CHAPTER – 2 LITERATURE REVIEW
2.1
Over view of Just in Time Manufacturing
High inventory holdings are commonly identified as poor management (Boute et
al., 2004). JIT is depicted as an inventory control technique and the Japanese Auto
Industry is recognised as the developer of JIT inventory and management philosophy
(Aghazadeh, 2003). It is a systematic approach which minimises inventory by having
supplies arrive at production and distribution points only when needed (Lee and Wellan,
1993). Hunglin and Wang (1991) claim that JIT production is a philosophy for reducing
work-in-progress (WIP) inventory, it aid process improvement and reduce process
variability. It can be seen as a new way of thinking, planning, and performing with
respect to manufacturing (Canel et al., 2000). Gyampah and Gargeya (2001) consider
JIT manufacturing both as a philosophy and disciplined method of production.
Stevenson (1996) defines the term JIT manufacturing as ‘a repetitive production system
in which processing and movement of material and goods occurs just as they are
needed, usually in small batches’. JIT implementing firms have to produce and deliver
finished goods JIT to be sold, sub assemblies JIT to be assembled into finished goods,
fabricated parts JIT to go into the subassemblies and purchased materials JIT to be
transformed into fabricated parts (Schonberger, 1982a). JIT philosophy is based on the
concept of delivering raw materials when needed; producing products when there is a
need, improve quality of product. The fundamental objective of JIT is to eliminate all
waste from the entire supply chain and to improve product continuously (Ptak, 1987;
Frazier et al., 1988, González-R., 2013).
The core of the JIT philosophy is CI through the elimination of waste
(Chakravorty and Atwater, 1995). Bicheno (1987) defines JIT as “to produce
instantaneously with perfect quality and minimum waste”. JIT in its broader sense is an
approach of achieving perfection in a manufacturing company based on the
continuously elimination of waste. In the narrow sense, JIT refers to the movement of
material at the necessary place at the necessary time (APICS, 1987). It is a disciplined
programme for improving overall productivity and reducing waste (Voss, 1988). In a
JIT environment quality parts in the right quantity and at the right time are produced,
13
while using a minimum amount of facilities, machinery and equipment, raw and inprocess materials and human resources (Schlesinger and Heskett, 1991).
According to Potts (1986) and Banerjee and Kim (1995), JIT is a philosophy
directed towards the elimination of waste, where waste is anything which adds cost but
not value to a product. It is a system driven by final product demand where each item is
procured, manufactured, and delivered in the quantities needed JIT to satisfy demand in
the next stage of the supply chain system or in the marketplace (Sadhwani et al., 1985).
Thus, waste is anything associated with the production process that does not add value
to the final product. Thus, waste includes quality defects, inventories of all kinds, time
spent to move material and time spent setting up machines (Demmy and Gordon, 1988).
Toyota Production system has given three broad types of waste and these are shown in
Table 2.1. Munda waste has been given more importance than the other two types of
waste. Munda waste is of seven types and is depicted in Table 2.2.
Table 2.1 Broad classification of Waste
Japanese nomenclature
English Meaning
1. Muda
Unproductive
2. Mura
Unevenness
3. Muri
Overburden
Younus (1991) in his research work has identified 12 types of wastes: handling,
movement, over-production, scrap and rework, idle time, setup times, transportation the
process itself, material or sub-assemblies, rework, improper order and arrangement,
miscommunication. This waste is any form is required to be eliminated. The elimination
of waste is achieved through internal elements (manufacturing systems, human
resources) and external elements (suppliers, other organizations with close relationships
with the manufacturer) (Keller and Kozazi, 1993). Chauhan and Singh (2012) have
emphasized that ‘elimination of waste’ is the most important parameter of lean
manufacturing, followed by ‘just in time deliveries’. Wallace (1990) has considered JIT
as a path to attain excellence in a manufacturing company based on continuing
elimination of waste and constant development in productivity.
14
Table 2.2 Types of Munda Waste
Abbreviation
Name of
Impact on performance of an Organization by
of waste
waste
eliminating waste
T
Transportation
Establish layout to minimize transport and handling.
I
Inventory
Reduce the waste of stocks in all production areas
(raw material, work in progress, finished goods).
M
Motion
Study motion for improved economics, productivity
and quality.
W
Wait
Synchronize work flow and balance loads through
flexible workers and equipment.
O
Over-
Use value analysis production. Processing may be
processing
totally or partially unnecessary and capable of being
eliminated.
O
D
Over-
Reduce set-up time, compact layout and improve shop
production
floor visibility
Defects
Build in processes to eliminate defects in the process.
Continuous monitoring of production processes with the goal of eliminating all
forms of waste is a key point in understanding JIT. JIT can be depicted as an operating
concept designed to eliminate waste (Chase et al., 1998; Hernandez, 1989). The
American Production and Inventory Control Society (APICS, 1987) define JIT as: ‘a
philosophy of manufacturing excellence based on pursuit of the planned elimination of
all waste and consistent improvement of productivety’. It encompasses the successful
execution of all manufacturing activities required to produce a final product from design
engineering to delivery and including all stages from conversion of raw material
onward. The elimination of waste using JIT foundation element ‘5S’ principle has been
shown in Figure 2.1.
15
Figure 2.1 Elimination of waste using 5S
Ehrhardt (1997) has considered JIT as a pull system, in which a production
process pulls material from a prior process (which does not operate unless there is need
for its output) in support of the final assembly schedule, which is closely coordinate
with customer demand. A common example of pull production system that is used in
industries is Kanban system. JIT is the classic pull system (Mahapatra et al., 2012). The
basic fundamental is that production at one level only happens when request is initiated
at the higher level. Other pull systems other than Kanban system given by Hyer and
Wemmerlov (2002) are paired-cell overlapping loops of cards with authorisation
(POLCA), constant work-in-progress (CONWIP) and drum-buffer-rope (DBR). Figure
2.2 explains pull strategies.
Figure 2.2 Pull Strategies
16
On the other hand, a push system supports batch manufacturing operations. In
batch manufacturing, a schedule prepared by taking into consideration the lead times of
various components and subassemblies is released by the material-planning department
of an organization (Vollmann et al., 1997). Estimating release lead-times, modeling
future requirements for different products, determining the safety lead-times and stock
have been identified as the key issues identified by Krishnamurthy et al. (2004) in
modeling a push system. Push system is also known as material requirement planning
(MRP). Various push strategies are shown in Figure 2.3.
Figure 2.3 Push Strategies
JIT is a management philosophy or toolbox of techniques based on making a
significant improvement in operating efficiency through reduced inventory levels, lead
times and overheads (Grahame, 1998). JIT is essentially more of a philosophy, than a
17
series of techniques, the basic aim of which is to reduce cost by restricting the
commitment to expenditure in any form, including manufacturing or ordering materials,
components, etc. (Sohal et al., 1989). Heeley (1991) considers JIT as a state of mind for
achieving competitive excellence by creating an attention to CI through 100%
involvement to eliminate all waste, institutionalising only value adding activities with
100%.
2.2
Need of JIT in contemporary manufacturing scenario
Reference literature has revealed that the manufacturing organizations
worldwide are facing many challenges to achieve successful operation in today’s
competitive environment. Many organizations are using different techniques to reduce
their cost of production so that they can compete with others. The objectives of JIT are
to remove waste and to enhance the flow of materials. Once this is accomplished, costs
can be lowered, quality enhanced and the firm becomes more flexible and achieves its
inherent objective of realization of manufacturing competitiveness (Fuller, 1995).
The typical topics covered under JIT include the system’s operating procedures
and characteristics, implementation strategies, and benefits (theoretical and actual) such
as efficiency improvements, cost savings, quality improvements, and modifications of
the supplier/producer relationship. On the whole, they present JIT from a perspective
that has an economic focus (Peters and Austin, 1995).
The JIT system is driven by final product demand, where each item is procured,
manufactured, and delivered in the quantities needed JIT to satisfy demand in the next
stage of the supply chain system or in the marketplace (Sadhwani et al., 1985). It is
widely accepted that the implementation of JIT can improve firm performance.
Schonberger (1986) provides anecdotal evidence that companies have substantially cut
lead times, drastically reduced raw material, work-in-process, and finished goods
inventories, and effectively increased asset turnover. Implementation of JIT in an
industrial organization is based on two principles, elimination of waste, and utilisation
of men, machine and material to its optimum levels.
