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Project report on just in time production

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Project report on just in time production

  1. 1. JUST IN TIME PRODUCTION JUST IN TIME PRODUCTION A PROJECTREPORT Underthe guidanceof Submitted by In partial fulfillment of the requirements For the award of the degree of MASTER OF BUSINESS ADMINISTRATION(MBA) IN OPERATION MANAGEMENT Session2009-2010 (May2010) Submitted to Sikkim-Manipal university of Health, Medical and technological sciences Distance education wing Syndicate house Manipal – 576 104. Learning Centre code: Vashi (02973) Page 1
  2. 2. JUST IN TIME PRODUCTION ACKNOWLEDGEMENT I have taken this opportunity to express my sincere gratitude towards the pillars of successful completion of this Management thesis on “Just in Time Production”, without whose unflinching assistance & co-operation at all times it would rather have been impossible for me to achieve the desired goal. I would like to thank ………………………………………………………….. for his invaluable guidance and support that made my going easy and provided me a good learning opportunity. I would also like to express my sincere gratitude towards all supply chain team colleagues of CIPLA LIMITED, who have always helped me to know and learn various aspects of management at various stages. A special thanks to my parents they have always tried to give me higher education. Page 2
  3. 3. JUST IN TIME PRODUCTION STUDENT DECLARATION I hereby declare that the project report entitled, “JUST IN TIME PRODUCTION” Submitted in partial fulfillment of the requirements for the degree of Masters of business Administration to Sikkim-Manipal University, India, is my original work and not submitted for the award of any other degree, diploma, fellowship, or any other similar title or prizes. Place:Vashi ----------------------- Centre Code : Date: Reg. No: Page 3
  4. 4. JUST IN TIME PRODUCTION BONAFIDE CERTIFICATE Certified that this project report titled “JUST IN TIME PRODUCTION” is the bonafide work of “------------------------ -------” who carried out the project work under my supervision SIGNATURE OF HOD SIGNATURE STORES FACULTYINCHARGE Cipla Limited, A-42, Patalganga,Raigad Karrox college of Technology Maharashtra Vashi, New Mumbai, Maharashtra Page 4
  5. 5. JUST IN TIME PRODUCTION EXAMINER‟S CERTIFICATION The project report of “JUST IN TIME PRODUCTION” Is approved and is acceptable inquality and form. Internal Examiner External Examiners Name: Name: Qualification: Qualification: Designation: Page 5
  6. 6. JUST IN TIME PRODUCTION UNIVERSITY STUDY CENTRE CERTIFICATE This is to certify that the project report entitled, “JUST IN TIME PRODUCTION” Submitted in partial fulfillment of the requirements for the degree of Masters of Business Administration of Sikkim-Manipal University of Health, Medical and technological sciences by has worked under my supervision and guidance and that no part of this report has been submitted for the award of any other degree, Diploma, Fellowship or other similar titles or prizes and that the work has not been published in any journal or Magazine. Certified (Guide‟s Name and Qualification) Page 6
  7. 7. JUST IN TIME PRODUCTION Table of Contents UUITS Page No. 1. Executive Summary of the Project - 8 2. Company Profile (Cipla Ltd.) - 9-20 2.1 Introduction 2.2 Visions, Mission and Objectives 2.3 Finance and staffing 3. Brief Introduction about JIT - 21-24 4. Just in Time Production - 25-43 5. JIT - Philosophy or Technique - 44-58 6. KANBAN Just-in-Time at Toyota - 59-67 7. JIT and IBS - 68-79 7.1 JIT and IBS 7.2 Classification of IBS 7.3 Value Stream Mapping 7.4 Example Structural Steel Supply Chain in Building Construction 8. Case Studies - 80-90 9. Case Study in Malaysia (Putrajaya) - 91-100 10. Abbreviations - 101 11. References & Bibliography - 102 Page 7
  8. 8. JUST IN TIME PRODUCTION Unit-1 Executive summary In this paper, we are examining the implementation of Just-In-Time methodology in Ford for its latest small car KA; possibly one of the most interesting manufacturing revolution where companies involved in the production are integrated not only in their business processes moreover in their physical plants. The concept has been successfully developed and implemented in Valencia, Spain and is due to be adopted in other Ford production plants. The case study clearly shows how companies can work together in a harmonic and synchronised system meeting probably the most idealistic manufacturing principles (JIT) to produce the best quality product within the shortest time frame with minimum/no wastage and cost-effective to all parties. Careful production planning, cost-benefit analysis, adequate outsourcing plans and customer orientation are being praises as the key success factors ofthis amazing Just-In-Time concept. Page 8
  9. 9. JUST IN TIME PRODUCTION Unit-2 Company Profile (Cipla Ltd.) HISTORY:- Khwaja Abdul Hamied, the founder of Cipla, was bornon October31, 1898. The fire of nationalism was kindled in him when he was 15 as he witnessed a wanton act of colonial highhandedness. The fire was to blaze within him right through his life. In college, he found Chemistry fascinating. He set sail for Europe in 1924 and got admission in Berlin University as a research student of "The Technology of Barium Compounds". He earned his doctoratethree years later. In October 1927, during the long voyage from Europe to India, he drew up great plans for the future. He wrote: "No modern industry could have been possible without the help of such centres of research work where men are engaged in compelling nature to yield her secrets to the ruthless search of an investigating chemist." His plan found many supporters but no financiers. However, Dr Hamied was determined to being "a small wheel, no matter how small, than be a cog in a big wheel. Page 9
  10. 10. JUST IN TIME PRODUCTION BORN OF CIPLA In 1935, he set up The Chemical, Industrial & Pharmaceutical Laboratories, which came to be popularly known as Cipla. He gave the company all his patent and proprietary formulas for several drugs and medicines, without charging any royalty. On August 17, 1935, Cipla was registered as a public limited company with an authorised capital of Rs 6 lakhs. The search for suitable premises ended at 289, Bellasis Road (the present corporate office) where a small bungalow with a few rooms was taken on lease for 20 years for Rs 350 a month. Cipla was officially opened on September 22, 1937 when the first products were ready for the market. The Sunday Standard wrote: "The birth of Cipla which was launched into the world by Dr K A Hamied will be a red letter day in the annals of Bombay Industries. The first city in India can now boast of a concern, which will supersede all existing firms in the magnitude of its operations. India has lagged behind in the march of science but she is now awakening from her lethargy. The new company has mapped out an ambitious programme and with intelligent direction and skillful production bids fair to establish a great reputation in the East. " Page 10
  11. 11. JUST IN TIME PRODUCTION July 4, 1939 was a red-letter day for Cipla, when the Father of the Nation, Mahatma Gandhi, honoured the factory with a visit. He was "delighted to visit this Indian enterprise", he noted later. From the time Cipla came to the aid of the nation gasping for essential medicines during the Second World War, the company has been among the leaders in the pharmaceutical industry in India. VISITED BY MAHATMA GANDHI July 4, 1939 was a red-letter day for Cipla, when the Father of the Nation, Mahatma Gandhi, honoured the factory with a visit. He was "delighted to visit this Indian enterprise", he noted later. From the time Cipla came to the aid of the nation gasping for essential medicines during the Second World War, the company has been among the leaders in the pharmaceutical industry in India. Page 11
  12. 12. JUST IN TIME PRODUCTION On October 31, 1939, the books showed an alltime high loss of Rs 67,935. That was the last time the company ever recorded a deficit. In 1942, Dr Hamied's blueprint for a technical industrial research institute was accepted by the government and led to the birth of the Council of Scientific and Industrial Research (CSIR), which is today the apex research bodyin the country. In 1944, the company bought the premises at Bombay Central and decided to put up a "first class modern pharmaceutical works and laboratory." It was also decided to acquire land and buildings at Vikhroli. With severe import restrictions hampering production, the company decided to commence manufacturing the basic chemicals required for pharmaceuticals. In 1946, Cipla's product for hypertension, Serpinoid , was exported to the American Roland Corporation, to the tune of Rs 8 lakhs. Five years later, the company entered into an agreement with a Swiss firm for manufacturing foromycene. Dr Yusuf Hamied, the founder's son, returned with a doctorate in chemistry from Cambridge and joined Cipla as an officer in charge of research and development in 1960. Page 12
  13. 13. JUST IN TIME PRODUCTION In 1961, the Vikhroli factory started manufacturing diosgenin. This heralded the manufacture of several steroids and hormones derived from diosgenin Global Presence Exports for the financial year ended March 31, 2009 amounted to more than Rs. 27,500 million. Cipla exports raw materials, intermediates, prescription drugs, OTC products and veterinary products. Cipla also offers technology for products and processes. Technical know-how/fees received during the year 2008-09 amounted to about Rs. 2200 million Cipla's manufacturing facilities have been approved by the following regulatory authorities Food and Drug Administration (FDA), USA Medicines and Healthcare products Regulatory Agency (MHRA), UK Therapeutic Goods Administration (TGA), Australia Medicines Control Council (MCC), South Africa National Institute of Pharmacy (NIP), Hungary Pharamaceutical Inspection Convention (PIC), Germany World Health Organisation (WHO) Department of Health, Canada State Institute for the Control of Drugs, Slovak Republic ANVISA, Brazil Page 13
  14. 14. JUST IN TIME PRODUCTION IMPORTANT DAYS MILESTONE OF CIPLA 1935 Dr K A Hamied sets up "The Chemical, Industrial and Pharmaceutical Laboratories Ltd." in a rented bungalow, at Bombay Central. 1941 As the Second World War cuts off drug supplies, the company starts producing fine chemicals, dedicating all its facilities for the war effort. 1952 Sets up first research division for attaining self-sufficiency in technological development. 1960 Starts operations at second plant at Vikhroli, Mumbai, producing fine chemicals with special emphasis on natural Page 14
  15. 15. JUST IN TIME PRODUCTION products. 1968 Cipla manufactures ampicillin for the first time in the country. 1972 Starts Agricultural Research Division at Bangalore, for scientific cultivation of medicinal plants. 1976 Cipla launches medicinal aerosols for asthma. 1980 Wins Chemexcil Award for Excellence for exports. 1982 Fourth factory begins operations at Page 15
  16. 16. JUST IN TIME PRODUCTION Patalganga, Maharashtra. 1984 Develops anti-cancer drugs, vinblastine and vincristine in collaboration with the National Chemical Laboratory, Pune. Wins Sir P C Ray Award for developing inhouse technology for indigenous manufacture of a number of basic drugs. 1985 US FDA approves Cipla's bulk drug manufacturing facilities. 1988 Cipla wins National Award for Successful Commercialisation of Publicly Funded R&D. 1991 Lauches etoposide, a breakthrough in cancer chemotherapy, in association with Page 16
  17. 17. JUST IN TIME PRODUCTION Indian Institute of Chemical Technology. The company pioneers the manufacture of the antiretroviral drug, zidovudine, in technological collaboration with Indian Institute of Chemical Technology, Hyderabad. 1994 Cipla's fifth factory begins commercial production at Kurkumbh, Maharashtra. 1997 Launches transparent Rotahaler, the world's first such dry powder inhaler device now patented by Cipla in India and abroad. The palliative cancer care centre set up by the Cipla Foundation, begins offering free services at Warje, near Pune. 1998 Launches lamivudine, becoming one of the few companies in the world to offer all Page 17
