JIT delivery PDF

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Summary

Notes for just in time delivery....

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JUST IN TIME (JIT) DELIVERY - Reducing cost of inventory control and control of purchase and supplies for production o Without running the risk that bottleneck will be created in the production flow, JIT was introduced - Safety stock is eliminated and inventory level is aimed at lowering to the absolute minimum Delivery of materials need to be ensured for the purpose of fulfilling aims and purpose - If they are not delivered production cannot go on Placing order and actual supplies needs to be versatile – coordination and close contact with supplier and buyer is crucial - On-time delivery should not be the only criteria – maintenance of quality of materials and components is needed to be kept within reasonable limits (as stated in the case) - Long term contracts are needed with suppliers Coordination and synchronisation (synergy with supplier and buyer) starting form placing demand, receipt of supplies, issues being made to production are required for JIT delivery. - JIT purchase is involved in JIT inventory – purchase should be made for the purpose of ensuring delivery just before use o There are no inventories on hand for the purposes of JIT ADVANTAGES: - Achievement of drastic reduction in investment of inventories - Substantially reduction of total cost of operation - Maintenance with the help of quality control system, quality of materials and components - Storage costs are saved - Loss from evaporation, deterioration, obsolation, sublimation, pilferage, theft can be brought to a minimum - Reduction of cost inventory - Prices of materials and components can be kept within limit – with the help of longterm contracts - If guarantees are given by suppliers, then production flow can be maintained uninterrupted DISADVANTAGES: - Stoppage for production will result in break in flow of supplies for a very short time - Production may be spoiled or stopped due to un-intended wrong supply - If reliability of suppliers is in question, then the concept cannot be applied in practice - At every moment, requirement is to be carefully assessed and ordered for continuous vigilance on operations - In off-seasons, materials produced seasonally may be scarce in the market, rendering JIT delivery regularly to be difficult on the part of suppliers.

Demand-pull basis – Keynesian economics that when aggregate demand in economy strongly outweighs the aggregate supply, then prices will go up - IN THIS CASE: Pull type supply chain management is based on demand side – JIT and CRP (continuous replenishment program) or actual demand assigned to later processes - Push type method doesn’t make it into stock, which is based on demand forecast DEMAND “PUSH” - Make to stock – production isn’t based on actual demand (it happens anyway) DEMAND “PULL” - Make to order – production is based on actual demand PULL TYPE SUPPLY – chain management is based on JIT - Inventory is kept to a minimum - Products can be supplied with short lead times at high speed - Supply is based on operations triggered by actual demand (like an elevator – comes when you need it, idle when you don’t – even when there is only one passenger)...