This caused a quality assurance crisis, which led to a dramatic improvement in product quality. Eventually, Toyota redesigned every part of its vehicles to widen tolerances, while simultaneously implementing careful statistical controls for quality control. Toyota had to test and train parts suppliers to assure quality and delivery. In some cases, the company eliminated multiple suppliers. When a process or parts quality problem surfaced on the production line, the entire production line had to be slowed or even stopped. No inventory meant a line could not operate from in-process inventory while a production problem was fixed.
Many people in Toyota predicted that the initiative would e abandoned for this reason.
In the first week, line stops occurred almost hourly. But by the end of the first month, the rate had fallen to a few line stops per day. After six months, line stops had so little economic effect that Toyota installed an overhead pull-line, similarly a bus bell-pull, that let any worker on the line order a line stop for a process or quality problem.
Even with this, line stops fell to a few per week. The result was a factory that has been studied worldwide. It has been widely emulated, but not always with the expected results, as many firms fail to adopt the full system. 4 The just-in- time philosophy was also applied to other segments of the supply chain in several types of industries.
In the commercial sector, it meant eliminating one or all of the warehouses in the link between a factory and a retail establishment. Examples in sales, marketing, and customer service involve applying information systems and mobile hardware to deliver customer information as needed, and reducing waste by video conferencing to cut travel time.
5 Benefits Main benefits Of KIT include: Reduced setup time. Cutting setup time allows the company to reduce or eliminate inventory for “changeover” time. The tool used here is SEEM (single-minute exchange of dies). The flow of goods from warehouse to shelves improves. Small or individual piece lot sizes reduce lot delay inventories, which simplifies inventory flow and its management.
Employees with multiple skills are used more efficiently.
Having employees trained to work on different parts of the process allows companies to move workers where they are needed. Production scheduling and work hour consistency synchronized with demand. If there is no demand for a product at the time, it is not made. This saves the company money, either by not having to pay errors overtime or by having them focus on other work or participate in training.
Increased emphasis on supplier relationships. A company without inventory does not want a supply system problem that creates a part shortage. This makes supplier relationships extremely important.
Supplies come in at regular intervals throughout the production day. Supply is synchronized with production demand and the optimal amount of inventory is on hand at any time. When parts move directly from the truck to the point of assembly, the need for storage facilities is reduced.
Minimizes storage space needed. Smaller chance of inventory breaking/expiring. Waste Elimination Supports Continuous Quality and Productivity Improvement Problems Within a KIT system Just-in-time operation leaves suppliers and downstream consumers open to supply shocks and large supply or demand changes. For internal reasons, Non saw this as a feature rather than a bug.
He used an analogy of lowering the water level in a river to expose the rocks to explain how removing inventory showed where production flow was interrupted. Once barriers were exposed, they could be removed.
Since one of the main barriers was rework, lowering inventory forced each shop to improve its own quality or cause a holdup downstream. A key tool to manage this weakness is production leveling to remove these variations. Just-in-time is a means to improving performance of the system, not an end. Very low stock levels means shipments of the same part can come in several times per day.
This means Toyota is especially susceptible to flow interruption. For that reason, Toyota uses two suppliers for most assemblies.
As noted in Liker (2003), there was an exception to this rule that put the entire company at risk because of he 1997 Again fire. However, since Toyota also makes a point of maintaining high quality relations with its entire supplier network, several other suppliers immediately took up production of the Again-built parts by using existing capability and documentation. Within a raw material stream This section contains wording that promotes the subject in a subjective manner without imparting real information. Please remove or replace such wording and instead of making proclamations about a subject’s importance, use facts and attribution to demonstrate that importance.
October 2008) As doted by Liker (2003) and Woman and Jones (2003), it ultimately would be desirable to introduce synchronized flow and link KIT through the entire supply stream. However, none followed this in detail all the way back through the processes to the raw materials. With present technology, for example, an ear of corn cannot be grown and delivered to order. The same is true of most raw materials, which must be discovered and/or grown through natural processes that require time and must account for natural variability in weather and discovery. The part of this currently viewed as impossible is the honeymooners part of flow and the linked part of KIT.
It is for the reasons stated raw materials companies decouple their supply chain from their clients’ demand by carrying large ‘finished goods’ stocks.