  18. 18. JUST IN TIME PRODUCTION three component drugs of retroviral combination therapy (zidovudine and stavudine already launched). 1999 Launches Nevirapine, antiretroviral drug, used to prevent the transmission of AIDS from mother to child. 2000 Cipla became the first company, outside the USA and Europe to launch CFC-free inhalers – ten years before the deadline to phase out use of CFC in medicinal products. 2002 Four state-of-the-art manufacturing facilities set up in Goa in a record time of less than twelve months. 2003 Page 18
  19. 19. JUST IN TIME PRODUCTION Launches TIOVA (Tiotropium bromide), a novel inhaled, long-acting anticholinergic bronchodilator that is employed as a once- daily maintenance treatment for patients with chronic obstructive pulmonary disease (COPD). Commissioned second phaseof manufacturing operations at Goa. 2005 Set-up state-of-the-art facility for manufacture of formulations at Baddi, Himachal Pradesh. 2007 Set-up state-of-the-art facility for manufacture of formulations at Sikkim. Page 19
  20. 20. JUST IN TIME PRODUCTION Boardof Directors Founder Dr. K.A. Hamied (1898-1972) Chairman & Managing Director Dr. Y.K. Hamied Joint Managing Directors Mr. M.K.Hamied Mr. Amar Lulla Non-Executive Directors Mr. V.C. Kotwal Dr. H.R. Manchanda Mr. S.A.A. Pinto Mr. M.R. Raghavan Mr. Ramesh Shroff Mr. Pankaj Patel Page 20
  21. 21. JUST IN TIME PRODUCTION Unit-3 Brief Introduction about JIT Introduction Just-in-time (JIT) is a management philosophy that strives to eliminate sources of manufacturing waste by producing the right part in the right place at the right time. Waste results from any activity that adds cost without adding value, such as moving and storing.JIT (also known as lean production or stockless production) should improve profits and return on investment by reducing inventory levels (increasing the inventory turnover rate), reducing variability, improving product quality, reducing production and delivery lead times, and reducing other costs (such as those associated with machine setup and equipment breakdown). In a JIT system, underutilized (excess) capacity is used instead of buffer inventories to hedge against problems that may arise. JIT applies primarily to repetitive manufacturing processes in which the same products and components are produced over and over again. The general idea is to establish flow processes (even when the facility uses a jobbing or batch process layout) by linking work centers so that there is an even, balanced flow of materials throughout the entire production process, similar to that found in an assembly line. To accomplish this, an attempt is made to reach the goals of driving all queues toward zero and achieving the ideal lot size of one unit. The goal of JIT, therefore, is to minimize the Page 21
  22. 22. JUST IN TIME PRODUCTION presence of non-value-adding operations and non-moving inventories in the production line. This will result in shorter throughput times, better on-time delivery performance, higher equipment utilization, lesser space requirement, lower costs, and greater profits. JIT was developed as a means of meeting customer demands with minimum delays. Thus, in the olden days, JIT is used not to reduce manufacturing wastage, but primarily to produce goods so that customer orders are met exactly when they need the products. JIT is also known as lean production or stockless production, since the key behind a successful implementation of JIT is the reduction of inventory levels at the various stations of the production line to the absolute minimum. This necessitates good coordination between stations such that every station produces only the exact volume that the next station needs. On the other hand, a station pulls in only the exact volume that it needs from the preceding station. The JIT system consists of defining the production flow and setting up the production floor such that the flow of materials as they get manufactured through the line is smooth and unimpeded, thereby reducing material waiting time. This requires that the capacities of the various workstations that the materials pass through are very evenly matched and balanced, such that bottlenecks in the production line are eliminated. This set-up ensures that the materials will undergo manufacturing without queuing or stoppage. Page 22
  23. 23. JUST IN TIME PRODUCTION Another important aspect of JIT is the use of a 'pull' system to move inventories through the production line. Under such a system, the requirements of the next station are what modulate the production of a particular station. It is therefore necessary under JIT to define a process by which the pulling of lots from one station to the next is facilitated. JIT is most applicable to operations or production flows that do not change, i.e., those that are simply repeated over and over again. An example of this would be an automobile assembly line, wherein every car undergoes the same productionprocess as the one before it. Some semiconductor companies have likewise practiced JIT successfully. Still, there are some semiconductor companies that don‟t practice JIT for the simple reason that their operations are too complex for JIT application. On the other hand, that‟s precisely the challenge of JIT – creation of a production set-up that is simple enough to allow JIT. (find a semi conductor factory) Inventory stocks allow production process to continue even when some problem occurs. In a way, inventory stocks act like a buffers to hide any problem that may occur. But, with JIT, there are no buffers to hide problems and thus, occurrence of problem can shut down the entire production process. Thus, JIT philosophy helps organization to prominently expose problems and thus, bring a clear focus on removal of it at source, by eliminating the cause, rather than effects, of problem. With JIT, it is believed that the root causes of most problems are due to faulty production process Page 23
  24. 24. JUST IN TIME PRODUCTION design. Hence, with JIT, nothing is takenfor granted, everything is subject to analysis. Each activity is identified as either „Value-Added‟ or „Non-Value-Added‟. The reduction of „Non-Value-Added‟ activities is achieved mainly through increasing manufacturing flexibility and improved quality. JIT is an extremely powerful tool to identify where improvements should be made. It helps you to identify cause (not the effect) of problem and its elimination. Failures and exceptions are treated as opportunities to improve the system. In fact, JIT initiates failures due to problems to expose them. It is a system of trouble-shooting, within a culture of constant analysis and improvement. It is clear, as an attitude and approach, JIT and TQM are perfectly complimentary to each other, to expose and correct problems at source, so as to avoid wasting resources on production of defective products. Just-in-time manufacturing is a process where suppliers deliver inventory to the factory only when it's needed for assembly. Companies are beginning to turn to Internet-based technologies to communicate with their suppliers, making the just-in-time ordering and delivery process speedier and more flexible. Page 24
  25. 25. JUST IN TIME PRODUCTION Unit-4 Just in time Production History of Just in Time: Just-In-Time is a Japanese manufacturing management method developed in 1970s. It was first adopted by Toyota manufacturing plants by Taiichi Ohno. The main concern at that time was to meet consumer demands. Because of the success ofJIT management, Taiichi Ohno was named the Father of JIT. After the first introduction of JIT by Toyota, many companies followed up and around mid 1970s‟, it gained extended support and widely used by many companies. One motivated reason for developing JIT and some other better production techniques was that after World War II, Japanese people had a very strong incentive to develop a good manufacturing technique to help them rebuilding the economy. They also had a strong working ethnic which was concentrated on work rather than leisure, seeked continuous improvement, life commitment to work, group conscious rather than individualism and achieved common goal. This kind of motivation had driven Japanese economy to succeed. Because of the natural constraints and the economy constraints after World War II, Japanese Manufacturers looked for a way to gain the most efficient use of limited resources. They worked on "optimal cost/quality relationship". Before the introduction of JIT, there were a lot of manufacturing defects for the existing system at that time. According to Hirano, this included inventory problem, productdefects, risen cost, large lot production Page 25
  26. 26. JUST IN TIME PRODUCTION and delivery delays. The inventory problems included the unused accumulated inventory that was not only unproductive, but also required a lot of effort in storing and managing them. Other implied problems such as parts storage, equipment breakdowns, and uneven production levels. For the product defects, manufacturers knew that only one single product defects can destroy the producer‟s creditability. They must create a "defect-free" process. Instead of large lot production - producing one type of products, they awaked that they should produce more diversified goods. There was also a problem of rising cost, the existing system could not reduce cost any further but remember improvement always leads to costreduction. Lastly, the existing system did not manage well for fast delivery request, so, there was a need to have a faster and reliable delivery system in order to handle customers‟ needs. Thus, JIT manufacturing management was developed based on these problems. Focus of JIT? Mainly JIT focuses to eliminate the waste or the non-value added. Thus there are several types of wastes categorised. JIT usually identifies seven prominent types of waste to be eliminated: Waste from Overproduction Transportation Waste Processing Waste Page 26
  27. 27. JUST IN TIME PRODUCTION Waste from ProductDefects Waste of waiting/idle time Inventory Waste Introduction Phase for Just in Time: According to Hirano, the introductory phases of JIT involve 5 steps. Page 27
  29. 29. JUST IN TIME PRODUCTION Step 1: Awareness Revolution It means giving up old concept of managing and adopting JIT way of thinking. There are 10 principles for improvement: 1. Abolish old tradition concepts. 2. Assume that new method will work. 3. No excuses are accepted. 4. It is not seeking for perfection, absolutely zero-defect process, few defects is acceptable. 5. Correct mistakes immediately. 6. Do not spend money on improvement. 7. Use you brain to solve problem. 8. Repeat to ask yourself 5 times before any decision. 9. Gather information from several people, more is better! 10. Remember that improvement has no limits. The idea of giving up old concept was especially for the large lot production, The lot production was felt that "having fewer changeover was better", but it was no longer true. Whereas JIT is a one-piece flow manufacturing. To compare the two, Hirano had this idea: Lot production: "Unneeded goods...In unneeded quantities...At unneeded times..." JIT: "Needed goods...Inneeded quantities...At needed times..." The main point here is to have an awareness of the need of throwing out old system and adopting a new one. Page 29
  30. 30. JUST IN TIME PRODUCTION Step 2: 5S‟s ForWorkplace Improvement Page 30
  31. 31. JUST IN TIME PRODUCTION The 5S‟s standfor: Seiri - ProperArrangement Seiton- Orderliness Seiso - Cleanliness Seiketsu- Cleanup Shitsuke – Discipline This 5S‟s should be implemented company-wide and this should be part of a total improvement program. Seiri - Proper Arrangement means sorting what you have, identifying the needs and throwing out those unnecessary. One example is using red-tags. This is a little red-bordered paper saying what the production is, how many are accumulated and then stick these red tags onto every box of inventory . It enhances the easiness to know the inventory status and can reduce cost. Seiton - Orderliness means making thing in order. Examples include keeping shelves in order, keeping storage areas in order, keeping workplace in order, keeping worktables in order and keeping the office in order. Seiso - Cleanliness means having a clean workplace, equipment, etc. Seiketsu- Cleanup mean maintaining equipment and tools. Shitsuke - Discipline means following the rules and making them a habit. Page 31