18
Table 2.3 Effect of JIT implementation on various factors
Factors
Facilitating JIT
Effect of JIT Implementation
Reduction in waste
Reduce lot size
Elimination of waste
Reduce lead-time
Automation
Kanban
Reduced set-up times
Stable production
Process
Preventive maintenance
Production strategy
TPM
Kaizen
Group technology
Continuous quality improvement
Quality
control
improvement
and Halt production line
Statistical process control
TQM
Quality circles
Management participation and
commitment
Increase workers’ morale
Management
Management commitment
Reduction in labor turnover
Incentive to worker
Job security
Employee suggestions
Workers
Workers commitment
Flexibility of employee
Long working hours
Quality parts
Reliable and prompt deliveries
Small lot size
Suppliers
Vendor/supplier
participation
Communication with suppliers
Long-term contract
Supplier training
Single source supplier
19
Figure 2.4 Need of JIT
The following factors necessitate implementation of JIT in the contemporary
manufacturing scenario:
•
Need to remain competitive globally.
•
Satisfy global customers.
20
•
Eliminate threats faced by organization from tough competition, increase of raw
material costs, energy costs and globalization.
•
Improve the work culture and mindset of organization to increase the efficiency
of the workers by providing them training, incentive and to make each worker
multi-skilled.
•
Improve the quality of product.
•
Reduce the cost of product.
•
Ensure that minimum breakdowns should occur in the industrial organization.
•
Ensure that each part is to be procured or produced as and when required so as to
reduce waste.
•
Reduce inventory levels and lead time in an industrial organization to minimum.
•
Optimum utilisation of men, machine and material.
There are many factors that facilitate JIT manufacturing and the effect of these
factors on JIT implementation is depicted in Table 2.3. The need for JIT in an
organization is highlighted in Figure 2.4. From the figure, it is clear that globalisation
leads to competition in an organization. To meet this competition organizations use
modern techniques of manufacturing. According to Maskell (1987), the world of
manufacturing is changing so fast that there seems to be a new buzzword every day and
a new concept every couple of weeks. There are some factors that facilitate JIT and
ultimately organization reaps the benefits of JIT.
2.3
Relationship of JIT with other manufacturing practices
JIT production is called by many names like Minimum inventory production
system, Zero inventory production system, Kanban production, Kaizen production,
stockless production, pull through production, and quick response inventory system
(Biggart and Gargeya, 2002). It is system that produces the required items at the time
and in the quantities needed (Gunasekaran and Lyu, 1997). The main aim of JIT is to
produce the parts used for subassemblies JIT, to assemble these parts into subassemblies
JIT, to bring together these subassemblies to form assemblies JIT and ultimately deliver
21
finished goods JIT, so as to eliminate waste, to maintain quality and to satisfy
customers. The achievement of all these goals is possible if JIT is implemented along
with the other manufacturing techniques. There are a number of manufacturing
techniques and philosophies used by the organizations. The adoption of philosophies
such as JIT, TQM, benchmarking (BM), business process reengineering (BPR) and CI
has in most cases led to operational and strategic gains for manufacturing and service
organizations in particular (Yasin et al., 2004b).
JIT is a backbone of lean manufacturing system (Dabee et al., 2013). For long
people associated JIT only with the process of manufacturing, but in actual practice JIT
consists of JIT purchasing, JIT manufactures and JIT selling. Ahuja and Khamba (2008)
have depicted a direct relationship between JIT and lean manufacturing philosophies
(Figure 2.5). From this figure, it is also clear that JIT plays a vital role in lean
manufacturing. The relationship of JIT with other manufacturing philosophies or
practices is also depicted in Figure 2.5.
Figure 2.5 Relationship between JIT and lean manufacturing
Enormous attention has been given to JIT and TQM by many organizations all
over the world to improve their competitiveness. Vuppalapati et al. (1995) discussed
relationship of JIT with TQM. The connections between JIT and TQM from conceptual,
philosophical, and implementation perspectives are examined. It is summarised that
22
implementing both JIT and TQM jointly outperform the organizations that have
implemented only one of these, or none. Figure 2.6 has explained three views about JIT
and TQM implementation.
Figure 2.6 Three views of JIT-TQM implementation
Venkatesh et al. (2007) have discussed relationship between three letters
syndrome for revitalising manufacturing. The three letter syndromes in manufacturing
are mentioned as JIT, TQM, total productive maintenance (TPM), supply chain
management (SCM) and theory of constraints (TOC). The relationship between above
mentioned manufacturing techniques with performance of manufacturing has been
presented in the study. The theoretical framework of relationship of these techniques has
been depicted in Figure 2.7.
23
Figure 2.7 Theoretical framework
There are some TQM related JIT practices and these are total quality control,
quality circles, value analysis, integrated product and process design, total productive
and preventive maintenance, workplace organization plan (Sandanayaka et al., 2008).
JIT is also associated with Kanban. Kanban is another name of JIT material flow
system. It is a pull based system. Flow of material in an industrial organization is
classified into two types, push and pull systems. The Kanban system is typical pull
system while most conventional systems are push systems (Karmarkar, 1989). The basic
difference between pull and push is that a pull system initiates production as a reaction
to current demand, where as push system initiates production in response to expected,
forecasted, future demand.
Danese et al (2012) in their research work developed six hypotheses on the
relationships between JIT production, JIT supply, efficiency and delivery performance.
Authors concluded that JIT production practices have positively affected both efficiency
and delivery. JIT supply practices positively moderate the relationship between JIT
production and delivery, while there is no significant moderating effect when
considering the impact on efficiency.
Chen and Tan (2013) have shown that organization ownership not only impacts
the implementation of JIT and operations performance, but also impacts the relationship
between JIT implementation and operations performance.
24
•
Moreover, the results revealed that, for firms operating in China, the
implementation frequency of JIT practices varies with organization
ownerships.
•
The foreign and joint venture firms (JVFs) were found to have a higher
level of JIT implementation and can also achieve better performance
from JIT implementation than state-owned and private-owned firms
(POF).
•
Also, JIT implementation was found to have a significantly positive
relationship with operations performance in all types of ownership firms.
Singh et al. (1990) have discussed a case study about implementation of Kanban
system. The lead-time between the entries of the parts to the completion of the assembly
operation was reduced because the materials would not be delivered to the usage area
until they were needed. From the above studies, it is clear that JIT bears a direct or
indirect relationship with other manufacturing practices. If JIT is implemented with the
other manufacturing practices results are much better that applying JIT alone in the
industrial organization.
2.4
Prerequisites for JIT
There are four major areas to be looked after for the implementation of JIT
successfully and these are inventory, production, quality and customer’s relation.
Schermerhorn (1996) has put forth the theory that the effectiveness of JIT
implementation hinges on a wide range of special support that includes: high quality
supplies, strong management commitment, a manageable supplier network, geographic
concentration, efficient transportation, and materials handling.
Before a manufacturing or service organization can enjoy the fruits of JIT, the firm must
accept JIT as an organisational philosophy. This may require the organization to change
or modify its operating procedures, its production or service systems and in most cases
its organisational culture (Yasin et al., 2004a). Figure 2.8 explains the modifications in
an organization prior to JIT implementation.
25
Figure 2.8 Organizational modifications prior to JIT implementation
Main aim of JIT manufacturing is to reduce inventories. Maskell (1987)
mentioned four types of inventory procurement problems and their solution in Table 2.4.
Table 2.4 Inventory procurement problems and their solutions
Problem
Solution
Supplier lead times
Closer supplier relationships
Inflexible production planning
Closed-loop MRP-II system
Large batch sizes
Reduced set-up time
Long queue times
Plant layout and MRP-II
Cooperation of supplier is a vital first step for inventory control. Industrial
organization can reap benefits of JIT if suppliers give industrial organization shorter
lead times, deliver smaller quantities more often, guarantee a low reject rate and
26
perform quality-assurance inspection at source. More frequent deliveries of smaller
quantities of material supplied by supplier should be such that each delivery should be
just enough to meet organisation’s immediate production schedule to keep inventory as
low as possible. It is often thought that component manufacturers who supply on a JIT
basis must be located in close proximity, and certainly within the same customs region,
as the end-product manufacturer (Rooks, 1989).
Peters and Austin (1995) are of the view that JIT suppliers are partners with the
JIT firm. The relationships between the firm and its suppliers are expected to be longterm. Since the supplier is a vertical extension of the JIT firm’s operations system, the
stake in the JIT firm increases for this stakeholder group. To develop and support
relationships of this intensity, it is usually necessary for JIT firms to reduce their
supplier bases.
