Justintime Manufacturing

Just-in-time manufacturing is a process that continuously stresses waste reduction by optimizing the processes and procedures necessary to maintain a manufacturing operation. Part of this process is JIT purchasing or inventory where the materials needed appear just in time for use, thus eliminating costs associated with material handling, storage, paperwork, and even inspection. In order to eliminate inspection, the customer must be convinced that the contractor has adhered to all quality requirements. In other words, JIT inventory pushes quality assurance and quality control for that product down to the contractor's level.

The customer benefits from JIT purchasing by developing long-term relationships with fewer suppliers, thus lowering subcontractor management costs. The contractor benefits by having long-term contracts. However, the contractor must agree to special conditions such as on-site inspections by the customer's executives, project manager, or quality team, or even allowing an on-site customer representative at the contractor's location.

JIT purchasing has been widely adopted in Japan, but only marginal success has occurred here in the United States. Table 20-7 shows the relative comparison of American versus Japanese quality practices.

Another part of JIT manufacturing is the identification and continuous reduction of waste. Shigeo Shingo of Toyota Motor Company has identified seven wastes that should be the targets of a continuous improvement process. These appear in Table 20-8.

TABLE 20-7. COMPARATIVE ANALYSIS OF PURCHASING PRACTICE: TRADITIONAL U.S. AND JAPANESE JIT

Purchasing Activity JIT Purchasing Traditional Purchasing

TABLE 20-7. COMPARATIVE ANALYSIS OF PURCHASING PRACTICE: TRADITIONAL U.S. AND JAPANESE JIT

Purchasing Activity JIT Purchasing Traditional Purchasing

Purchase lot size

Purchase in small lots with frequent deliveries

Purchase in large batch size with less frequent deliveries

Selecting supplier

Single source of supply for a given part in nearby geographical area with a long-term contract

Rely on multiple sources of supply for a given part and short-term contracts

Evaluating supplier

Emphasis is placed on product quality, delivery performance, and price, but no percentage of reject from supplier is acceptable

Emphasis is placed on product quality, delivery performance, and price but about two percent reject from supplier is acceptable

Receiving inspection

Counting and receiving inspection of incoming parts is reduced and eventually eliminated

Buyer is responsible for receiving, counting, and inspecting all incoming parts

Negotiating and bidding process

Primary objective is to achieve product quality through a long-term contract and fair price

Primary objective is to get the lowest possible price

Determing mode of transportation

Concern for both inbound and outbound freight, and on-time delivery. Delivery schedule left to the buyer

Concern for outbound freight and lower outbound costs. Delivery schedule left to the supplier

Product specification

"Loose" specifications. The buyer relies more on performance specifications than on product design and the supplier is encouraged to be more innovative

"Rigid" specifications. The buyer relies more on design specifications than on product performance and suppliers have less freedom in design specifications

Paperwork

Less formal paperwork. Delivery time and quantity level can be changed by telephone calls

Requires great deal of time and formal paperwork. Changes in delivery date and quantity require purchase orders

Packaging

Small standard containers used to hold exact quantity and to specify the precise specifications

Regular packaging for every part type and part number with no clear specifications on product content

Source: Sang M. Lee and A. Ansari, "Comparative Analysis of Japanese Just-in-Time Purchasing and Traditional Purchasing Systems," International Journal of Operations and Product Management, 5, no. 4 (1985), pp. 5-14.

Source: Sang M. Lee and A. Ansari, "Comparative Analysis of Japanese Just-in-Time Purchasing and Traditional Purchasing Systems," International Journal of Operations and Product Management, 5, no. 4 (1985), pp. 5-14.

Two new topics are now being discussed as part of JIT manufacturing: value-added manufacturing and stockless production. Value-added manufacturing advocates the elimination of any step in the manufacturing process that does not add value to the product for the customer. Examples include process delays, transporting materials, work-in-process inventories, and excessive paperwork. Stockless production promotes little inventories for

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