  32. 32. JUST IN TIME PRODUCTION Step 3: Flow Manufacturing Flow manufacturing means producing one single piece of productat a time but multi-handling which follows the process sequence. There are several main points concerning flow manufacturing: Page 32
  33. 33. JUST IN TIME PRODUCTION 1. Arrange machines in sequence. 2. U-shaped production line (Cellular Manufacturing). 3. Produceone-piece at a time. 4. Train workers to be multi-skilled. 5. Follow the cycle time. 6. Let the workers standing and walking around while working. 7. Use small and dedicated machines. Page 33
  34. 34. JUST IN TIME PRODUCTION Step 4: Standard Operations Standard Operation means to produce quality safely and less expensively through efficient rules and methods of arranging people, products and machines. The basis of standard operations is: 1. Cycle time It means how long it would take to "carry out part all the way through the cell". Following are the equations for calculating cycle time. Daily Quantity Required = Monthly Quantity Needed / Working Days per month Cycle Time = Working Hours per day / Daily Quantity Required 2. Work sequence 3. Standard stock-on-hand 4. Use operation charts Step 5: Multi-Process Handling Multi-process handling means one worker is responsible for several processes in a cell. Page 34
  35. 35. JUST IN TIME PRODUCTION Some points that should be aware: ·Clearly assign jobs to machines and workers. ·Make a good use of U-shaped cell manufacturing. ·Multi-skilled workers ·Operation should be able to perform multi-machine handling and multi process handling. Multi-machine handling - a worker should handle several machines at once, this is also called "horizontal handling". Multi-process handling - a worker should handle several different processes at once, this is also called "vertical handling" and this is the basis for JIT production. · Uses casters extensively as author written, "Floor bolts are our enemies! Machines must be movable." Elements of Justin Time According to Cheng, the basic elements of JIT manufacturing are: ·People Involvement ·Plants ·System Page 35
  36. 36. JUST IN TIME PRODUCTION People Involvement Maintaining a good support and agreement from people involved in production. This is not only reduce the time and effort in implementation of JIT, but also minimize the chance of creating implementation problem. The attempt to maximize people‟s involvement may carry through the introduction of quality circle and total involvement concept. Manufacturers can gain supportfrom 4 sources. 1. Stockholders and owners of the company - should maintain a good long-term relationship among them. 2. Labor organization - all labors should be well-informed about the goals of JIT, this is crucial in gaining supportfrom the them. 3. Management support - support from all level of management. The ideas of continuous improvement should spread all over the factory, managers and all shop-floor labor. 4. Government support - government can show their support by extending tax and other financial help. This can enhance the motivation, and also help in financing the implementation of JIT. Page 36
  37. 37. JUST IN TIME PRODUCTION Plants Certain requirements are needed to implement JIT, there are: 1. Plant layout - the plant layout is mainly focus on maximizing working flexibility. It requires the use of "multi-function workers". 2. Demand pull production - it means to produce when the order is received. This can manage the quantity and time more appropriately. 3. Kanban - a Japanese term for card or tag. Special inventory and process information are written on the card. This helps tying and linking the process more efficiently. 4. Self-inspection - it is carried out by the workers at catch mistakes immediately. 5. Continuous improvement - this conceptshould be adopted by every members in the organization in order to carry out JIT. This is the most important conceptof JIT. This can allow an organization to improve its productivity, service, operation and even customer satisfaction in an on- going basis. Page 37
  38. 38. JUST IN TIME PRODUCTION System This refers to the technology and process that combines the different processes and activities together. Two major types are MRP (Material Requirement Planning) and MRP II (Manufacturing ResourcePlanning). MRP is a computer-based, bottom-up manufacturing approach. This involves two plans, production plan and master production schedule. Production plan involves the management and planning of resources through the available capacity. Master production schedule involves what products to be produced in what time. MRP II is mainly involved the management or planning of financial resources in order to carry out the operation. Goalof Just in Time According to Cheng in Just-In-Time Manufacturing – An Introduction, he explains the objectives of JIT. There are three main objectives: 1. Increasing the organization‟s ability to compete with others and remain competitive over the long run. The competitiveness of the firms is increased by the use of JIT manufacturing process as they can develop a more optimal process for their firms. 2. Increasing efficiency within the production process. Efficiency is obtained through the increase of productivity and decrease of cost. 3. Reducing wasted materials, time and effort. It can help to reduce the costs. Page 38
  39. 39. JUST IN TIME PRODUCTION Other short-term and long-term objectives are:- 1. Identify and response to consumers needs. Customers‟ needs and wants seem to be the major focus for business now, this objective will help the firm on what is demanded from customers, and what is required of production. 2. Optimal quality/cost relationship. The organization should focus on zero- defect production process. Although it seems to be unrealistic, in the long run, it will eliminate a huge amount of resources and effort in inspecting, reworking and the production of defected goods. 3. Reduceunwanted wastes. Wastes that do not add value to the products itself should be eliminated. 4. Develop a reliable relationship between the suppliers. A good and long- term relationship between organization and its suppliers helps to manage a more efficient process in inventory management, material management and delivery system. It will also assure that the supply is stable and available when needed. 5. Plant design for maximizing efficiency. The design of plant is essential in terms of manufacturing efficiency and utility of resources. 6. Adoptthe work ethnic of Japanese workers for continuous improvement. Page 39
  40. 40. JUST IN TIME PRODUCTION Commit a long-term continuous improvement throughout the organization. It will help the organization to remain competitive in the long run. Other Similar Ideas 1. Reduction of Inventory. JIT reduces inventory at all level of the organization. 2. Reduction of Lead Time. Lead time such as setup time and move time and waiting time is reduced. 3. Quality Control. JIT improves the quality controlby increasing its efficiency of managing shop floor productionand increasing its commitment to its suppliers. 4. Improvement for Performance. In JIT manufacturing, the organization can obtain a greater impact/control over its suppliers. With fewer suppliers, organizations have larger control because the amount purchased is usually large. And, organizations can obtain a tighter requirement on products from their suppliers. 5. Total Preventive Maintenance. JIT provides preventive maintenance to lessen the risk of machine breakdowns. 6. Continuous Improvement. JIT is a never-ending method in operation management. Page 40
  41. 41. JUST IN TIME PRODUCTION 7. Strategic Gain. JIT helps organization to remain competitive in the market place. 8. Reduction of Wastes. JIT helps significantly in reducing wastes. JIT can help organization remains competitive by offering consumers higher quality of products than their competitors, it is very important in the survival in the market place. These major objectives are suitable for all organizations. But each organization is unique in some way, adjustments of JIT objectives for each form should be made in order to complement the overall production process. Limitation of Just in Time Regardless of the great benefits of JIT, it has its limitations, the following are the major limitations. · Culture Differences The organizational cultures vary from firm to firm. There are some cultures that tie to JIT success but it is difficult for an organization to change its cultures within a short time. · Traditional Approach The traditional approach in manufacturing is to store up a large amount of inventory in the means of backing up during bad time. Those companies rely on safety stocks may have a problem with the use of JIT. ·Difference in implementation of JIT Because JIT was originally established Page 41
  42. 42. JUST IN TIME PRODUCTION in Japanese, it is somehow different for implementing in western countries. The benefits may vary. ·Loss of individual autonomy. This is mainly due to the shorter cycle times which adds pressures and stress on the workers. ·Loss of team autonomy. This is the result of decreasing buffer inventories which lead to a lower flexibility of the workers to solve problem individually. ·Loss of method autonomy. It means the workers must act some way when problems occur, this does not allow them to have their own method to solve a problem. ·JIT success is varied from industry to industry. Some industries are benefit more from JIT while others do not. ·Resistance to change JIT involves a change throughout the whole organization, but human nature resists to changes. The most common resistances are emotional resistance and rational resistance. Emotional resistance are those psychological feeling which hinder performance such as anxiety. Rational resistance is the deficient of the needed information for the workers to perform the job well. Page 42
  43. 43. JUST IN TIME PRODUCTION Some other limitations:- ·Relationship between management and employees is important .A mutual trust must be built between management and employees in order to have effective decision making. ·Employee commitment Employees must commit to JIT, to enhance the quality as their ultimate goal, and to see JIT as a way to compete rather than method used by managers to increase their workload. ·Production level JIT works best for medium to high range of production volume. ·Employee skill JIT requires workers to be multi-skilled and flexible to change. ·Compensation should be set on time-based wages. This allows the workers to concentrate on building what the customers wants. Page 43
  44. 44. JUST IN TIME PRODUCTION Unit – 5 JIT - Philosophy or Technique Just In Time is a philosophy and not the technique for elimination of wastes. The JIT strategy is to have "the right product at the right place at the right time." The Just-in-time philosophy that emerged, is a management logic based on simplicity and continuous improvement. It may be applied to any process where it will aim to make improvements through elimination of excess, waste and unevenness. The Just-in-Time concept comprises methods and techniques that aim to increase the potential for short times to delivery. Production system in which both the movement of goods during production and deliveries from suppliers are carefully timed so that at each step of the process the next (usually small) batch arrives for processing just as the proceeding batch is completed The "Just in time" (JIT.) inventory concept, also called Kanban, asserts that just enough inventories, arriving just in time to replace that which was just used, is all the inventory that is necessary at any given time. Excessive inventory unnecessarily ties up money, adds warehousing costs, increases risk of damage and risks obsolescence, and most of all, can possibly obscure opportunities for operational improvements. Page 44