JIT production requires high quality, small lot sizes, and frequent delivery of raw
materials. A good relationship with suppliers is crucial to achieve these requirements.
For example, the Japanese make their vendors seem like the next level below the start of
production (Zhu and Meredith, 1995). It is clear that if any industrial organization has to
apply JIT then they have to improve their relations with suppliers/vendors so that they
can get their raw material inventories well in time.
Another factor that needs attention prior to implementation of JIT is production
and quality control. To improve the production and to control quality most important
factor in the implementation of JIT is culture. The culture is further sub divided into two
parts, i.e., workers culture and management’s culture. The workers should be totally
committed to their work and company. They should be ready to work for long hours if
needed, loyal to their organization, cooperative, flexible. The management should also
be loyal to their workers, provide them training, give incentives, job security, and
involve them in decision making.
Ramarapu et al. (1995) have emphasised that success of JIT in Japan is due to
the culture of their workers and management. Workers in Japan are loyal, cooperative,
flexible and willing to work long hours whenever there is need. Management of Japan is
also characterised by life-time employment, approaching decision making from the
bottom-up, respect for their workers, and a paternalistic approach towards workers. This
27
distinction between workers and managers has helped Japanese management implement
JIT successfully.
Process improvement and maintenance of equipments are also required before
implementation of JIT. For successful implementation of JIT, equipment of the
industrial organization should be well maintained and function properly. For this
industrial organization should have to use latest manufacturing techniques and improve
the process regularly. Duclos et al. (1995) described that as part of JIT implementation,
organizations must instill the habit of expecting continuous small improvements in the
process. CI or Kaizen indicates that there is no best, there is only better. The concept of
CI involves a change in attitude towards the overall effectiveness of an organization.
The purpose is to develop everyone’s attitude in doing the simple things correctly with
gradual improvement (Chandra and Kodali, 1998).
One of the manufacturing techniques that are to be used for the improvement of
equipment efficiency is TPM. TPM is a maintenance management programme with the
objective of eliminating equipment downtime. TPM is an innovative approach to plant
maintenance that is complementary to TQM, JIT manufacturing, total employee
involvement (TEI), continuous performance improvement (CPI), and other world-class
manufacturing strategies (Schonberger, 1986) There are some conditions to implement
the JIT system with success, and these are uniform production rate (to ensure schedule
stability), a pull control system, small lot sizes, quick and economic setups, high quality
levels, preventive maintenance, supplier long-range relationships, etc. These conditions
are called the JIT elements and are presented by several authors, among which are
Gargeya and Thompson (1994), Zhu and Meredith (1995), Spencer and Guide (1995),
and Ramarapu et al. (1995).
Implementation of quality control techniques in an organization can also lead to
realisation of intangible benefits in the form of improved image of the organization,
leading to the possibility of increased orders. For the maintenance of quality, TQM is
used nowadays. TQM, in its simplest form, encompasses all actions, values and beliefs
of an organization which aim to improve and maintain quality standards. Maintaining
and improving quality is an integral part of JIT (Chandra and Kodali, 1998). Customer’s
relation also plays a vital role in implementation of JIT. Holweg and Pil (2004)
28
emphasize the importance of build-to-order strategies to enable responsiveness to
customer demand. The principles and philosophies of JIT are depicted in Figure 2.9.
Figure 2.9 Principals and philosophies of JIT
2.5
JIT strategies
Since JIT is a philosophy of management whose objective is complete
elimination of waste from a productive system, it is adaptable to any productive system
– a transportation system, an administrative system, or a manufacturing system
(Daugherty and Sprencer, 1990). JIT production system is based on principles of
elimination of waste, improvement of quality, participation of workers with positive
attitude, attitude of management towards worker and relationship with vendors and
customers. Need of JIT is to eliminate or to reduce all kind of inventories whether it is
raw material, work in process or finished goods inventories. Ohno (1982) identifies
seven types of waste and recommends methods for their elimination; over-production:
29
reduce setup time, compact layout and improve shop floor visibility; waiting:
synchronise work flow and balance loads through flexible workers and equipment;
transportation: establish layout to minimise transport and handling; processing: use
value analysis production; processing may be totally or partially unnecessary and
capable of being eliminated; storage: reduce the waste of stocks in all production areas
(raw material, WIP, finished goods); motion: study motion for improved economics,
productivity and quality; making defective products: build in processes to eliminate
defects in the process. JIT has three main goals, elimination or reduction of all kind of
inventory,
exposing
process
inefficiencies
in
manufacturing
process
and
reducing/elimination of these inefficiencies by using latest manufacturing techniques.
From Figure 2.10, it is clear that JIT strategies are having three broad aspects, i.e., JIT
purchasing, JIT production and JIT sales.
Figure 2.10 Strategies of JIT
2.5.1
JIT purchasing
The JIT concept as applied to purchasing translates into frequent releases and
deliveries (Schonberger and Gilbert, 1983). So JIT purchasing requires frequent, reliable
deliveries in exact quantities (Gupta, 1990). In today’s competitive markets, close
cooperation between the vendor and the buyer is necessary to reduce the joint inventory
cost and the response time of the vendor-buyer system (Yang et al., 2007). Lorefice
(1998) stressed that a sort of partnership has to be established among supplier and
30
customer in order to involve the latter into the efficient process of JIT. Most relevant
factors for the selection of suppliers are not price but to eliminate defective goods from
production cycle and improved quality turn outs. The selection of supplier should be
based on the criteria such that there should be minimum waste, minimum inspection,
minimum freight costs (with geographic proximity), minimum paperwork and small and
frequent lot size delivery. Despite the importance of frequent small lot deliveries from
nearby suppliers, the quality assurance became the most important prerequisite to
establish a relationship with a company that works JIT. Company working with JIT
should also pursue the ‘one supplier per product’ objective. To assure a close
relationship with the upstream partner, the company has to be able to open its doors to
the new link of the production chain (Lorefice, 1998).
Schonberger and Gilbert (1983) are of the opinion that the supplying plant does
not need to carry much buffer stock unless they sell capacity to other plants, in which
case buffer stocks would be necessary to maintain JIT deliveries and therefore, JIT
purchasing works best if the vendor supplies to one customer.
Shin et al. (2000) listed the various criteria to evaluate performance of supplier:
these include lead times, on-time delivery, delivery reliability, quality, and cost.
Giuniperio et al. (2005) in Figure 2.12 has suggested measures of JIT purchasing
practices.
JIT suppliers are considered ally with the JIT firm (Wong and Johansen, 2006).
The association between the firm and its suppliers are supposed to be long-term. Since
the supplier is a vertical extension of the JIT firm’s operations system, the stake in the
JIT firm increases for this stakeholder group. To develop and support relationships of
this intensity, it is usually necessary for JIT firms to reduce their supplier bases. In the
extreme case, single sourcing may be used (Peters and Austin, 1995).
Ansari and Modarress (1988) list the following activities as major JIT
purchasing practices: small purchase lot sizes delivered in definite quantities compared
to traditional large batch delivery; few suppliers, ideally one per component or family of
parts rather than multi-sourcing; selection of suppliers and their evaluation is based on
quality and delivery performance as well as price; quality inspections are performed at
the supplier’s location instead of traditional method of incoming inspection; more
freedom is given to supplier to design specifications; no annual rebidding compared to
31
traditional frequent retendering; packaging is changed to encompass standard
containers; paperwork reduces and becomes more informal. The JIT purchasing
strategies are listed in Figure 2.11.
Figure 2.11 JIT purchasing strategies
Aslı and Nursel (2011) are of opinion that supplier selection and supplier
performance evaluation are necessary tools for successful JIT implementation.
Figure 2.12 Measures of JIT purchasing practices
32
2.5.2
JIT production
In a JIT production system, earliness and tardiness must be discouraged as early
finished jobs increase inventory cost while late jobs lead to customers’ dissatisfaction
and loss of business goodwill (Wong et al., 2006). Customers need products of good
quality at right time. To produce product of quality, latest manufacturing techniques are
used. There are three main factors that contribute to JIT production: workers,
management, and process.
2.5.2.1 Workers
The main aim of JIT is to reduce waste and eliminate inventories throughout the
process. Peters and Austin (1995) pointed out that reduction of buffer inventory between
process stages means that closer integration and synchronization are required. Due to
this reduction in inventories without compromising with quality an operator’s latitude
and freedom are reduced, creativity and motivation may in turn also be reduced. So the
operators are helped to achieve reductions in waste and cost by enhancing their skills
and each worker should be allowed to participate in the production/service process.
