Sunday, February 19, 2012

A Method for

A Method for
Assessing JIT
Effectiveness
Introduction
Japanese products have come to dominate many of the
world markets in recent years. This success has in turn
led Western manufacturers to examine Japanese
manufacturing practices and in many cases try to
emulate them. Drucker[1] was the first academic who
recognized that Japan was a country that Western
companies could learn from. From the 1970s onward
many articles have been published about Japanese
management, manufacturing, production systems and
culture, most of which paid attention mainly to Japanese
general management practices and their socio-cultural
environment[2]. Many consider that Japanese
manufacturing management techniques are among the
principal factors which have contributed to the Japanese
reputation for superior product quality and their high
growth rate of productivity. The “just-in-time” or “world
class” manufacturing system is one of the Japanese
production systems best known to management in
Western industry.
The basic concept of “just-in-time” (JIT) was introduced
by Taiichi Ohno, executive vice president of Toyota
Motor Company[3]. His ideas were formalized into a
management system when Toyota made the deliberate
decision to meet the precise demands of customers for
various models and colours with minimum delay. Toyota
started to implement JIT in the early 1970s; this then
spread rapidly to other Japanese companies in the late
1970s. By the early 1980s JIT became a very popular
manufacturing innovation in many Western and other
Asian countries[4].
Underlying the adoption of JIT is the requirement to
implement an entire series of important strategies for
improving facility layout, product design, production
planning and scheduling, material flow, supply chain and
human management aspects. The overriding objectives
behind this philosophy essentially focus on the
elimination of waste, where waste comprises all activities
which do not add value in some form or other to the
production process.
Subsidiary objectives of JIT systems focus on continuous
improvement towards lower production costs, higher
rates of productivity, better quality and reliability of
products, improved achievement of promised delivery
times of finished goods and improvement of working
relationships with suppliers and customers.
JIT systems cannot be introduced in a piecemeal manner
with regard to either specific function or activities in the
company. In this respect, a company adopting the JIT
philosophy must ensure that all changes or modifications
are accepted throughout the organization from chief
executive down to lower job functions. The management
must consider all elements which can have an influence
on the production process, particularly those that can
improve the manufacturing systems[5]. However,
regarding the difficulty of JIT implementation and
changing or modifying manufacturing environments, it is
vital that the starting point should be a matter of
strategic consideration and universal agreement by top
management. Having decided to implement JIT, it is very
important to monitor how rapidly and efficiently this is
being done. Ideally any method used for the process
should satisfy the following conditions: it should be
objective; it should be quantitative; results should be
unambiguous and in obvious readily acceptable form;
and they should be relatively simple. No such method is
apparently advocated or reported in the open literature.
To supply this need the following auditing method based
on a checklist of questions was prepared.
Proposed Auditing Procedure
It is not sufficient just to make the decision to implement
JIT and then let events run their course. It is important
also to have in place an auditing procedure that can
monitor that JIT is being implemented efficiently and
correctly. These procedures should ideally monitor
performance and ensure that potential benefits are being
derived.
Items on the present checklist are based both on extensive
examination of JIT literature, in order to identify major
factors, and three years’ study of JIT implementation.
These studies included extensive in-depth interviews that
were conducted to identify common areas of interest in
design, implementation and operation of JIT systems.
The procedure monitors 77 items, divided into five
groups (see Table I). It should be noted that areas 1 to 4
represent JIT “inputs” and area 5 “outputs” relating to
benefits achieved by the company. The elements in areas
1 to 4 are under the control of the manufacturer; on the
other hand the elements in area 5 arise from the
effectiveness of implementation of the elements in areas 1
to 4. Elements in all areas need to be scored separately.
Questions in area 1 are designed to assess degree of use of
JIT manufacturing technical systems and the second area
is related to supplier relationships. Questions in the third
area relate to management of human resources in the JIT
environment and the fourth area relates to quality and
reliability systems in use. Questions in the last area of the
checklist identify how JIT has affected the manufacturing
environment and productivity performance. The
checklist used in the research is reproduced in the
Appendix. Every care was taken to ensure that the