  45. 45. JUST IN TIME PRODUCTION Storing inventory is still the basics of warehousing, but in today‟s business it constitutes only part of the total. A modern thought on warehousing is that large inventories are really not as necessary as oncebelieved. To some companies storing large quantities of inventory is detrimental to business because it ties up capital and can also disguise poor management practices. The JIT philosophy emphasizes flow flexibility and developing supply chains to reduce all excess and waste Implementation Of JIT Although the just-in-time (JIT) concept is very young, perhaps 10 to 15 years old in this country, it is so widespread in American manufacturing and service. Perhaps this is because the idea is so simple and so appealing. In short, the JIT strategy is to have "the right product at the right place at the right time." It implies that in manufacturing or service, each stages of the process produces exactly the amount that is required for the next step in the process. This notion holds true for all steps within the system. Suppose, for example, that all products pass through a drilling operation and then a milling operation. With JIT, the drill produces only what the mill will need next. It also holds for the last step that is, the system produces only what the customer desires. Implementation of a JIT system typically includes emphasis on the following aspects of the productionprocess: Page 45
  46. 46. JUST IN TIME PRODUCTION Production Smoothing Capacity Buffers Set-up Reduction Cross Training and Plant Layout Total Quality Management Most of the companies today seek this method of implementation: Form a top-level team: This team‟s responsibilities include deciding upon an organizational structure and developing a plan to implement JIT within the company. This plan should include the company‟s goals concerning production, as well as how to establish this plan among all employees (i.e. motivation & discipline) This plan then be used to establish the overall philosophy of the company concerning JIT To train the top managementin the basic concepts ofJIT: This is the first step of the implementation process. It is very important to educate and train the top-level management, as they are the ones who frame policies and get things moving. This being a new idea, getting this into practice will need full support& cooperation from these people. Page 46
  47. 47. JUST IN TIME PRODUCTION To implement this system to every aspectof the company from supplier to distributors: First of all each department should establish its goals and a specific problem to attack. Then a team should be chosen by each department and establish team leaders. The teams should focus on the reduction of costs and the elimination of wastes. Data must then be collected on the team‟s problems. This data should be plotted in order to find excess waste or costs. Once this is done, measurement should be plotted in order to find excess waste or costs. Once this is done, measurement should be made. Manipulation of this data should show at least some apparent problems in the current system. Further analysis should help in the implementation of JIT by showing problem areas. In addition, the data the data could be used to show the effects of implementing JIT into the company. Guidelines for SuccessfulJIT Implementation Make the factory loadings uniform, linear, and stable. Fluctuations in manufacturing loadings will result in bottlenecks. Reduce, if not eliminate, conversion and set-up times. Reduce lot sizes. This will smoothen out the flow of inventories from one station to another, although this may necessitate more frequent deliveries or transfers. Reduce lead times by moving work stations closer together and streamlining the production floor lay-out, applying cellular manufacturing concepts, using technology to automate processes and improve coordination. Reduce equipment downtimes through good preventive maintenance. Cross-train personnel to Page 47
  48. 48. JUST IN TIME PRODUCTION achieve a very flexible work force require stringent supplier quality assurance since an operation under JIT can not afford to incur errors due to defects. Use a control system to convey lots between workstations efficiently; the use of a kanban system is an example of this Benefits of JIT Perhaps, the most significant benefit of JIT is to improve the responsiveness of the firms to the market place thereby affording it an overwhelming advantage in competition. Specific benefits will depend upon size of the market, technology of processes etc. Therefore, they vary from organizations to organization. One of the benefits of JIT is that with raw materials and WIP being processed in smaller batches, errors can be easily identified and corrected quickly, during each stage of the production process. This in turn has the ‘knock-on’ effects of reducing non-value added costs Conceptually, the JIT benefits could be grouped into the following categories; Product Cost: This is greatly reduced of manufacturing cycle time, reduction of scraps, inventories, space requirement, and material handling and eliminations of non-value adding operations. Quality: It has greatly improved due to fast detection and correction of defects, use of automatic stop devices, higher quality of purchased parts, Page 48
  49. 49. JUST IN TIME PRODUCTION worker centered quality control and statistical process control. Total preventive maintenance an d lower inventory levels also help in quality improvements. Design: Due to fast response to engineering change, alternative designs can be quickly brought on the shop floor. Productivity: Order magnitude productivity improvements are obtained due to the use of flexible workforce, reduced rework, reduced inspection, reduced part delay and reduced throughout time. Workers acquire multiple skills and becomehighly productive. JIT systems have a number of other important benefits also, which are attracting the attention of various companies. The main benefits are: Reduced levels of in-process inventories, purchased goods, and finished goods. Reduced spacerequirements. Increased productquality and reduced scrap and rework. Reduced manufacturing lead times. Greater flexibility in changing the productionmix. Smoother production flow with fewer disruptions. Worker participation in problem solving. Page 49
  50. 50. JUST IN TIME PRODUCTION Pressure to build good relationships with vendors. Increased productivity levels and utilization of equipment Reduction in the need for certain indirect labour. Just In Time (JIT) Manufacturing Just in Time manufacturing is a systems approach to developing and operating a manufacturing system. It is based on the total elimination of waste. JIT is not a new concept. It has been part and parcel of the Japanese manufacturing industry adopted approach for quite some time. It requires that equipment, resources and labor are made available only in the amount required and at the time required to do the job. It is based on producing only the necessary units in the necessary quantities at the necessary time by bringing production rates exactly in line with market demand. In short, JIT means making what the market wants, when it wants it. JIT has been found to be so effective that it increases productivity, work performance and productquality, while saving costs. JIT AND COSTS JIT can affect the bottom line in a variety of ways. Improvement in quality and delivery times can increase demand and, thus, revenue. Costs are also affected; the JIT philosophy contends that inventory reduction and increased quality reduce costs. Traditional costaccounting Systems often makes it Page 50
  51. 51. JUST IN TIME PRODUCTION difficult to measure the effects of changes except in very aggregate terms. One of the tenets of JIT is to account for these effects more accurately. CostAccounting Systems Costs are a major factor in PIM decisions. Unfortunately, traditional cost accounting Systems often do not tell the decision maker how much a specific decision wilt affect actual expenditures. This is due to overhead costs being hidden by the allocation methods. For example, overhead costs usually are allocated to departments (cost centres) rather than to activities, such as set-up, and inspection and maintenance operations. In addition, allocation based on the material or directs labour required to manufacture an item ignores the fact that different items are in different stages of their life cycles. Thus, different items may have different manufacturing, engineering, and tooting costs, may have quite different quality and inspection requirements, and may require different marketing and distribution expenditures. When these costs are aggregated and allocated on the basis of the average direct labour cost of a part-as is the case with most traditional cost accounting systems-some products are allocated costs considerably below the actual expenditures required for their manufacture and distribution and others are allocated more than their true cost. Thus, decisions often are based on inaccurate information. Page 51
  52. 52. JUST IN TIME PRODUCTION In order to manage costs and base decisions on accurate information, the causes (source) of the expenditures must be identified. Various expenditure causes; such as set-up times, shop and purchase order processing, receiving, and material handling deserve more discussion. These basic causes of indirect costs are called cost drivers. The cost accounting system must report the cost of these activities to accurately determine the costs of individual products. Such reporting enables manufacturing management to treat set-up, inspection, receiving, and transaction costs as direct costs, to base decisions on accurate information, and to focus on reducing high cost elements. An ABC analysis can be used to select the activities that are appropriate for costreduction studies. JIT, TQM, AND THE PRODUCTIONPIPELINE Think of a company as a pipeline with raw materials entering at one end and products emerging at the other.( the pipe can be extended conceptually with customer needs or orders going in at one end and products arriving to customers at the other.) The goal is to minimize the through put time, that is to move the materials as quickly as possible Shorter throughput time is better But the pipeline varies in size and has obstructions through out. Output is determined by the narrowest part of the pipeline and the biggest obstruction. Page 52
  53. 53. JUST IN TIME PRODUCTION These must be identified and then eliminated to achieve the goal. As each obstruction is eliminated the flow speeds up but only by as much as allowed by the next biggest obstruction elsewhere in the pipeline. Identification and location of these obstructions, understanding them, and finding ways to eliminate them are the purposes of JIT and TQM. The pipeline analogy may give an impression those barriers to flow / production, once removed is gone forever. This is not true. To identify the obstruction and its precise location in itself is difficult and time consuming Inventory as a way of avoiding problems Sources of obstructions keep changing and it could be any one of the factors of production and /or in any combination of the factors. One gets eliminated and another one crops up and therefore it has got to be continuously attended to. The pipeline itself and the things that floe through are changing always. The diameter of the pipeline may have to be changed. But only the extent required. Over size is waste, while undersize would not meet the required throughput. The BEST flow rate would be that which matches the required output rate. At times the pipeline itself may have to be modified or even replaced. As changing processes and products introduce whole new set of obstructions. Page 53
  54. 54. JUST IN TIME PRODUCTION In short the work on the pipeline is CONTINUOUS. JIT and TQM continuously enable tinkering the pipeline so that the material coming out of the pipeline is the best possible in all respects. JIT / TQM Difference in Organizations JIT /TQM greatly increase the number of people who are involved in identifying and eliminating obstructions. Every one does it Level of authority of workers to make and carry out decisions is much higher Emphasis is on measure, diagnose, and improve it. Second difference is in the process employed to identify and prioritise problems and sources of waste In JIT the primary process is reduction of inventory, mainly to reveal the obstructions (which were earlier hidden or ameliorated by the inventory) and prioritise them. Just in Time Summary Efficient Techniques Reduce Leeway(Maintaining Continuity) 1. Prepare a disaster plan, e.g. firing protection or backing-up data. He believes that the better the disaster plan, the larger chance the companies will survive after disaster. 2. Cost-reduction strategies. Page 54