Thus, the workers get an opportunity to make suggestions, propose improvements, and
receive awards (Monden, 1993).
A very high quality standard is required for all materials for JIT to function
properly. One programme that is used to attain and maintain high quality is selfstopping. Operators have the responsibility to stop their operation if they feel that there
is a condition that adversely affects product quality. Before restarting the system, the
affected operators and managers are expected to identify the root cause of the problem
and take corrective action (Peters and Austin, 1995). Worker has to perform many
duties at a time for the success of JIT. Peters and Austin (1995) listed following
additional duties to be performed by the worker/operator: performing several different
jobs; maintaining production and inventory control; inspecting their own work;
reworking of their own non-conforming (defective) parts; setting up production
equipment; executing preventive and light maintenance of their production equipment;
receiving or giving training both on and off the job.
In a JIT environment, if machine is operated just for eliminating of idle men or
machine, considered as waste. Nothing can be produced until there is a need from the
33
downstream operation. So the idle workers are kept busy by running several machines,
since each worker is trained to operate multiple machines and to perform multiple jobs
(Zhu and Meredith, 1995). To achieve all these goals cross-training of worker is very
essential. According to Zhu and Meredith (1995), cross-training is necessary when
workers are encouraged to operate multiple machines. Cross-training operationalise the
idea of job enrichment that brings more responsibility in quality of products to a person
who is producing them. Consequently, quality can be improved as a worker gets more
involved in a production process.
2.4.2.2 Management
As the operators take on more responsibilities, managers must relinquish some
of their traditional responsibilities. The operations manager becomes more of a coach
and adviser to the operators or their teams (Peters and Austin 1995). Evans et al. (1990)
suggest that JIT implementation be initiated from the top, with full support of all
managerial levels. Since implementing JIT pushes a lot of changes to be taken place in
an organizational structure, it is very important to understand that the change may
require people to think and view things in a totally different way. Training should
concentrate on basic understanding of the technical aspects of JIT and the impact that
JIT has got on the operating environment. JIT implementation cannot be successful
without top management commitment. Management must be willing to devote the
resources which are necessary to support an implementation such as JIT education and
training (Zhu and Meredith, 1995). Chong et al. (2001) mentioned various types of
organizational support: top management support for successful JIT implementation;
middle management support; first line supervisor support. According to Chandra and
Kodali (1998), the management commitment to a JIT manufacturing system must start
from the top-most level in management and flow down through all levels of the
company. Top management should act as shapers and coaches. It must support the
workforce by eliminating obstacles to progress.
2.5.2.3 Process/production
For the success of JIT process/production strategies also plays an important role.
According to Davy et al. (1992), JIT production includes following factors: focused
factory; reduced setup times; group technology; total preventive maintenance; uniform
34
workloads; Kanban; total quality control; quality circles. The key factors that improve
process/production while implementing JIT are discussed below.
2.5.2.4 Focused factory
The focused factory is a grouping together of operations to achieve a specific
goal and is appropriate for manufacturing of several distinct products. Manufacturing
operations are combined into a series of mini factories, where lead times, setup times,
cycle times, inventory and manufacturing wastes are significantly reduced (Chandra and
Kodali, 1998).
2.5.2.5 Kaizen
Kaizen indicates that there is no best, there is only better. The concept of Kaizen
involves a change in attitude towards the overall effectiveness of an organization. The
purpose is to develop everyone’s attitude in doing the simple things correctly with
gradual improvement (Chandra and Kodali, 1998). Kaizen was changed to gaichu
Kanban (the process where production is only executed on receipt of an order) in 1960.
The meaning of ‘gaichu’ is ‘order’, and ‘Kanban’ means the written instructions for
parts which are sent from a post-process to a pre-process or a parts supplier, when a part
is required (Kaneko and Nojiri, 2008).
2.5.2.6 Group technology
Group technology is an engineering and manufacturing philosophy which
identifies the sameness of parts, equipment or processes. For the purpose of
manufacturing and design, similar parts are identified and grouped by it. Various
machines are grouped according to the routing required for a family of parts rather than
by their functions (Bennett, 1986; Burbidge, 1989). Group technology was first
discussed by Flanders (1925). Since then, it has been extensively used and developed in
the former USSR, followed by Europe and Japan (Huang and Houck, 1985). According
to Chase and Aquilano (1992), group technology is a technique of grouping machines
which perform different tasks together into one work cell so that these tasks can be
performed without moving a large number of work-in-process inventories between
departments. This scale measures the use of manufacturing cells, machine and process
layout, and the use of equipment designed for flexible floor layout. The shop-floor
layout must allow streamlined flow of production, and manufacturing cells and group
35
technology are utilised to help the materials and parts move fast from one work centre to
the next. One of the applications of group technology is cellular manufacturing.
2.4.2.7 Cellular manufacturing
According to Ballahur and Steudel (1987), ideally, a cell is a group of dissimilar
machines physically located in close proximity such that a part is processed from start to
finish in a single or continuous flow. Cellular manufacturing is one of the best
techniques with which to implement JIT systems and total quality control (Dicasali,
1986; Welke and Overbecke, 1988). So the aim of cellular manufacturing is to reduce
setup and wait times and enhance the flexibility of the manufacturing environment
(Welke and Overbecker, 1988).
2.4.2.8 Total productive maintenance
Preventive maintenance is needed to provide a smooth production flow.
Maintenance and minor repairs are considered a part of line workers’ job requirements
Zhu and Meredith (1995). An organization without preventive maintenance operates
heavily under the risk of facing accidents, safety problems, substantial repair costs and
out-of-control manufacturing processes. Preventive maintenance is not solely the
responsibility of one individual department. Effective maintenance policies such as
preventive maintenance, TPM, etc., are implemented and practiced by a significant
number of manufacturing industries (Chandra and Kodali, 1998). TPM is a unique
Japanese philosophy, which has been developed based on the Productive Maintenance
concepts and methodologies. This concept was first introduced by M/s Nippon Denso
Co. Ltd. of Japan, a supplier of M/s Toyota Motor Company, Japan in the year 1971.
TPM is an innovative approach of maintenance that promotes autonomous maintenance
by operators and optimizes equipment effectiveness, eliminates breakdowns (Bhadury,
2000). TPM is a manufacturing programme designed primarily to maximise equipment
effectiveness throughout its entire life through the participation and motivation of the
entire work force (Venkatesh et al., 2007).
2.5.2.9 Automation
The organization must have a systematic integrated automation strategy and
invest in modifying process layout accordingly (Yasin and Wafa, 1996).
36
2.5.2.10 Heijunka (smooth build up rate)
Heijunka means the rate of production should be as smooth as possible. JIT
systems often try to smooth the build-up rate over a stipulated period. To achieve this,
JIT systems often resort to under-capacity scheduling, so that they could respond to
demand changes by essentially smoothing production, and by holding down to
minimum deviations from the schedule (Chandra and Kodali, 1998).
2.5.2.11 Reduced setup time
Setup time is the down-time of an operation to change from one part or product
to another. Reduction of setup time entails reduction in lead time, which in turn enables
the company to be more responsive to market changes and customer needs (Chandra
and Kodali, 1998). By reducing setup time, smaller run quantities become economically
feasible, manufacturing lead times fall, lead times variability is reduced, quality is
improved, and shop floor flexibility is greatly enhanced. Through the setup reduction,
capacity that is previously consumed by setups can be freed up and made available for
production.
2.5.2.12 Push system
Push systems are projections of schedule based demand, i.e., what is expected to
be? Based on historical information (updated on a week or monthly basis) a detailed
sub-schedule for buying materials and producing goods are initiated. It is this schedule
what pushes the production in order to comply with the expected demand (Lorefice,
1998). In a push system multi-period schedule of future demands for the company’s
products (called a master production schedule) is prepared. The computer breaks that
schedule down into detailed schedules for making or buying component parts. It is a
push system in that the schedule pushed production into making the required parts and
then pushing the parts out and onward. The name given to this push system is MRP
(Schonberger, 1982a). Singh et al. (1990) explained that a weakness of MRP is that
there is some guesswork involved. One need to guess what customer demand would be
in order to prepare the schedule. Thus, bad guesses would result in excess inventory of
some parts.
