costs as goods pass from raw materials, to work in progress, to finished goods and finally to sales. And this type of system is known as 'Sequential Tracking System' because the accounting system entries come in the similar arrangement as purchases and manufacturing. At times the management tries to track both direct material and labor time to individual operations and products and thus this process can prove to be very expensive in accordance to sequential tracking. The execution of a Just-in-Time philosophy can result in a change in the character played by the management accountant. This is because the standard management accounting techniques are rendered to be improper owing to their inaptness for use in conjunction with just-in-time operations. For example, habitual variance study centers on making the most of capacity utilization while trying to lessen costs. The minimization of costs will always remain an important concern. On the other hand, the focus on value appreciation has increased while trying to decrease the costs. Management is as a result required to give financial and non-financial information concerning supplier performance, on-time deliveries, cycle times, and the quantity of faulty items produced. And thus these new duties for the management department have resulted in definite changes in the processes and accounting techniques in order to facilitate the provision of such information. And here comes the application of backflush accounting systems which are very helpful in improving the performance of just-in-time operations. This accounting system centers on the productivity of an organization and then works accordingly while assigning costs between costs of goods sold and inventories. Backflush accounting improves the costing system as it disregards both labor variances and work-in-progress. (C.Drury)

For a flourishing performance of JIT many added conditions are thought out. These conditions consist of small lot sizes, short setup and changeover times, proficient and effectual quality controls, and perhaps most of all, planning the whole production process to reduce backups and get the most out of the effectiveness of human and machine labor. The details first and foremost focus on 'assembly' manufacturing. It includes service organizations and administrative departments, making this philosophy applicable greatly broader. The steps taken to achieve proper and profitable JIT are,

JIT production includes the knowledge of the profits and fame (i.e. The objective), which are to be achieved with JIT. The objective fundamentally decreases product throughput times. It lessens or diminishes conventional stock and also focuses the mind on quality and set-up times and Offers a theoretical structure for tactical growth in many areas

Value stream mapping is an important tool that assists you to observe and realize the flow of objects and information as a product or service creates its way through the value stream.

The 5S program is introduced which ascertains a well-organized, proficient and safe and sound place of work.

Line integration has a setup of a flow model, which is very significant to mark troubles right away. It also eradicates or decreases intermediate stock.

One-piece flow production is when parts are made one at a time and passed on to the next process. It helps to detect the defects immediately and prevents a huge amount of loss. It is also known as make one, move one.

Pull system is in which a production method is organized in which the production of an item starts only when there is actual demand from a customer. It is the next vital step to ensure that goods are not pushed into the manufacturing process any longer (hoping some date they will come out at the other end), but 'pulled' the time the purchaser asks for it.

Line balancing is the process of aligning processes within a definite manufacturing line, and feeder lines to consuming lines that reduces variations in production levels and operation downtime.

Standardization is the procedure of keeping procedures and equipment as constant as achievable.

But on the other hand Just in time (JIT) is not a direct solution to all the problems. Implementing this strategy could make the company change all the ways in which a company works. The strategy in this way of working comes from many different disciplines including statistics, industrial engineering, production management and behavioral science. In JIT inventory is seen as incurring costs or waste instead of adding value. In JIT environment, industries are encouraged to eliminate inventory that does not reimburse for production issues and to build up processes that help in keeping a low amount of inventory. This strategy concerns all about containing "the right material, at the… READ MORE

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