JIT manufacturing and inventory control system

JIT

Just-in-time production is considered to be on the leading edge of technological advancement. With improvements in the virtually every industry, maintaining an effective production line while minimizing inventory costs is a very feasible option. Just-in-time systems are designed to keep inventory costs at a minimum, unlike the ways of old, with large warehouses loaded with back inventory. With technology allowing instantaneous communication around the world, production lines and stores do not have to wait for days for inventory delivery. It can happen, well, just-in-time. Many companies are on the verge of switching to a just-in-time inventory system, to compliment the millions of companies that have already implemented the system. It is generally recognized that effective implementation of just-in-time will result in a significant reduction of inventories. As a matter of fact, inventory levels are key indicators for measuring just-in-time performance (Harrison). The just-in-time philosophy on inventory management is simple: - Strive for a level of zero inventories. - Produce items at the rate required by the customer. - Eliminate all unnecessary lead times. - Reduce setup costs to achieve the smallest economical lot size - ideally, a quantity of one. - Optimize material flow from suppliers through the production process to the point of sale of the finished product, so that inventories are minimized. - Ensure high quality and dependable just-in-time delivery from suppliers. - Implement a Total Quality Control (TQC) program, which will minimize scrap, rework and resultant delays in production (Naylor). While the just-in-time inventory management philosophy is simple, execution is not.

In a just-in-time environment, the supplier should deliver raw materials and other purchased items when they are needed. A blanket purchase order or other suitable form of basic agreement should cover the terms and conditions for procurement. Delivery of the item should be direct to the point of use in the manufacturing plant. It is time consuming and not cost-effective for the materials to be handled in one part of a production line before it is moved to the correct location. It is up to the supplier to ensure a smooth flow of material to support production, which is obtained through optimum communication and coordination between the manufacturing plant and the supp...

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.... - Authorize individuals in production to release vendor delivery quantities against blanket purchase orders, purchasing agreement, or contract. - Establish inventory policy code for each item based on the method of inventory control and the method of transaction reporting and recording. - Review and establish minimum economical order quantities and safety stocks required by just-in-time production. - Measure inventory performance to determine effectiveness of just-in-time production and inventory management (Naylor). Just-in-time will change our conventional thinking concerning the management of inventories and streamline our methods for inventory control. Proper selection and implementation of these methods will yield substantial benefits by improving customer service, shortening delivery lead times, and significantly reducing inventory investment. It does not, however, eliminate the need for sound inventory planning.

Bibliography:

Slack, Chambers, Harland, Harrison and Johnston, Operations Management, New York: Pitman, 1995

Naylor J, Operations Management, New York: Pitman, 1996 Harrison A, Just-in-time

Manufacturing in Perspective, New York: Prentice Hall, 1992