2.5.2.13 Pull system
In a pull system, the production of a certain product starts on the demand or
request made by the buyer. The consumer of the product is the one that pulls from the
37
last link of the production chain, this last link pulls its preceding and so on (Lorefice,
1998). Where companies employ traditional push systems (e.g., Compaq and HewlettPackard) financial risk increases because inventory value inputs, WIP, and final goods
inventories frequently lose value with each day they are held due to decreasing product
lifecycles and a positive cash-to-cash cycle (customers pay for products when they take
possession). Companies that utilise push-based systems frequently attempt to minimise
risk by postponing final product assembly until products reach local distributors who are
responsible for final product configurations (Papadakis, 2003). As stated by Kimura and
Terada (1981): ‘In the pull system, there is certain amount of inventory at each process.
The succeeding process orders and withdraws the parts from the preceding process only
at the rate and at the moment it has consumed all the parts. The preceding process then
only produced on the parts withdrawn by the succeeding process.’
2.5.2.14 Kanban system
Husseini et al. (2006) consider Kanban as a main tool for production control in a
JIT system. The word ‘Kanban’ when translated into English means signal. It is usually
a card or tag accompanying work-in-process parts. In Kanban system parts, components
are supplied continuously so that worker should get what they need, when they need,
where they need and how much they need. There are two types of Kanbans, which are
used as a tool in the JIT production system. The ‘withdrawal Kanban’ is used to indicate
the type and amount of product which the next process should withdraw from the
preceding process. The ‘production ordering Kanban’ specifies the type and quantity of
product which the current process must produce (Chandra and Kodali, 1998). Kanban is
a pull based system. Parts/components are supplied when there is demand (Aghajani et
al., 2012). Number of parts/components that are manufactured depends on customer’s
demand, in other words number of cards received by manufacturer. In Kanban system,
parts/components are not produced until the manufacturer receives card. Kanban is a
control mechanism that links production activities and transmitted demand information
from final product buffers to the preceding workstation by using Kanban cards (AlTahat and Mukattas, 2006). Figure 2.13 given by Al-Tahat and Mukattas (2006)
explains how circulation of information takes place in a single-stage single-product
Kanban-controlled production line.
38
Note: Withdrawal and supplier Kanban circulate as shown by the solid line, production
Kanban circulates as shown by the dotted line, and WIP flows as shown by the dashed
line
Figure 2.13
Circulation of information in a single-stage single-product Kanbancontrolled production line
Pisuchpen (2012) has investigated the effect of varying number of kanban cards,
mean inter-arrival time of demand, and locations of the bottlenecks on the performance
integration of JIT flexible manufacturing, assembly and disassembly systems using
multivariate analysis of variance (MANOVA). The study emphasized the interactions
between the variables and their effects on system performance for improving
performance processes. The research highlighted that minimized WIP can be obtained
by higher percentage average fill rate, lower WIP, small average part cycles times, and
increasing in kanban cards while simultaneously retaining full customer satisfaction.
2.5.2.15 Total quality management
While, undoubtedly, a principal function of the quality control department is to
ensure that the level of defects of parts leaving the shop floor falls within specified
levels, the more important objective is to be able to detect the defects at source as soon
as they arise (Lee and Seah, 1987). TQM is a manufacturing programme aimed at
continuously improving and sustaining quality products and processes by capitalising on
the involvement of management, workforce, suppliers, and customers, in order to meet
or exceed customer expectations (Venkatesh et al., 2007). TQM, in its simplest form,
39
encompasses all actions, values and beliefs of an organization which aim to improve and
maintain quality standards. Maintaining and improving quality is an integral part of JIT
(Chandra and Kodali, 1998).
2.5.3
Customers
Buyer-seller linkage is critical to successful execution of this JIT marketing
strategy (Kenneth et al., 2011). Customers want to purchase quality products at fair
prices and have those products delivered in a timely manner (Peters and Austin, 1995)
and the overriding purpose of strengthening relationships with customers is to more
effectively respond to changes in customer demand (Green and Inman, 2006).
Claycomb et al. (1999a) define JIT-with-customers as ‘the use of the integrated,
problem-solving initiatives of a JIT philosophy concentrating on improving quality and
facilitating timeliness in supply and distribution to external customers’.
2.6
Elements of JIT
After going through literature, many author suggested different elements of JIT
some of these are discussed below.
Ramarapu et al. (1995) have grouped elements of JIT in five broader critical
factors: elimination of waste; production strategy; quality control and quality
improvement;
management
commitment
and
employee
participation;
and
vendor/supplier participation. The elements of JIT discussed by various authors are
depicted in Table 2.5.
Table 2.5 Elements discussed by various authors
Authors
Elements
Benson (1986)
Total visibility – of equipment, people, material and processes;
Synchronization and balance – of production to sales and supply to
production; Respect for people – line operators are responsible for
production, problem solving and improvement; Flexibility – adapt
production to customer needs; Continuous improvement – never
satisfied with the process; Responsibility for the operation’s
environment – those who design, manage and operate the processes
are responsible for the outcome; Holistic approach – company-wide
philosophy of elimination of waste.
40
Lee and Seah
(1987)
Golhar and
Stamm (1991)
The number of jobs drawn (completed); The process utilization; the
set/run time ratio; The mean and variance of queue time; The mean
and variance of job tardiness; and The work-in-progress level.
Elimination of waste, Employee involvement, Supplier long-range
relationships, and Total quality control.
Inventory Control
Inventory level, Inventory turnover, Space available in factory,
Space available in warehouse.
Production Control
Cycle time, Labour productivity, Down time, Capital productivity
or machine utilization, Number of change over, Change over time,
Clarke and Mia
(1993)
Reduction in unit cost, Safety
Quality Control
Scrap, Rework and number of defects, Quality costs, Reduction in
write offs, Appraisal costs.
Customer Service Control
Schedule achievement, Order fill rate, Stock outs, Outstanding
orders, Outstanding requisitions, Value of product awaiting
dispatch.
Reduction of raw materials inventory, Reduction of work in process
inventory, Reduction of throughput time, Reduction of finished goods
inventory, Improved product quality, Faster customer service,
Reduction of waste and rework, Improved control of production,
Product diversification.
Clarke and Mia
(1993)
Other objectives listed by respondents include:
Improved utilization of factory space; Reduction in storage space,
Improved
labour
productivity,
Improved
scheduling
and
communications, Reduction of departmental thinking, Employee
participation and team building, Customer requirement, More accurate
inventory, Improved cash flow, Survival.
41
Grouped JIT elements into the five broader critical factors:
Elimination of waste, Production strategy, Quality control and
quality improvement, Management commitment and employee
participation and Vendor/supplier participation.
They further sub classified these elements:
Elimination of waste:
Reduction in waste, Reduce lot size, Reduce lead-time, Automation
Production strategy:
Reduced set-up times, Stable production, Preventive maintenance,
Group technology.
Ramarapu et al.
Quality control and improvement:
(1995)
Continuous quality improvement, Halt production line, Statistical
process control, Quality circles
Management commitment and employee participation (in decision
making):
Cross-training/education, Team decision making, Management
participation and commitment Employee suggestions
Vendor/supplier participation:
Quality parts, Reliable and prompt deliveries, Small lot size,
Communication with suppliers Long-term contract, Supplier
Training, Single source supplier.
Production strategy elements: Set-up reductions, Lot size reductions,
Preventive maintenance, Physical layout management, cross-trained
Spencer and
Guide (1995)
workers, effective capacity utilization, Plant-wide programme
adoption of JIT methods, In-house quality, JIT vendor strategy, Lot
size reductions, Lead time reduction, Quality, Sole sourcing, JIT
human relations strategy, Mutual respect, JIT seen as overall
philosophy of business, JIT education throughout organization.
42
Small lot sizes delivered in exact quantities, Few suppliers, Ideally
one per component, Supplier selection based on quality and delivery
Fuller (1995)
performance, Long term contracts, Standardized packaging, Reduced
paperwork, Delivery synchronization to production, Geographically
close suppliers, Improved data exchange.
Set-up time reduction, In-house lot size, Group technology, Crosstraining, Preventive maintenance, Vendor lot size, Sole sourcing,
Vendor lead time, Quality certificates from vendor, Pilot project, JIT
Zhu and
Meredith
(1995)
team, JIT education, Outside consultant, JIT champion, Investigate
suggestions, Authority to stop lines, Quality circles, Schedule
stability, Top management commitment, Relationship with supplier,
Flatten bill of materials, Communication, Co-worker relations,
Flexibility
Exponential smoothing models, Regressed models, Econometric
models, Customer provided forecasts, Type and extent of process
Yasin and
automation and process, Layout modification, CAD, CAM, Robotics,
Wafa (1996)
Use of CIM, Extent of modifying process layout,. Availability of
quality assurance methods and systems, Quality circles, Statistical
quality procedures, Total quality management.