  55. 55. JUST IN TIME PRODUCTION 3. Develop long-term continuity plan. 4. Identify critical functions and estimate the time, the company can afford without such function. 5. Identify potential alternative suppliers. 6. avoid too complicated continuity plan. 7. Evaluate risk before any decision. 8. Conducting continuity tests. Just in Time-----Manufacturing (1) Introduction Just in Time---manufacturing is a systems method to develop and operate a factory system. It is mainly basis on the total Decrease of waste. As you know, many people think JIT is not a new knowledge field. As a matter of fact, it has been part and plays an important role of the Japanese manufacturing industry adopted method for a long time. It requires all the materials such as equipment, human resources, and management skills are made available only in the amount required and at the time required to do the job. It is based on producing only the necessary units in the necessary quantities at the necessary time by bringing production rates exactly in line with market demand. Generally speaking, JIT means making what the market wants. JIT has been found to be so effective that it increases Page 55
  56. 56. JUST IN TIME PRODUCTION productivity, work performance and product quality. What‟s even more, it plays a vital role to increase productivity and decrease the total cost of manufacturing production. (2) Planningfor JIT Since each manufacturing process is different, it is up to the individual company to determine the degree of appropriateness and the final application of JIT. However, it is very important to define the plan and objectives before setting up a JIT manufacturing system. It is impossible to establish a new JIT system that can be used successfully without change. Therefore, we should take serious consideration to make a plan for Just-In- Time, which will benefit to our factory performance. (3) Defining the Planning JIT manufacturing system requires an understanding of the objectives of JIT, and objectives of the JIT system. After the objectives are set up for the manufacturing, the process of planning becomes one of determining what is required to meet those objectives. The goal of a JIT approach is to develop a system that allows a factory to have only the materials equipment and people by hand required doing the some plan. T o achieve this goal, we should have equipped with at least five fundamental plan: · Integrating and optimizing every step of the manufacturing process · Reducing manufacturing cost· Producing producton demand · Developing Page 56
  57. 57. JUST IN TIME PRODUCTION manufacturing flexibility · Produce quality product to maintain commitments and links made between Customers and Suppliers We also should keep in mind that achieving these obtaining targets does not automatically make a company a JIT manufacturer. On the contrary, it will lead to achieve even one of these objectives will prevent a manufacturer from establishing a successfulJIT system. According to Common Wealth on May, 1996 report, it said that “A company cannot decide to implement JIT; they must earn the right to use JIT by revising their quality for system." (4) Reducing ManufacturingCost If we can design products that it will speed up and decrease manufacturing processes. Gradually, it will help us to reduce the cost of manufacturing and building the product to specifications benefit. One aspect in designing products for manufacture ability is the need to set up a good boss and employee relationship. At least, this is to cultivate and procure the resources of the production experts, and the line employees to develop cost saving solutions. Participatory quality programs utilize employee knowledge about their job functions and review the department performance. It will, finally, encourage with rewards for suggested total costsaving. (5) Manufacturing Flexibility According to China time report on August 1996. "Manufacturing flexibility is the ability to start new projects or the rate at which the production mix can be adjusted to meet customer demand." Planning for manufacturing Page 57
  58. 58. JUST IN TIME PRODUCTION flexibility requires the understanding of the elements in the manufacturing process and understanding elements in the process that restrict flexibility and improving on these areas. The unique feature of Just-In-Time is the modification from between pull and push systems. The main idea behind these approaches is that "work should not be pushed on to the next worker until that worker is ready for it." (Hauser, J.R.) As a result, manufacturing flexibility requires production managers to consider the some important factors, such as supplier lead time, production process time, process setup time and so forth. (6) Keep in touch between customers and suppliers For factory main commitment to achieving the internal structures, both customer and supplier are also playing a vital role to support JIT manufacturing. Because it is the primary requirement for developing the JIT system, each other can establish trust and honest between the supplier and the customer which is a must, since every Just-in-Time operation depends on it. Supposed, finally, it leads to failure to keep the commitments each other. Finally, it will be result to a serious form of breakdown manufacturing systems. Therefore, we should pay attention to this kind of serious call. Never be ignorant of this commitment. If we can make use of Just-In-Time (manufacturing approaches), it, eventually, will attain those goal, which are the fundamental conceptof producing productonly as needed or on demand. Page 58
  59. 59. JUST IN TIME PRODUCTION UNIT – 6 KANBANJUST-IN-TIME AT TOYOTA INTRODUCTION: When we talk about Kanban Just-In-Time, you maybe have a question which company set a very good example to fulfill this approach. The answer is Japanese company ------Toyota. Not only did Toyota take advantage of Kanban Just-In-Time, but it also get a very good benefit to operate its company. Kanban just-In-Time helps companies solving many Manufacturing problems. Kanban derives it name from the manufacturing systems and processes implemented at Toyota Motor Manufacturing that are so effective at producing at low cost, high quality, and short cycle times. As a consequence, these systems are highly flexible and responsive to customer requirements. Toyota capabilities are listed below. Kanban Just-In-Time impact on whole Toyota productionapproachas following: (a) Standardized work Manufacturing Cells Manufacturing Lines Facility Layout Technology Development Simulation of processesand systems Page 59
  60. 60. JUST IN TIME PRODUCTION (b) Quality Improvement In Process Inspection Experimental Design Process Development (c) Continuous Improvement Example: Toyota manufacturing processes route the product around the plant to various work centers where work is staged to be processed. Implementing manufacturing cells typically increases net income dramatically and reduces cycle time over 50%. The cost of design and implementation is usually recovered within the first year from inventory savings. In this paper, we present the benefits of bringing the processes to the product and discuss the value of simulation as a tool to design and predict cell performance prior to implementation; therefore, reducing financial and technical risk to the company. On September 10, 1997, Mr. Hoskins presented on "Improve Profits and Reduce Cycle Time with Manufacturing Cells and Simulation" for the National Technology University series on Kanban just-In-Time Manufacturing of this series. On October 27 - 28, 1996 Jerry Hoskins, President presented a paper titled "Developing a Lean Implementation Roadmap" at the SME Kanban Manufacturing Conference in Dearborn, Page 60
  61. 61. JUST IN TIME PRODUCTION Michigan. The intent of this paper is to provide information to companies on where to start with a Kanban implementation based on where one is currently manufacturing operation. His theory help our many manufactures implement all the elements of Kanban Manufacturing directed at elimination of manufacturing waste as defined by the Toyota Production System. These systems are more flexible, responsive, and profitable than traditional manufacturing systems. And, its theory also help our many participate determine where best to start with a Kanban implementation which usually involves an assessment of current operations. Once plan is developed we design the system to be implemented which may involve layout, cells, JIT, process technology, and process simulation. Conclusion: To sum up, we should make fully use of Kanban in order to improve the performance of a production line which is under controlled by Kanban. Generally speaking, Kanban is combined with base stock or immediately improvement to create a hybrid production control system. Simulation results based on a Toyota factory show that this policy meets throughput targets with significantly lower inventories than Kanban alone. As a result, Toyota research considers a line production system which purchases raw materials from a supplier, processes them into finished products and delivers them to a buyer just in time. This study focuses on finding the optimal number of raw material orders, finished goods deliveries and Kanbans between work stations for a time-proportionate demand of finished goods. Page 61
  62. 62. JUST IN TIME PRODUCTION Unit – 7 JUST IN TIME IN FORD FORD KA IN JUST IN TIME Production of Ford latest small car, the Ford KA has been a dramatic improvement compared to Ford previous product, Fiesta (Kochan, 1997). This is a real example of successful JIT implementation with all its outsourcing strategies. The production target of 1,100 KA cars per day has been reached only within 8 weeks since the launch date, compared to 15 weeks required for Fiesta. Ford found that the initial bottleneck was caused by material handling, assembly time and inbound logistic. Some of the components in Fiesta are supplied by various suppliers and these components had to be made, loaded in the container and scheduled for delivery before finally delivered by trucks. This common process is found to be inefficient as every part has to be continuously handled by human and this causes big risks of damages, misplaced and imperfection in quality, especially for cosmetically sensitive and fragile parts such as instrument consoles, electrical wiring and airbags. With the new developed JIT system supported with sophisticated aerial tunnels connecting Ford with its suppliers, production lead times can be minimised, product quality can be improved, responsiveness towards customer demands can me boosted and the most important thing is inventory, space requirements, handling and transportation cost can be dramatically reduced (Kochan, 1997). Ford is now connected with more than 50 suppliers in Valencia with specifically designed aerial tunnels. These Page 62
  63. 63. JUST IN TIME PRODUCTION tunnels are also very useful to transport bulky and heavy items such as seats and fuel tank. The brain of this amazing system is DAD (direct automated delivery) which will integrate the whole processes virtually as one extended manufacturing warehouse. DAD will enable a smooth manufacturing process by applying Ford scheduling system so that all the supplied components being delivered right on time they are needed. In addition, DAD and its tunnels enable the integration of manufacturing equipment so that the component being delivered can be immediately installed with the main body or other components in Ford factory. Summary of Ford Valencia manufacturing system prior JIT implementation: Minimum of 15 weeks to reach full productioncapacity Required at least 3,000 parts to be assembled for each car Very small outsourcing involve for car components All parts from suppliers are delivered on trucks Stockmust be kept at certain level to assure the continuity of production Parts are often damaged during packaging, handling or delivery Spent over $6 million for inefficient delivery system (250+ trucks per day) 80 per cent automation in overall Manual seats and battery placement and this may cause injury for employee Page 63