Both flow and KIT can be implemented in isolated process islands within the raw materials stream. The challenge becomes to achieve that isolation by some means other than carrying huge stocks, as most do today. Because of this, almost all value chains are split into a part made-to-forecast and a part that could, by using KIT, become make-to-order. Historically, the make-to-order part has often men within the retailer portion of the value chain.
Toyota took Piggy Wiggle’s supermarket replenishment system and drove it at least halfway through their automobile factories. Their challenge today is to drive it all the way back to their goods-inwards dock.
Of course, the mining of iron and making of steel is still not connected to an order for a particular car. Recognizing KIT could be driven back up the supply chain has reaped Toyota huge benefits and a dominant position in the auto industry.
Note that the advent of the mini mill stalemating facility is starting to challenge how far back KIT can be implemented, as the electric arc furnaces at the heart of many mini-mills can be started and stopped quickly, and steel grades changed rapidly. Oil It has been frequently charged that the oil industry has been influenced by The argument is presented as follows: The number of refineries in the United States has fallen from 279 in 1 975 to 205 in 1990 and further to 149 in 2004.
As a result, the industry is susceptible to supply shocks, which cause spikes in prices and subsequently reduction in domestic manufacturing output. The effects of hurricanes Strain and Rata re given as an example: in 2005, Strain caused the shutdown of 9 refineries in Louisiana and 6 more in Mississippi, and a large number of oil production and transfer facilities, resulting in the loss of 20% of the US domestic refinery output. Rata subsequently shut down refineries in Texas, further reducing output. The GAP figures for the third and fourth quarters showed a slowdown from 3.
5% to 1. 2% growth. Similar arguments were made in earlier crises.
Beside the obvious point that prices went up because of the reduction in supply and not for anything to do with the practice Of KIT, KIT students and even oil and gas industry analysts question whether KIT as it has been developed by Non, Goldwater, and others is used by the petroleum industry. Companies routinely shut down facilities for reasons other than the application of KIT.
One of those reasons may be economic rationalization: when the benefits of operating no longer o;sigh the costs, including opportunity costs, the plant may be economically inefficient. KIT has never subscribed to such considerations directly; following Waddle and Boded (2005), this ROI-based thinking conforms more to Brown-style accounting and Sloan management. Further, and more significantly, KIT calls for a reduction in inventory capacity, not production capacity.
From 1 975 to 1 990 to 2005, the annual average stocks of gasoline have fallen by only 8.
5% from 228,331 to 222,903 bulb to 208,986 (Energy Information Administration data). Stocks fluctuate seasonally by as much as 20,000 bulb. During the 2005 hurricane season, stocks never fell below 1 bulb (30,800,000 mm), while the low for the period 1 990 to 2006 was bulb mm) in 1997. This shows that while industry storage capacity has decreased in the last 30 years, it hasn’t been drastically reduced as KIT practitioners would prefer.
Finally, as shown in a pair of articles in the “Oil & Gas Journal”, KIT does not seem to have been a goal of the industry.
In Wisecrack and Cantor (1996), the authors point out that KIT would require a significant change in the supplier/refiner relationship, but the changes in inventories in the oil industry exhibit none of those tendencies. Specifically, the relationships remain cost- driven among many competing suppliers rather than quality-based among a select few long-term relationships. They find that a large part of the shift came about because of the availability of short-haul cruder from Latin America. In the follow-up editorial, the Oil & Gas Journal claimed that “casually adopting popular business terminology that doesn’t apply” had provided a “rhetorical bogey” to industry critics. Confessing that they had been as guilty as other media sources, they confirmed that “It also happens not to be accurate.
Business models following similar approach Vendor-managed inventory Vendor-managed inventory (VIM) employs the same principles as those Of KIT inventory, however, the responsibilities of managing inventory is placed with the vendor in a vendor/customer relationship. Whether it’s a manufacturer managing inventory for a distributor, or a distributor managing inventory for their customers, the management role goes to the vendor. An advantage of this business model is that the vendor may have industry experience and expertise that lets them better anticipate demand and inventory needs. The inventory planning and controlling is facilitated by applications that allow vendors access to their customer’s inventory data.
Another advantage to the customer is that inventory cost usually remains on the vendor’s books until used by the customer, even if parts or materials are on the customer’s site.
Customer-managed inventory With customer-managed inventory (COM), the customer, as opposed to the vendor in a VIM model, has responsibility for all inventory decisions.