Each of these cases must be examined on its own merits and on a continuing
basis to determine the optimum solution (Slack). Just-in-time requires flow of
material in the exact quantity required and at the exact time; the key word is
exact. Regardless of the specific method used to achieve this exact material
flow, there must be advance planning to ensure that material is available when
needed. Material requirements’ planning (MRP) is the best technique to
accomplish this (Naylor). MRP provides the basic logic for determining not only
future material requirements but also manufacturing capacity requirements.
State-of-the-art MRP-II computer systems provide the user with on-line,
real-time simulation capabilities to explore a broad horizon of what if?
situations. While just-in-time strives for the smallest economical lot sizes,
there may be valid reasons for acquiring larger inventories of certain items.
MRP with its look ahead capability allows companies to make sound decisions for
purchasing, as well as manufacturing resources planning. The latter includes
manpower, plant facilities, equipment, and tooling. This powerful technique
provides essential information, which helps suppliers plan their production for
just-in-time delivery (Harrison).
The basic steps required to implement a
just-in-time production system are as follows: - Review segmentation of the
inventory by item type; ensure that all items have been properly classified. -
Ensure that the unit cost is stated for each item - Establish the anticipated
annual demand quantity for each item. - Establish blanket purchase orders,
purchasing agreement, or contract for selected items with qualified vendors. -
Authorize individuals in production to release vendor delivery quantities
against blanket purchase orders, purchasing agreement, or contract. - Establish
inventory policy code for each item based on the method of inventory control and
the method of transaction reporting and recording. - Review and establish
minimum economical order quantities and safety stocks required by just-in-time
production. - Measure inventory performance to determine effectiveness of
just-in-time production and inventory management (Naylor). Just-in-time will
change our conventional thinking concerning the management of inventories and
streamline our methods for inventory control. Proper selection and
implementation of these methods will yield substantial benefits by improving
customer service, shortening delivery lead times, and significantly reducing
inventory investment. It does not, however, eliminate the need for sound
inventory planning.
Bibliography
Slack, Chambers, Harland, Harrison and Johnston, Operations Management, New
York: Pitman, 1995 Naylor J, Operations Management, New York: Pitman, 1996
Harrison A, Just-in-time Manufacturing in Perspective, New York: Prentice Hall,
1992
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