  64. 64. JUST IN TIME PRODUCTION In a dynamic market trends, pre-JIT system clearly is not responsive enough as an answer. There are minor inefficiencies throughout the system which accumulate into serious problem that may cause Ford being less competitive in the market. Improvement Process analysis The main objectives of JIT are obtaining low-cost high quality products and on-time production as well as eliminating waste and stagnant stock (Svensson, 2001). Even though most of JIT implementation has similar aim and purposes, the strategies involved may differ from industry to industry or company to company. Ford has smartly chosen the right methods and strategies by reducing the barriers in relation with its suppliers. Through JIT, Ford is achieving the highest efficiency in car manufacturing industry. Its plant in Valencia has become the standard and being adopted in its other plants in many other countries. Apart from its tangible benefits such as saving on transport costs, stock/inventory costs, quicker manufacturing process and minimised risk/wastage, JIT will also bring immediate intangible benefits such as improved customer satisfaction through immediate responses and shorter timeframe to respond towards market trends. Improvements being achievedthrough JIT implementation: Only 8 weeks required to reach full productioncapacity Page 64
  65. 65. JUST IN TIME PRODUCTION Only 1,200 parts need to be assembled, the rest have been done by its suppliers All the outsource-viable productionparts are outsourced Automatic delivery system and aerial tunnels are developed to minimise transport There is barely any stockrequired as most parts are made to order The whole manufacturing process including the suppliers are working as one system The need of conventional truck delivery is minimum 98 per cent automation Seats and battery placement are being done by automated high- precision machines There is not enough detail to measure the benefit of JIT implementation against the pre-JIT system, however from rough analysis Ford will gain the benefit immediately and get the investment back in virtually no time. JIT cost/benefitanalysis for Ford Valencia COSTS BENEFITS Extending outsourcing (losing Speed-up production process 8 control) weeks $500 million pilot plan and Smaller number or manufacturing analysis parts Concentrating on core business Page 65
  66. 66. JUST IN TIME PRODUCTION functions 25% shorter time production time needed Accuracy of production on plan Building aerial tunnels Less handling = less damages / Setup Direct Automated Delivery costs DAD Less conventional transport $16 million delivery system dependent Time saving Manufacturing seamless integration Further interest from more suppliers Saving $6+ million per year on transport Conclusion In this paper, we examined the implementation of Just-In-Time methodology in Ford for its latest small car KA; possibly one of the most interesting manufacturing revolutions where companies involved in the production are integrated not only in their business processes moreover in their physical plants. JIT has shown it success to produce the best quality product within the shortest time frame with minimum/no wastage and cost-effective to all parties. Careful productionplanning, cost-benefit analysis, adequate Page 66
  67. 67. JUST IN TIME PRODUCTION outsourcing plans and customer orientation are being praises as the key success factors ofthis amazing Just-In-Time concept. GeneralMotors An example of the use of JIT in General Motors is given below. General Motors (GM) in the USA has (approximately) 1700 suppliers who ship to 31 assembly plants scattered throughout the continental USA. These shipments total about 30 million metric tons per day and GM spends about 1,000 million dollars a year in transport costs on these shipments (1990 figures). JIT implies frequent, small, shipments. When GM moved to JIT there were simply too many (lightly loaded) trucks attempting to deliver to each assembly plant. GM's solution to this problem was to introduce consolidation centres at which full truckloads were consolidated from supplier deliveries. This obviously involved deciding how many consolidation centres to have, where they should be, their size (capacity) and which suppliers should ship to which consolidation centres (suppliers can also still ship direct to assembly plants). As of 1990 some 20% by weight of shipments go through consolidation centres and about 98% of suppliers ship at least one item through a consolidation centre. All this has been achieved without sacrificing the benefits of JIT. Page 67
  68. 68. JUST IN TIME PRODUCTION 1. Uniit – 7 JIT and IBS AN OVERVIEW OF IBS 7.1 JIT and IBS The term „Just-In-Time‟ (JIT), used for instance to describe the delivery of materials to a construction site, suggests that materials will be brought to their location for final installation and be installed immediately upon arrival without incurring any delay due to storage in a laydown or staging area. JIT is a conceptdeveloped by the Japanese who created the Toyota Production System, later translated into English as the lean production system. The ultimate objective of JIT productionis to supply the right materials at the right time and in the right amount at every step in the process. Thus, IBS is one example of JIT in construction. Rahman and Omar (2006) defined IBS as a construction system that is built using pre-fabricated components. The manufacturing of the components is systematically done using machine, formworks and other forms of mechanical equipment. IBS is defined as products, systems and techniques used in making construction less labour-oriented, faster as well as quality controlled. It generally involves prefabricated products, factory manufactured elements that transported to the construction sites and erected. (Shaari, Bulletin Ingénieur, 2003) According to Abraham Warszawski (1999), IBS is defined as a set of element or component which is inter-related towards helping the implementation of Page 68
  69. 69. JUST IN TIME PRODUCTION construction works activities. He also expounded that an industrialisation process is an investment in equipment, facilities, and technology with the objective of maximising production output, minimising labour resource, and improving quality while a building system is defined as a set of interconnected element that joint together to enable the designated performance of a building. 7.2 Classification of IBS According to Badir- Razali, generally, there are four types of building systems currently available in Malaysia‟s building system classification (Badir et al. 1998), namely conventional, cast in-situ, prefabricated and composite building systems. Each building system is represented by its respective construction method which is further characterised by its construction technology, functional and geometrical configuration. Fig. 3 : Type of building system in Malaysia Nonetheless, according to CIDB (2003), the structural aspects of IBS of the systems, divided into five major types as follows: 1. Precast Concrete Framing, Panel and Box Systems Precast columns, beams, slabs, 3-D components (balconies, staircases, toilets, lift chambers), permanent concrete formwork, etc; Page 69
  70. 70. JUST IN TIME PRODUCTION Precast concrete wall 2. SteelFormwork Systems Tunnel forms, beams and columns molding forms, permanent steel formworks (metal decks, etc; Steel formwork system 3. SteelFraming Systems Steel beams and columns, portal frames, roof trusses, etc; Page 70
  71. 71. JUST IN TIME PRODUCTION Steel roof trusses 4. Prefabricated Timber Framing Systems Timber frames, roof trusses, etc; Prefabricated timber framing system for a double storey house 5. Block Work Systems Interlocking concrete masonry units (CMU), lightweight concrete blocks, etc. Page 71
  72. 72. JUST IN TIME PRODUCTION Lightweight concrete blocks are used for wall construction The pre-cast concrete components are among the most common prefabricated elements that are available both locally and abroad. The pre-cast concrete elements are concrete products that are manufactured and cured in a plant environment and then transported to a job site for installation. The elements are columns, beams, slabs, walls, 3-D elements (balconies, staircase, toilets, and lift chambers), permanent concrete formwork and etc. The steel formwork is prefabricated in the factory and then installed on site. However the steel reinforcement and services conduit are installed on site before the steel formwork are installed. The installation of this formwork is easy by using simple bracing system. Then concrete is poured into the formwork and after seven days, the formwork can be removed and there is some system whereby the formwork served as a part of the structure itself after concreting. The steel formwork systems are used in tunnel forms, beams, column moulding forms and permanent steel formworks. The elements of steel framing system are rolled into the specific sizes and then the elements are fabricated that involves cutting, drilling, shot blasting, welding and painting. Fabricated elements are sent to the Page 72
  73. 73. JUST IN TIME PRODUCTION construction site to be then erected whereby welding and the tightening of bolts at joints are conducted. The elements include steel beams and columns, portal frames and roof trusses the prefabricated timber framing system is normally used in the conventional roof truss and timber frames. The timber is prefabricated by joining the members of the truss by using steel plate. It is important that all members are treated with the anti pest chemical. Then, the installation is done on site by connecting the prefabricated roof truss to the reinforcement of the roofbeams. The elements of block work system include interlocking concrete masonry units (CMU) and lightweight concrete blocks. The elements are fabricated and cured in the factory. The elements are normally used as bricks in structures and interlocking concrete block pavement. 7.3 Value Stream Mapping Koskela (1992) pointed out that architects, engineers, and construction practitioners have for the longest time focused on conversion activities and overlooked issues of flow. Flow is important because work or materials that do not flow sit idle in inventory, tying up money (including the procurement costof ingredients plus labor and machine time to bring them to the stage of completion they are in) as well as space. They stand the risk of being damaged or becoming obsolete due to design changes or market competition. Inventory means productwaits: its cycle time increases, that is, it takes longer for the productto traverse all production steps it needs to go Page 73
  74. 74. JUST IN TIME PRODUCTION through before reaching its customer. As a result, project durations are larger than they would have been had flow not been inhibited. Most tools used today by practitioners who manage construction, such as those fordesign, planning, scheduling, and costing, do not acknowledge flow: they do not explicitly capture changes of resource characteristics over time. Process modeling tools for discrete event simulation are an important exception and warrant more attention by the lean construction community. Such models can incorporate input regarding individuallycharacterized components, uncertainties of numerous kinds, and sequencing rules (e.g., Tommelein 1997) and then produce output data regarding buffer sizes, cycle times, idle times, production rates, etc. The symbols commonly used to depict process models for construction, however, have yet to distinguish how processes are being managed, for instance, whether or not a JIT system has been implemented. Practitioners in manufacturing, working for Toyotaand then later for other companies „going lean‟ developed their own pictorial language to help focus attention on what matters in their transition. We borrowed such symbols from Rother and Shook (1998) and used them to map structural steel supply chains. Boxes denote value-adding processes or tasks, such as ordering raw materials, fabricating steel, and transporting shipments to a site. A triangle denotes work in progress or inventory. It represents an accumulation of product (materials or information) possibly of unlimited amount and for an indeterminate duration. An inverted triangle is an order to batch. Kanban (introduced in Figure 1) denote orders to withdraw or produce product, in order to deplete or replenish a supermarket. A supermarket, represented by , Page 74