Promotion of employee responsibility, Provision of training,
McLachlin
Promotion of teamwork, Demonstration of visible commitment,
(1997)
Provision of workforce security, and Use of group performance
measures.
Wafa and
Yasin (1998)
The four categories are: Management, Workers, Process, and
Suppliers.
43
Organization in modules/cells, Highly motivated work force (HMW),
Respect to humanity and creativity, Top management support (TMS),
Continuous improvement (kaizen), Flexible workforce, Focused
factory (flow and layout), Group technology, Reliable equipment,
Chandra and
Automation, Efficient material handling system and standard
Kodali (1998)
containers, Preventive maintenance, Smooth build-up rate (Heijunka),
Reduced set-up time, Housekeeping, Simplification of product and
process, Kanban system, Total quality management, Small lot
frequent deliveries, Vendor reliability, Few committed suppliers,
Vendor flexibility,
JIT purchasing, JIT selling, JIT production, Size, Natural logarithm of
employees, Natural logarithm of sales, Inbound inventory, In-process
Claycomb et al.
(1999b)
inventory, Spans of control, Senior marketing executive span, Senior
production executive span, Senior logistics executive span, Senior
purchasing executive span, Hierarchical layers, Layers for marketing,
Layers for production, Layers for logistics, Layers for purchasing,
ROI performance, profit growth Performa
Canel et al.
(2000)
Cua, et al.
(2001)
Total
visibility,
Respect
for
people,
Flexibility,
Continuous
improvement, Holistic approach, Total visibility, Synchronization and
balance, Flexibility, Respect for people.
Setup time reduction, Pull system, JIT delivery by suppliers,
Equipment layout, Daily schedule adherence
Supplier Agreement. Set-up Time Reduction, In-House Lot Sizes,
Group Technology, Cross Training, Preventive Maintenance,
Ahmad et al.
(2002)
Uniform Flow Loading, Statistical Process Control, Focus Factory,
Employee Involvement, Employee Empowerment, Jidoka, Improved
Performance Measurement, Work Team, Vendor Lot Sizes,
Suppliers, Vendor Lead Time Reduction, Quality Certification of
suppliers, Kanban.
44
Reduction of rejects of final goods/services, Improvement in
relationship with suppliers, Reduction in the variability of workload
levels, Reduction of inventory, Improvement in customer service,
Yasin et al.
(2003)
Improvement in on-time receipts from suppliers, Improvement in
worker morale, Improvement in operational efficiency, Reduction in
labor turnover, Extent to which the company would recommend, JIT
to others, Set-up time reduction, Improvement in customer
perceptions of product/service quality, Lead time reduction, Monetary
savings
Point-of-use with reduced floor space, Reduced floor space with
capital cost savings, Point-of-use with reduced inventories, Reduced
inventories with carrying cost savings, Point-of-use with fewer
material transactions or better quality control, Fewer material
Mistry (2005)
transactions or better, Quality control with increased revenue,
Assemble to order with reduced floor space, Reduced man hours with
labor cost savings, Assemble to order with reduced cycle times, No
physical inventories with reduced man hours, Supplier program with
reduced man hours.
Lot size reduction, Setup time reduction, Buffer stock removal,
Material
handling
scheduling,Under
discipline,
capacity
Group
scheduling,
technology,
Zero
Product
deviation
from
scheduling, Component item standardization, Multifunction workers,
Worker centered quality control, Poka Yoke, Preventive maintenance,
Kanban,
Wakchaure et
al. (2006)
JIT
purchasing,
Quality
circles,
Relationship
with
supplier,Effective communication, Top management commitment,
Sole sourcing, Process flexibility, Kaizen, Reliable and prompt
deliveries, Automation, Long term contract, Supplier training, SPC,
Housekeeping,
Lifelong
employment,
High
quality,
Layout
improvement, Product and process simplification, Smooth flow of
material, SQC, WIP reduction, Zero defect, Support from workers,
Stock to dock delivery, Standard container, Firm schedule to suppler,
Vendor location, Buyer control over freight, Respect for humanity,
Reliable equipment, Smooth built up rate, TQM, Focused factories.
45
Automation, Administrative Efficiency, Bar Code technology, Buffer
Stock removal, Continuous improvement, Customer Care, Customer
Satisfaction, Communication and Information Sharing, Design for
service, Employee involvement, Flow layout, Flexible workforce,
Group
Kumar and
Grewal (2007)
technology,
Housekeeping,
Inventory
reduction,
JIT
purchasing, JIDOKA, Kanban card or system, Lot size reduction,
Lead time reduction, Poka yoke, Preventive maintenance, Product
simplification, Process simplification, Process flexibility, Process
improvement, Quality circles, Quality functions deployment, Standard
containers, Small lot size, Setup time reduction, Smooth flow of
materials,
Standardization,
Statistical
process
control,
Total
productive maintenance, Team work, Work-in-process reduction,
Waste reduction, Zero defect, Zero deviation schedule.
Enlightenment and education, Quality control, Redesigning and
Alawode and
Ojo (2008)
restructuring
of
working
environment,
Flow
manufacturing,
Improvement of customer relation, Improvement of productivity,
Reduced idle inventory levels.
Direct
Wilson (2009)
communication,
Market-based
pricing
and
bidding
mechanisms, Coordination by plan, Notification, Sequencing,
Tracking,
Inventory
management,
Standardization
Scheduling,
Synchronization
Buffer Stock Removal, Continual quality improvement, Effective
Communication, Employees empowerment, Poke-yoke, Frequent and
reliable deliveries, Group incentive scheme, High QC visibility, Job
enlargement, Kanban system, Line stop strategy, Long-term
employment, Long-term QC commitment, Multifunctional worker,
TPM, QC authority to worker, QC authority to supplier, Quality
Kumar 2010
certification to suppliers, Quality circles, Regular quality auditing,
Self-correction of defects, Set up time reduction, Short lead time,
Small lot size, Standard containers, Standardization, Process control,
Statistical quality control, Strong buyer- supplier relationship, Team
work, Total quality control, U-cells, Vendor rating, Scheduling
flexibility, Zero defect, zero deviation from schedule, 100% quality
inspection.
46
Master schedule, Automation and autonomation, Buffer stock
removal, Cellular manufacturing, Computer-integrated manufacturing,
Continuous
improvement,
Effective
communication,
Focused
factories, Flexible workforce, JIT purchasing, High quality, Jidoka,
Kanban system, Layout improvement, Process flexibility, Product and
Singh and Garg process simplification, Pull-controlled flow, Quality circles, Robots,
(2011 a)
Setup
time
reduction,
Small
lot
size,
Standard
containers,
Standardization, Statistical process control, Statistical quality control,
Streamlined process design, Total productive maintenance, Total
quality control, Under capacity scheduling, Worker-centered quality
control, Work-in-process reduction, Zero defect, Zero deviation
schedule, Multi-functional workers.
Establishing lot size, Vendor selection, Vendor evaluation, Inspection
Singh and Garg
of incoming materials, Negotiating with vendors, Determining mode
(2011b)
of transportation, Setting specifications, Paper work, Packaging
People involvement: Stockholders and owners of the company,
Kootanaee et
Labour organization, Management support, Government support
al. (2013)
Plants: Plant layout, Demand pull production, Kanban, Selfinspection, Continuous improvement and Systems
47
Figure 2.14 Broad classification of JIT elements
After going through the literature it is found that JIT elements can be broadly
classified as shown in Figure 2.14 and critical elements of JIT are given in Figure 2.15.
JIT elements have direct impact on the performance of any organization. Ahmad
et al. (2004) have depicted the relationship between JIT elements, operating
performance and financial growth of an organization. Figure 2.16 gives the path
diagram between JIT elements, operating performance and financial growth.
Figure 2.15 Critical elements of JIT
48
Figure 2.16 Path diagram between JIT elements, operating performance and
financial growth
2.7
Success factors for strategic JIT implementation
In a JIT environment, any system for measuring performance must be designed
to reflect the new production philosophy. Such a system should be capable of measuring
and reporting progress toward total quality control, reducing inventory levels, faster
setup times, reduced lead time, and new product launch times. Equally important would
be measures indicating improvement in on-time deliveries, floor space utilisation, and
quality yield. Such a system may require the elimination of some traditional short-term
financial measures and include some new, more relevant non-financial measures of
performance (Green et al., 1991).
Mistry (2005) has discussed implementation of JIT in supply chain. Figure 2.17
reveals the strategies to be employed in improving processes and outcome of these
improvements.