questions were completed in this checklist in an objective
manner.
Scoring Procedure
Where questions could be answered quantitatively the
following scale was adopted; if a question had a
dichotomic answer of Yes or No, 1 was adopted for No,
and 4 for Yes. For other questions, for example 3 of area 1,
the following scoring procedure was adopted.
All elements adopted 4
Most elements adopted 3
Some elements adopted 2
No element adopted 1
It is appreciated that there is in this case still an element
of subjectivity in assigning a value of 3 or 2, but as it is
effected in a structured manner, it can be argued that it
should not significantly prejudice or bias the procedure.
Areas 1-4 and 5 were scored independently. Simple
weighting of questions was adopted and normalized
scores obtained given by:
Input score = (summation of all scores areas 1-4)
(240 × 100)
Output score = (summation area 5)
(68 × 100)
Interpretation of Scores
The above checklist as scoring method can be used by
companies to assess the efficiency of their own JIT
implementation. It is recommended that the questionnaire
should be completed and scored as objectively as
possible, preferably by an independent auditor. The input
score is a measure of the degree of input by the company,
and as a guide for comparison with general practice of
other companies as identified in the research, the
following grading is recommended.
A: 75 - 100 very much above average
B: 50 - 75 above average
C: 25 - 50 below average
D: 0 - 25 insufficient input
Obviously all companies with a serious JIT commitment
should strive to obtain grade A or at least B for input
score. The output score should also be similarly graded
and completed; it is very important as an indicator that
JIT is being implemented correctly and the inputs are
being put to proper use.
Validation of the Method
Within the limited resources available for the research,
the auditing procedure was applied in detail to 13
companies. The results obtained with regard to grades
obtained are detailed in Table II. The total sample of 13 in
this trial is too small to allow a meaningful regression to
be carried out between benefits obtained and effort put in.
However, a comparison of average JIT effort put in and
average benefits obtained strongly suggests that not only
are the proposed scales consistent but also that there is a
one to one relationship between effort put in and benefits
derived.
Except for company 1 it is seen that to within a single
grade outputs are consistent with inputs to within a
grade. As a working procedure, having decided that the
level of input is satisfactory if a lower output grade than
the input grade is achieved, then significant attention
should be given to establish that the inputs are being
correctly applied.
Appendix: “Just-in-Time” Manufacturing Checklist
Questions only allowing Yes or No have an answer of 4 for Yes and 1 for No
Manufacturing systems
1 2 3 4
1. Production simplification ■ ■ ■ ■
2. Production smoothing ■ ■ ■ ■
3. Use of MRP (MRP II) for internal capacity planning and vendor scheduling ■ ■ ■ ■
4. Use master production scheduling in order to stabilize the factory at 95 per cent accuracy ■ ■ ■ ■
5. Replanning of master schedule at regular intervals ■ ■ ■ ■
6. Forecasting production requirements ■ ■ ■ ■
7. Use of cellular manufacturing system ■ ■ ■ ■
8. Use of standard pallets/containers for delivery and use around the factory ■ ■ ■ ■
9. Instant availability of manufacturing engineering in production area ■ ■ ■ ■
10. Inspection processes in plants to identify abnormalities in the manufacturing systems ■ ■ ■ ■
11. Installation of “Andon” (line-stop alarm light) in the shop floor ■ ■ ■ ■
12. Delegation of authority to operators to stop production line or machinery whenever a
defect is observed ■ ■ ■ ■
13. Installation of slogans and notices which keep workforces informed ■ ■ ■ ■
14. Setting standard of times for each operation ■ ■ ■ ■
15. Setting standard of times for set-up times ■ ■ ■ ■
16. Introduction of “pull” system scheduling (kanban) ■ ■ ■ ■
17. Reduction of number of kanbans to a minimum ■ ■ ■ ■
18. Material delivery to point of usage of components and materials ■ ■ ■ ■
19. Minimization of buffer stocks ■ ■ ■ ■
20. Balancing in monthly production to demand and sales ■ ■ ■ ■
21. Reduction in order quantities ■ ■ ■ ■
22. Usage of daily production quotas ■ ■ ■ ■
23. Emphasis on elimination of all non-value adding activities ■ ■ ■ ■
24. Appropriate work instruction ■ ■ ■ ■
25. Poster giving in the shop floor to warn safety information ■ ■ ■ ■
26. Simplification accounting procedures ■ ■ ■ ■
27. Harmonization of financial and JIT ■ ■ ■ ■
Supplier
28. Schedule planning with supplier ■ ■ ■ ■
29. Frequent deliveries in small lot sizes ■ ■ ■ ■
30. Assistance to suppliers to improve quality ■ ■ ■ ■
16 INDUSTRIAL MANAGEMENT & DATA SYSTEMS 94,7
Recommendations for Further Research
The method should be further validated by application to
a larger sample of companies and further theoretical
work, possibly using discriminant analysis, should be
done to establish whether simple uniform weighting is
sufficient or that the method should be tuned by applying
individual weights to each of the answers to the items in
the checklist.

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