  75. 75. JUST IN TIME PRODUCTION refers to controlled inventory in terms of how much material is kept on hand and how replenishment takes place. The FIFO symbol denotes the first-in- first out release of resources output by a task. The circular arrow denotes a physical pull of materials from a supermarket. It differs from the withdrawal kanban in that it pertains to the amount of product needed at the time of the withdrawal and not necessarily a predetermined fixed quantity. A dashed line with an arrow designates the flow of product. A solid white line is transportation of product to the customer site. A black-andwhite dotted line shows that productis pushed into inventory. Rother and Shook (1998) use these symbols for so-called “value stream mapping” where the term “value” pertains mainly to reducing work n process inventories and product cycle times. Our use of this notation stems as much from our desire to engage in mapping the structural steel supply chain as it does from our desire to test the adequacy of those symbols in representing architecture/engineering/construction processes and in capturing value. 7.4 Example Structural SteelSupply Chain for Building Construction The structural steel supply chain for building construction differs in several regards from the one for industrial construction. The building‟s frame may in fact be more complex, especially when it supports a very tall structure, so the major steel sections require extra procurement effort. The industry is also organized differently. On design-bid-build projects, a common delivery method for buildings, the owner typically hires an architectural engineering (AE) firm, which in turn hires a structural designer. Page 75
  76. 76. JUST IN TIME PRODUCTION When the AE has prepared all bid documents, the project is put out for bid. A general contractor (GC) is then selected. The GC subcontracts the steel work to the fabricator, who in turn subcontracts field installation work to a structural steel erector. The latter essentially provides the crane and skilled labor, whereas the former is responsible for acquiring, fabricating, and shipping the materials to site in the sequence needed for erection. The fabricator may also subcontract the structural steel detailing work. Fabricator and erector work as a tightly knit team. The GC will meet with them during bid preparation. They must assess the project site constraints to position the erector‟s crane, as it determines not only the steel erection sequence but also the layout of other temporary facilities and thus the flow of many construction resources. This sequencing in turn drives the fabrication schedule. It must of course meet the GC‟s master schedule but must also be efficient4 the fabricator who subcontracts the erection work has an incentive to minimize that work and does so by thoroughly planning the sequencing and site delivery of steel pieces in the order they will be needed. As for logistics, a big difference between the industrial and the building sectoris that more often than not building space is very tight, especially on projects located in an urban environment. Industrial projects tend to be more remotely sited. Materials deliveries to building projects accordingly are constrained by traffic patterns and transportation permit requirements. Trucks parked in the street along the edge of a site ready to off-load steel may not remain there for any extended time. When deliveries take place, the crane gets dedicated to off-loading and moving pieces to a staging area, namely the highest floor with decking, from where steel will subsequently Page 76
  77. 77. JUST IN TIME PRODUCTION be picked up and moved into final position. Only in exceptional cases will steel be erected directly off the flatbed truck. This saves extra handling steps but can be done only when it is acceptable to tie up the truck longer and provided the steel has been loaded in inverse order needed. Differences in value stream maps between industrial and building construction are therefore expected at least near the end of the chain, especially in the way delivery to the project site is organized. If JIT is practiced in industry today one possible way is depicted in figure 3. Figure 3 includes two supermarkets, which illustrate the presence of pull mechanisms. The steel mill (IV) still takes special orders. The resulting output is stored in a generic buffer (triangle). The buffer is not specifically controlled in size but it is filled only based on firm customer orders. That product is sold so it is unlikely to become obsolete (waste). The mill also produces run-of-the-mill productin anticipation of customer orders. As was the case in figure 2, this is denoted by a supermarket where quantity-on-hand will not exceed a threshold value and gets replenished at appropriate times. A second supermarket is shown in figure 3 to handle output from fabrication Page 77
  78. 78. JUST IN TIME PRODUCTION (III). For instance, the fabricator of a 20-story building could complete the steel for stories 1 through 3, then await orders from the construction site (withdrawal kanban) to ship them steel for story 1 before starting work on story 4 (production kanban). A smaller inventory buffer may be well suited provided fabrication can keep pace with erection. Since there is virtually no storage space on site, no buffer of materials is shown preceding ERECT [ion] (VI). The creation of large buffers either at the contractor‟s or fabricator‟s site is contrary to JIT production system design. As the word JIT suggests, materials must be fabricated or delivered on time, which means not too late but not too early either. This implies that variability regarding timing, actual pieces released, as well as quality must be limited and controlled. In a true JIT system, this timeliness pertains not only to a single hand- off between two production steps, but rather, one aims at achieving JIT flow between all production steps. In the idealistic extreme, this means having no buffers at all! In practice, this means buffers must be determined trategically. Admittedly, doing so is not an easy task, especially in a production system of complex products that involve several organizations as is the case for structural steel. But this is what lean Because of construction‟s one-of-a- kind project nature, the structural steel supply chain differs from manufacturing systems for more standardized products, which can be likened to the Toyota Production System. The manufacturing symbols used here for mapping the steel supply chain provide no room for defining individually-characterized resources or detailed sequencing rules. While their ability to show processingdurations and delay times has not Page 78
  79. 79. JUST IN TIME PRODUCTION been used in this paper (we expect to do so in future work), we doubt that using only deterministic values will suffice. Some representation of uncertainty will have to be incorporated in the maps. The current practice of buffering stems from the desire to optimize labor and machine utilization and from admitting that uncertainties exist in the supply chain. Many uncertainties are the result of variability, which could be understood better if at least it were measured and explicitly accounted for. This is not the current practice in construction. Uncertainties and variability should not be taken for granted. They should be acknowledged, managed, and minimized to a reasonable degree. In fact, one technique to identify them is to reduce buffer sizes in-between various production steps in order to see and learn the extent to which they are needed. Process improvement efforts can then focus on those steps where the impact on throughput of the system as a whole will be most significant. Example improvements in construction are those that aim at reducing uncertainty, as is done for instance through reliable planning by the Last Planner (Ballard and Howell 1998), work methods design, and work structuring (Ballard et al. 1999). Page 79
  80. 80. JUST IN TIME PRODUCTION Unit – 8 CASE STUDY JUST IN TIME CASE STUDY – 1 JUST IN TIME A case study pertains contractors who bids on projects from County of San Francisco, the Public Utilities Commission as well as the Water Department. Most of these jobs include concrete of a well-defining and widely-used kind through quantities usually small in comparison to what is needed for residential or office building projects. Concrete is a very common construction material. Projects ranging from a single family home to a high- rise building all may need concrete for their foundation, slabs, columns, beams, walls, etc. to be constructed. In urban settings, the task of delivering concrete moreoften than not has been delegated to ready-mix batch plants and contractors has to rely on the timing and reliability of their service. Although this set-up puts the contractor‟s project somewhat at the mercy of the batch plant, most batch plants perform at their very best to meet their customers‟ schedules. On-time delivery is part of the product they sell. The interplay between contractors and batch plants is interesting. On one hand, the contractor must order a large enough quantity, sufficiently long ahead of time to ensure available batch plant capacity and timely delivery service in order to maximize productivity of their placing crew. On the other hand, the batch plant tries to time its deliveries so that all projects are served according to the contractors‟needs and the plant as well Page 80
  81. 81. JUST IN TIME PRODUCTION as the trucks and drivers have little idle time. This balancing act between the two parties is not always achieved due to the nature of concrete and the nature of the production systems being used. In addition to contractors and batch plants, this balancing act also involves the suppliers of raw materials to the batch plant, crews on site that erect formwork and tie reinforcing basin preparation for concrete placement, as well as others. Although the interdependence of all these parties typically results in uncertainties rippling through the supply chain, the focus of this paper is limited to the downstream-, namely the contractor vs. batch plant relationship. The batch plant could, in order to level its load, vary its unit price of ready- mix concrete based on the time and day of the week at which concrete is to be delivered. This would illustrate a market mechanism at work, however, we are not aware of such differential pricing being advertised in the industry today. As one can imagine the city imposes limits on working hours in order to avoid congestion during peak traffic times, excessively long closure of a road for vehicular or of a sidewalk for pedestrian traffic, undue inconvenience of road users and complaints about noise from citizens or area residents. In addition, contractors must obtain a work permit from the city in order to work at a specific location. Page 81
  82. 82. JUST IN TIME PRODUCTION This contractor s main concern has been tardiness of deliveries made by batch plants. Because most of these jobs have restricted working hours, punctual delivery is of paramount importance. However because each order is small ( a few cubic yard at a time),this Contractor cannot get any plants attention. Went plant truck arrive late to his jobs, he loses that time for the concrete to set and may therefore not be able to open the site to traffic when needed. To achieve on-time performance this contractor has acquired a fleet of small revolving-drum trucks as well as dump trucks (used to fill „potholes with concrete) to meet his projects concrete transportation needs, The latter trucks are not so good as the former for transporting concrete as the mix may segregate. This contractor has its trucks pull into any batch- plant during operating hours and order concrete. The contractor-owned trucks simply join the line of plant trucks waiting to be loaded. The driver then goes to the operator‟s walk-up window and orders the needed mix design and quantity. The batch plant fills these trucks in the same way as it fills its own in a first-in-first-out manner. The contractor then gets billed on a regular basis for exact amount loaded. At the site, the driver works with the crew in placing concrete. Providing one‟s own ready-mix trucks does not mean that the unit price of concrete is any cheaper but it overcomes many scheduling hassles. No advance order needs to be placed to reserve plant capacity as only a few cubic yards of commodity mix are needed each time. Page 82