49
Figure 2.17 Mistry’s Data-supported model of JIT-driven profitability
Table 2.6 Ahmad’s Performance Measures and their Categories
Category
Quality
Performance measure
Conformance to specifications, Cost of quality, Vendor quality
Sales forecast accuracy, Record accuracy, Number of suppliers
Yields
Time
Manufacturing lead times, Vendor lead times, Changeover/setup
times, Meeting project milestones.
Flexibility
Number of engineering changes, Number of materials part
numbers
New product introduction, New model introduction, New
process/equipment introduction
Delivery/Customer Meeting production schedules, On-time delivery, Customer
Service
surveys
Social/
Environmental
Education/training budgets, Safety, Minimizing environmental
waste, Environmental monitoring
Cost/Financial and
Traditional
Inventory turnover, Cost-reduction: dollar savings, Dollars of
capital investment, Process R&D costs, Product R&D costs,
Dollar shipments per period, Unit material costs, Unit labor costs,
Unit overhead costs,
Margins (Contribution/Gross), Return on investment, Capacity
utilization, Department budget control
50
The success factors that are required for the implementation of JIT are broadly
classified as: relationship with vendor/supplier, location of organization, plant layout,
culture of organization, production techniques, and communication with dealers.
Mackelprang and Nair (2010) in his study found that JIT is having direct relationship
with the performance measures. Ahmad et al. (2002) have discussed the performance
measures related to each element of JIT and these performance measures are listed in
Table 2.6.
2.8
Benefits/contributions of JIT
JIT implementation has got many benefits. Claycomb et al. (1999b) in his
research work found that inventory reduction is one of the most commonly cited
theoretical advantages of JIT. But most important benefit listed is reduction in waste,
and it may be waste of raw material, waste during production or process, and waste of
finished goods. Some of the benefits listed by various authors include: Elimination of
waste in production and material (Tesfay, 1990; Hobbs, 1997), elimination of some
material handlers resulting in labour cost savings as a result of JIT (Yasin et al., 2004a),
improving communication internally, i.e., within the organization and externally, i.e.,
between the organization and its customers and vendors. In Inman and Mehra (1991),
reduction in cost of purchasing raw material or reduction in setup (ordering) which is a
major cost to most organizations (Ansari and Modarress, 1990; Gargeya and Thompson,
1994; Yasin et al., 2004a), improvement in the quality level of incoming material, less
paperwork (Yasin et al., 2004a), reducing inventories (raw material, Work-in-process,
Finished goods), reducing lead-time, reducing throughput time, improvement in the
quality of products, increasing productivity and enhancing customer responsiveness,
shortened customers response time and relation with vendors (Schonberger, 1982a;
Hernandez, 1989; Ramsay et al., 1990; Arogyaswamy and Simmons, 1991; Crawford
and Cox, 1991; Clark and Mia, 1993; Norris et al., 1994; White, 1993; Mazany, 1995;
Hobbs, 1997; Chase et al., 1998; Yasin et al., 2004a), raise organisational discipline and
managerial participation (Francis, 1989), reduction in the number of grievances of filed
by workers (Yasin et al., 2004a), increased employee involvement (Hernandez, 1989;
Chase et al., 1998), integration of the different functional areas in the organization. It
especially bridges the gap between production and accounting or enhance in
productivity (Johansson, 1988; O’Grady, 1988; Clark and Mia, 1993), reduced
51
downtime of machinery, reduced failures (Mazany, 1995), decreasing manufacturing
costs without compromising cost (Hernandez, 1989; Chase et al., 1998), improving
quality that consistently and continually meets customers requirements, minimising
levels of inventory and improving relationship with suppliers (Aghazadeh, 2003),
simplification of processes, improved quality, and increased flexibility (Mazany, 1995),
reducing the labour turnover rate, reducing manufacturing lead times, reducing setup
time (Wafa and Yasin, 1998; Yasin et al., 2004a), reducing use of space, lower costs,
better quality and higher competitive advantage (Hernandez, 1989; Inman and Mehra,
1993; Chase et al., 1998), significant reduction in rejects of outgoing final
products/services/enhanced flexibility and ability to meet customer demands
(Hernandez, 1989; Chase et al., 1998; Yasin et al., 2004a), where as Schonberger and
Ansari (1984) included the following benefits of implementing JIT: low part costs – low
scrap costs; low inventory carrying costs; quality – fast detection and correction of
unsatisfactory quality, and ultimately higher quality purchased parts; design – fast
response to engineering change requirements; administrative efficiency – fewer
suppliers, minimal expediting and order, release work; simplified communications and
receiving activities; productivity – reduced rework, reduced inspection; reduced partsrelated delays; capital requirements – reduced rework inventories of purchased parts,
raw materials, WIP and finished goods.
By using JIT practices, the firms have saved money, as these funds that are used
to procure inventories can be used elsewhere. Implementation of JIT has helped in
saving of storage space in the industry, as areas used to store inventories can be used for
other more quicker response to customers; defect rates are reduced, resulting in less
waste and greater customer satisfaction; work in process inventories can be reduced or
eliminated.
In manufacturing, JIT has been credited with many holistic benefits. These
benefits include reduced inventory levels; reduced investment in inventory; improved
quality of incoming materials; and consistent high-quality products. Some additional
benefits of JIT that have been achieved in manufacturing firms are: improved
operational
efficiency,
uniform
workstation
loads;
standardised
components;
standardised work methods; cooperative relationships with suppliers; closer
collaboration with customers, and improved customer satisfaction (Yasin et al., 2004b).
52
Chungi and Bakar (2001) depicted beneficial effects of JIT purchasing practice
on quality of product and these benefits are listed in Table 2.7.
Table 2.7 Chung and Bakar’s Effect of JIT Purchasing Practices on Quality
Purchasing
Activities
Effect on Quality
Lot size
Purchase in small lot-sizes Fast detection and correction
with frequent deliveries
of defects
Supplier
Evaluation
Suppliers evaluated on ability Suppliers put more emphasis
to provide high quality on their product quality
products
Supplier Selection
Product
Specification
Bidding
2.9
JIT Practice
Single source in
geographical area
close Frequent on-site visits by
technical people; rapid and
better understanding of quality
requirements
Fully specify only essential Suppliers have more discretion
product characteristics
in
product
design
and
manufacturing methods, which
results in specifications that are
more likely to be attainable
Stay with the same suppliers;
do informal value analysis to
reduce bid price; no annual
rebidding.
Suppliers can afford cost of
long term commitment to meet
quality requirements, and they
become more aware of buyer’s
true requirement
Receiving
Inspection
Vendor certifies quality; Quality at source (the supplier)
receiving inspections are is more effective and less
reduced
and
eventually costly
eliminated
Paperwork
Less formal system; reduced More time available for
volume of paperwork
purchasing people to devote to
quality matters.
Stumbling blocks of JIT manufacturing
Although JIT is having many advantages but there seems to be certain
reservations or limitation also. The manufacturer’s ability to meet the consumer’s
demand well in time has been affected by several sources of uncertainty, in this highly
53
competitive and demand driven production with JIT inputs. Due to this, manufacturer
may suffer loss of revenue and customers. This has great impact on the financial and on
the viability of the manufacturer. So before implementing JIT manufacture has to
determine whether they can meet demands of customers in given time frame or not
(Hussain et al., 2012). JIT requires several modifications in support activities
(accounting system, personnel evaluation, worker and management incentive systems,
etc., both within and outside the firm, which, in some cases, require plentiful
investments. Use of JIT production systems can be problematic. Most companies
introduce JIT into an existing plant trying to have the minimal interference on
production and achieving a smooth changeover requires careful planning and
prioritisation of the JIT techniques to be implemented (Moreira and Alves, 2006).
According to Zipkin (1991), the highest risk in reducing inventories too fast is
that the suppliers and the workers came under pressure because, if delays occur, all the
system is in danger. What hampers successful JIT implementation is the lack of clarity
and priority leading to confusion and wasteful expenditure of organisational energy
(Mahadevan, 1997).
Yasin (2004b), in his work highlighted factors contributing to failure of JIT and
these includes, lack of cooperation from vendors in a form of inconsistent timing and
quantities of deliveries, the lack of resources to invest in direct linkages with vendors,
the unwillingness of workers to perform multi-tasks, management’s resistance to
sharing operational power with employees, the lack of management confidence in
hourly workers’ commitment to the organization, and the lack of accurate forecasting
system.