  83. 83. JUST IN TIME PRODUCTION By taking controlover the transportations process and the contractors crew can work at their own paceand not have to fret over when concrete would arrive. This kanban system work well especially on these projects where timing of need is not dictated exclusively be the contractor, but as is the case here also to a significant extent by the owne.This contractors has its trucks pull into any batch-plant during operating hours and order concrete. The contractor- owned truck simply join the line of plant trucks waiting to be loaded. The driver then goes to the operators walk-up window and orders the needed mix design and quantity. The batch plant fills these trucks in the same way as it fills its own, in a firstin- first –out manner. The contractor then gets billed on a regular basis for exact amount loaded. At the site the driver works with the crew in placing concrete. Providing ones own ready mix trucks does not mean that the unit price of concrete is any cheaper but it overcomes many scheduling hassle. No advance order needs to be placed to reserve plant capacity as only a few cubic yards of commodity mix are needed each time. By taking control over the transportation process and using trucks as kanban each time concrete is needed, the contractor‟s crew can work at their own pace and not have to fret over when concrete would arrive. This kanban system works well especially on these projects where timing of need is not dictated exclusively by the contractor, but as is the case here, also to a significant extent by the owner. Page 83
  84. 84. JUST IN TIME PRODUCTION This contractorthus controls what is otherwise a system variable controlled by an upstream supplier, namely the batch plant‟s delivery of concrete. As a result, the contractor can better schedule his work and be more reliable in making project due dates. Should one batch plant not be able to serve his needs, he can easily go elsewhere. The contractors pays for this ability. He now needs to have capital tied up in trucks and is responsible for hiring and training drivers. Because he has a fairly steady need for concretefrom one project to the next(contrary to many other who need concrete only for one phase of their work.)he can keep them gainfully employed. Ready-mix concrete is a prototypical of a JIT production system in construction. Two practices regarding ready-mix batching and delivery were described in this paper and depicted using value stream mapping symbols. Each case highlighted the presence of buffers of information, materials, and time as well as production order and withdrawal mechanisms positioned at strategic locations to meet specific system requirements, as defined by the nature of the contractor‟s work. One alternative is favored over the other depending on the amount of control the contractor wants in terms of on-time delivery of concrete and the variability in the contractor‟s demand for concrete project after project. While these practices clearly exemplify JIT production, the paper was limited in scope. No data was included to characterize the actual performance in terms of timeliness, buffer sizes, error rates, etc. Moreover, the paper focused on batching and delivery, which are only parts of the entire concrete productionsystem. Current practices for managing the concrete supply chain upstream in terms Page 84
  85. 85. JUST IN TIME PRODUCTION of raw materials acquisition or prerequisite work on site are not geared oward JIT production. Further investigation is therefore warranted and significant process improvements may be achieved by those working towards fully implementing a lean construction system. Case Study 2 : Fakuda Production System (FPS) The construction companies that adopted the Toyota Production System and Just in Time on a large scale in Japan are Fakuda Corporation in the field of building construction and couple of companies in the field of housing construction. Fakuda Corp. is a Niigita-based construction company having annual sales of $ 946 million (in 2003).With the objective of making construction work more efficient and reducing construction costs, the company introduced the system in construction work in 2002. In order to introduce the system the company received guidance from consultants CULMAN CO.LTD who were former employees of Toyota otor Corp. This building production system is called the Fakuda Production System ( FPS) Page 85
  86. 86. JUST IN TIME PRODUCTION The material distribution facilities were established so that materials can be delivered to the site JIT. In addition, the JIT material distribution network was set up to link the field office,branch offices, and material distribution facilities, Necessary materials are delivered to the predetermined location( Room C on Floor B at Site A,for example)in time. To visualize the JIT delivery process, the JIT delivery system board is posted to boost awareness. Time is Money among Page 86
  87. 87. JUST IN TIME PRODUCTION workers. The JIT ideal is elimination of physical buffers (materials or time)between production processes, and the achievement of one piece flow within processes, i.e. batch sizes of one.JIT was able to virtually eliminate such in-process inventories because production scheduling provided sufficiently stable coordination of flows. Construction scheduling does not provide such stabilization. Consequently, it is not appropriate to simply eliminate physical buffers without first attacking the causes of variation and uncertainty. Even though manufacturing and construction share the same ultimate objective of reducing variation and waste, their strategies for achieving that objective must be different. Materials constitute a huge proportion of the cost of construction. Materials are sometimes ordered weeks or even months ahead of requirement leading to uneconomical inventory on construction sites or contractors' warehouses. Building material inventory represents cost to procure, cost to store and insure, cost to guard against theft and cost incurred when inventory becomes obsolete. This paper presents an overview of the Just-in-Time (JIT) production system and discusses application and implementation issues for the control of material inventory in building construction. JIT ensures that suppliers deliver directly to the production floor to achieve either a reduction in inventory or zero inventory and consequently a reduction in production costs. Implementation of JIT building material management in construction has the potential to realize the same far reaching benefits experienced in manufacturing. Relevant factors to consider in JIT implementation for material inventory management in construction are implications for construction output and quantities, productionplanning, Page 87
  88. 88. JUST IN TIME PRODUCTION design planning, construction contractor and suppliers' relationships, material sourcing, and education and training. Case Study 3 The Byggelogistik project Up till now Byggelogistik has been tested on six housing schemes, the first being Sophiehaven approximately 20 miles north of Copenhagen. The project is a typical Danish social housing project comprising 100 flats in two stories blocks, erected in two phases - not a big project on an international scale (Bertelsen 1993, 1994-1, 1994-2). Contractually the project was undertaken by a general contractor and approximately 10 trade contractors. The general contractor's staff participated in the whole planning of the project. It was also from the staff of the general contactor that the provider was recruited and his job developed, as the project progressed, into being the production manager of the construction site. He planned the day-to-day operations, he provided the materials required, he coordinated the individual trade contractors' works and he followed up on the co-operation with the wholesale dealers. In order not to overreach the experiment in the first phase it was decided to restrict the logistics to a minor number of the trades. This decision caused a great deal of trouble. Those not participating were repeatedly in the way of those who were. In the second phase all trades participated and this problem was solved. Even though the methods were developed with EDP in mind the first tests were restricted to management by Page 88
  89. 89. JUST IN TIME PRODUCTION paper and pencil only. EDP was used in the usual manner in the participants' own operations but no attempt was made to use IT in the logistics. Inspired by the Toyota Production System the aim of Byggelogistik is to reduce cost by eliminating waste of all kinds. Foremost waste of materials, but also waste of labour time and transportation. In this the Byggelogistik concept is an instrument for making the whole building process more effective. The main objective is to look not only at direct transportation costs but at all costs in the building procesrelated to materials delivery. Materials are not considered delivered until the workers lay their hands on them in the exact quantity as the first step in the construction. Packing, temporary storage, on site transportation, on site losses and breakage, and low effectiveness due to badly and impedingly delivered and stored materials are all considered as belonging to the transportation costs. A Swedish study (Hammarlund 1989) has shown that approximately a third of the time used by the worker on the building site is spent procuring his materials in the widest sense, equalling about 10 percent of the total building cost. The hypothesis of Byggelogistik is that a near-optimum form of supply will increase costs only marginally, but will reduce waste of time considerably. This means that materials delivery in Byggelogistik is looked upon from the point of view of an optimum building process primarily. Byggelogistik (Bertelsen 1994-1) makes use of a two level logistics with a planning approach for the over all logistics and a JIT consumption approachfor the daily deliveries. The logistics are considered already on the Page 89
  90. 90. JUST IN TIME PRODUCTION drawing board. Materials are, where it is possible, specified as belonging to the separate building operation during the detailed design. In the planning of the operations all supplies are described in detail aiming at JIT supply once a day, comprising only materials needed until the next day, and packed for the various trades and heir individual tasks and work areas. Such assemblies of materials are named 'units'. Each type of unit is carefully specified to include all materials needed for the particular task, and form of packing as well as equipment for the delivery is detailed. Each type of unit is given a specific number for identification. Several participants in the project consider the unit the most original element in the whole concept. The idea is taken from the Swedish furniture chain Ikea who sells furniture in parts to be assembled by the customer but with all the parts – and often tools and assembly instructions in the same box. In order to manage sorting, packing and delivery a close co-operation with the wholesale dealers must be established. In Denmark 3 kinds of dealers cover all necessary materials, and their warehouses are used as store room for the building site. A few kinds of materials are Delivered directly in units packed by the manufacturer, but most materials are delivered to the warehouse to be sorted and packed in units, ready for transportation as the work progresses. In order to reduce the costs of external transportation joint deliveries are used containing all units from the dealer regardless of contractor, and to minimize internal transportation delivery of units takes place as close to the work area as possible. The dealers' drivers are considered as part of the building team in as much as the aim is to employ the same drivers to load the trucks and deliver the materials every day thereby making them familiar with the ever Page 90