Clark and Mia (1993) have investigated about JIT implementing and non-JIT
implementing firms in Australia and listed the following reasons for not implementing
JIT, the risk of late delivery is too high; constraint is capacity; products are unique and
built to customer specification; its practicality is questioned by some managers; TQM,
materials resources planning, or quick-response manufacturing are the main thrust of
our systems development efforts; management information system is inadequate to
support JIT; customers or suppliers are inflexible; inventories are small; raw materials
are always available on a JIT basis; raw materials are available on a seasonal basis (food
54
industry); raw materials are imported and supplier lead times are unpredictable. Figure
2.18 explains the problems of Just in Time Manufacturing
Figure 2.18 Problems of JIT implementation
2.10
Just in Time manufacturing in the Indian context
A manufacturing organization has to competitive for its survival. It has to supply
products of consistent high quality at reliable and reduced delivery time at reasonable
cost without compromising with quality. It may be extremely difficult for developing
countries like India to promote advanced manufacturing technology (AMT) because of
limited resources. Such countries need techniques which are characterized by low
investment, high short-term pay-off, high rate of productivity and quality. A ‘Just-inTime’ (JIT) based approach is one such approach to achieve the above stated goals.
Very few research papers on JIT implementation in Indian context are available
for reference at present. Lohar (2011) has conducted the survey of JIT implementing
55
Indian industries and found that the that JIT has the potential to increase the operational
efficiency, quality and organizational effectiveness of Indian industries while some
basic elements of JIT have been slightly difficult to implement in existing production
system of industries. According to author, to gain the benefits of JIT, Indian industries
should be willing to modify their procedure for dealing with supplier, analysis of
operations to identify the areas of standardization, simplification and automation and
reengineering of operational processes and procedures are some important issues, which
should be examined prior to implementation of JIT. It has been concluded that if these
issues are not adequately addresses the JIT efforts is bound to encounter human and
supplier related problems. Singh and Garg (2011b) have explained about JIT movement,
its concept, elements of JIT, motivational factors for JIT and benefits of JIT. Manoj
(2011) conducted his research in agro manufacturing units in Kerla (KAMCO) and
found that philosophies like JIT has become an imperative for survival and growth for
any manufacturing company, rather than just an option. The author also explained the
road map for adoption of JIT in KAMCO.
Malik et al. (2011) have conducted a study on implementation of JIT quality
management in Indian manufacturing industries and statistically analysed and depicted
that the degree of difficulty in implementation of JIT based quality management found
to be 3.18 on a scale of 0-5 that implying that implementation of JIT based quality
management in totality is reasonably difficult in Indian industries.
2.11
Challenges for JIT implementation in Indian manufacturing industry
… JIT is something that is already implemented in the industries of India
without much knowhow what JIT actually means (Telsan et al., 2006). As the
organizations across the world have faced stiff cut-throat competition in the last three
decades, the Indian industry too could not escape the brunt of globalisation (Ahuja and
Khamba, 2008). Due to entry of multinational companies since early 1990’s, Indian
manufacturing industry has also witness’s stiff competition in recent times. Owing to
opening up of the Indian economy from merely a regulated economy, the manufacturing
industry has been faced with uphill task of competing with the best in the world (Ahuja
and Khamba, 2008). The competition worldwide has been witnessed in terms of
lowering of costs, improved quality and products with high performance (Chandra and
56
Sastry, 1998). Moreover reducing lead times and setup time, innovation times and
controlling inventories have lead to increasing demands on the organisation’s
preparedness, adaptability and versatility.
Indian manufacturing sector is one of the largest industrial powers of the word,
which has never been allowed to realise its potential due to the interference of
bureaucratic governments and protectionists (Kumar, 2010). Due to this Indian goods
are unable to compete with the product of other countries. Traditionally, Indian
manufacturing organizations have suffered from inherent problems like poor
responsiveness to changing market scenarios, low productivity, poor quality, poor cost
effectiveness of production systems, stubborn organisational character and structures,
uncertain policy regimes, low skill and knowledge base of employees, low production
automation, non-motivating work environments, customer complaints, high utility rates,
high wastages associated with production systems, high labour rigidity, high internal
taxes and infrastructural glitches (Ahuja and Khamba, 2008). Challenge of cost effective
manufacturing strategies has to be adopted for staying competitive by Indian industry
(Chandra and Kodali, 1998). While implementing effective JIT manufacturing, the
Indian organizations have often been bothered with some problems and challenges like
difficulties to understand business economics, reluctance to change, worker’s
apprehensions of more work, management’s commitment and inability to realise the
same level of benefits as reaped by developed countries by imitating the JIT
implementation procedures and practices adopted abroad. Thus Indian manufacturing
organizations need to shed the sluggish character and move forward aggressively to
develop adapt proactive processes and practices for overcoming the inherent
deficiencies in manufacturing systems for harnessing distinct competencies in
comparison to their global competitors (Ahuja and Khamba, 2008). The present study
critically examines the factors effecting the implementation of JIT practices in Indian
manufacturing industry. Currently many models are undergoing failures and in this
situation this study is relevant.
Implementation of JIT in Indian industry has a potential to yield an enormous
saving and creation of new productivity ethics which can go in a long way to
strengthening of Indian economy (Singh and Garg, 2011a). But researchers have listed
some issues that can make or break the implementation of JIT manufacturing.
57
Successful implementation of JIT requires top management involvement and proper
employee training. Wakchaure et al. (2006) listed the major reasons pointed out for the
slow implementation by respondents are: Lack of information on JIT implementation,
Lack of justification for practicing JIT, Lack of assistance available from consulting
firms and government bodies, Lack of formal cross training program for workers,
Problem in maintenance time reduction, Initial high investment in layout improvement
to suit JIT requirements, JIT purchasing due to lack of infrastructure.
Venkatesh et al. (2007) listed the following difficulties in implementing JIT in
Indian: Lack of cooperation of suppliers in correctly supplied material, the lack of
resources to invest in direct linkages with vendors, Lack of formal cross training
programs for workers, Lack of formal training/education, Lack of cooperation from
vendors in the form of inconsistent lead times and capacity constraints imposed by
suppliers, Lack of an accurate forecasting system, Lack of strategic planning, Problem
in maintenance time reduction through machine, modification or replacement of existing
equipment, Quality problems with supplied material, Lack of cooperation of suppliers in
timing of supplied materials, Reduction in the levels of work load variability, Problems
with machines (Machine failures and reliability, Lack of information and
communication with suppliers, Inability to meet schedule, Lack of communication
between workers and management, Problem in line balancing, Lack of performance
measure, Problem in lead times reduction, Problems in layout modification, Lack of
team work spirit, Departmental conflicts, Poor quality. Whereas Malik et al. (2011)
listed following factors for the slow implementation of JIT: High cost of
implementation, Informal/casual quality auditing, On QC, lack of communication, Lack
of customer awareness on QC, Lack of employee participation, Lack of production
technology, Lack of support from workers, Lack of support from supervisors, Lack of
support from suppliers, Lack of support from designers, Lack of support from HRD,
Lack of support from R&D. Figure 2.19 gives the reasons for slow implementation of
JIT in Indian manufacturing industry.
58
Figure 2.19 Slow implementation of JIT in Indian manufacturing industries
2.12
Concluding Remarks
The contributions of JIT implementation initiatives for accruing strategic
benefits for meeting the challenges posed by global competition are highlighted in the
literature. Of all the strategies employed by an organization, JIT has emerged as the
front runner to compete in the global business arena. An effective JIT implementation
programme can focus on addressing the organisation’s problems, with a view to
optimise purchasing, production, utilisation of workers and delivery of finished goods.
JIT has become a new management practice in all types of organizations. In recent
years, many organizations have showed significant improvements in business through
JIT implementation. JIT strategies and philosophy can be effectively employed to
realise fundamental improvements of manufacturing performance in the organization,
59
thereby leading the organization to compete with others successfully in this highly
competitive environment.
JIT has emerged as a highly effective global strategy by which firms can
enhance their performance and achieve competencies. Thus, in this highly competitive
scenario, by using JIT the organizations could scale new levels of achievements. The
implementation of JIT really makes the difference between success and failure of the
organizations. The literature reveals the relevance of strategic JIT initiatives in the
manufacturing/service sector and the strategies adopted by organization for
implementation of JIT to realise its objectives successfully. From the literature, it is
evident that the successful JIT implementation programme can enable an organization to
gain an edge over the others for achieving enhanced manufacturing performance and
delivering the products of good quality and competitive rates.
60