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Monday, June 4, 2012

Implementation of just - in - time in a small company : a case study

of just - in - time in a small company : a case study

JIT implementation, SMEs, Case study, future research

This paper deals with the implementation of JIT in a small company in Taiwan that produces different kinds of automobile lamps such as rear combination lamps and front turn signal lamps. JIT systems havetremendous effects on all operations of a firm, including design, accounting, finance, marketing, distribution, etc., and thus are of interest to all levels of a firm's management Realizing the success of JIT, large-scale manufacturing companies all over the world have implemented. JIT in their production systems with the objective of improving their competitiveness. Nevertheless. Small and medium enterprises (SMEs) play a major role in the national economy. JIT has not received serious attention from SMEs. Realising the importance of improving the performance of SMEs, a case study is presented to motivate practitioners to implement JIT in their SMEs. In addition, future research directions in the areas of implementing JIT in SMEs are presen ted.


(Since the excellent work by Schonberger (1982) on Japanese manufacturing techniques and Monden (1983) on the Toyota production system, tremendous progress has been made on the methods and techniques related to the applications of the JIT philosophy. A number of articles have been published on the practice, JIT, however, most of them deal with large-scale industries. However, SMEs play a significant role in a national economy. Therefore, there is a need to help these companies to improve their competitiveness and hence to improve the national economy. Realizing the importance of SMEs and their performance, various productivity and quality improvement programmes have been implemented in the past. However, JIT has not requires new investments of capital in labour, materials, and equipments to implement JIT. However, experience shows that JIT requires change in the management various production operations, but not necessarily investment of capital resources such as automatio n, new equipment and workforce. In order to motivate other SMEs, a case study conduted in a mall company in Taiwan is presented. Some of the
observations from the case study may be useful to practitioners for motivating their efforts in implementing JIT in SMEs.

Background to the research :- There is no standard to implement JIt other than continuous progress towards the ultimate objective of delivery as wanted, with a smoothly synchronized continous flwo (purchasing and production) keyed to final demand, with perfect quality of incoming materials, goods in -process, and finished products. JIT is a concept that, for the most part, is not culturally based, the most notable aspect of the suggestions is that it is clearly possible to implement JIT in an automated facility that
utilizes a relatively small amount of direct labour in its processing operation.

(1993) presented a case studey and results are an implementation in a JIT environment in the electrical switchgear industry. The competitive pressures being placed on Western manufacturing organizations require new restructuring models, which take account of
value-adding capability investment. Time based manufacturing strategies offer a framework to develop the total input/output chain in solution of selling price. This method can be used successfully in batch manufacturing companies to reduce the throughput time and
conversion cost � the method is non capital intensive and involves the total company and people's commitment The ideal goal of a JIT system is to have the entire production of
business cycle operate without interruption and without non-value-added time costs. JIT is much more than just another system of methods of improvement. It is philosophy that can apply to nay company, regardless of whether the company is a manufacturer,
di stributor, or virtually any types of business, including a service enterprise. One secret to a successful JIT operation is in ensuring that everyone is involved. JIT should be viewed broadly as a procedure for helping companies to manage and reduce total processing times. There are five steps or phases involved in the implementation of JIT into a company's operations:

(i) cleaning up the operation;

(ii) effecting a company-wide culture change;

(iii) preparing logistics for JIT;

(iv) implementing the programme; and

(v) reviewing and monitoring the system after implementation (Tucker and Davies) 1993).

case study :-
The company (Daioku Company) considered for case study is located in Tainan, Taiwan, The major products of the company include different kinds of automobile
lamps. Since the world market of lamps is moving towards high variety and low quantity, and both the life cycle of the lamps and the lead time available from customers' orders to the delivery of lamps are getting shorter, top managers of Daioku Co. have been under great pressure to improve the overall competitive position of the firm by improving quality and productivity. In 1990, the executive manager at Daioku started promoting a JIT system, with the hope that the inventory level can be reduced and productivity can be improved This
will help Daioku to become more competitive in offering internationally acceptable quality lamps at competitive prices.

The process of implementation:-

One of the major objectives in implementing a JIT system is to achieve a common goal of the whole company. The main thing to start with in implementing JIT in any company is to improve the level of education and training, and to encourage suitable incentive schemes and promotions, In Daioku Co. three middlelevel managers were selected to participate in a Total Productivity System seminar organized by K- Company. With this background, the managers taught the whole company what they have learnt from K-Company. With
this background, the managers taught the whole company what they have learnt from K-Company. A committee consisting of the manager of each department was also established to plan and implement the JIT system so that they could discuss and learn from what was going on and could plan for the future programme.

The basis of JIT is 5S:

(i) Sein: classify materials on the shop floor based on its usefulness;

(ii) Secton: place the value-added materials in handy positions,

(iii) Seze: Clean up the non- value-added materials;

(iv) Seiketsu: maintain the factory in good looking shape;and

(v) Shitsuke. Let the employees have good habits and follow the rules,

Thus is the most important task to start with although it has been ignored by most academic researchers. With 5S activities, the working environment in Daioku was cleaned up to improve the safety, quality and productivity. Since beginning to implement the JIT system, Daioku continuously improved the quality of education and training, and activities based of on 5S activities. In 1991, a �red card war' was proposed. The managers of each department form an improvement committee to look after the implementation of JIT in different areas of the company, especially the shop floor. All unnecessary materials are posted with �red card' and deposited for further rework. Thus, all materials have been identified in terms
of their names, places, quantities, etc. The concept of visual management, that is management simply by eye sight has been strongly motivated and encouraged. Activities related to 5S have become routine to everyone in the company in Daioku. With this, the Daioku company has laid down a solid foundation for the JIT system so that the production system can be operated smoothly to improve safety, quality and productivity over the years.

The emphasis on TQM activities has also played an important role in implementing the JIT system. With quality cost control activities, teamwork spirit and techniques to learn quality
control are highlighted. The encouragement of employee suggestion schemes has also been established to help people on the shop floor to solve their problems by themselves and giving them the motivation to continuously improve their working environment. Other activities related to the JIT system included are as follows.


Men, machines and materials are integrated efficiently Using standardization of various processes and material flow path so that the results of the implementation of JIT and
maintenance of any improvement project can be realized without wasting any resources in the whole process.

Total preventative maintenance activities

From the cleaning up of the simplest equipments. Every worker learns to inspect, lumping and other related activities so that equipments on the shop floor can totally be under a self
maintained situation. The breakdown rate of equipments has therefore been greatly reduced and they are made available all the time. This is certainly helpful to implement an effective JIT system. Since July 1990, the top managers of Daioku have started
implementing the kanban production system moving from the traditional push-type production management to pull type production management. It is much more complicated than they expected and some of the major
problems include:

1. Combining the information and material flows instead of separating them.

2. Post the products, its store and manufacturing process instead of a flow
without any post.

3. Changing the L-shape assembly line into U-shape assembly line. A number of
new techniques and new equipments, although not necessarily the newest are required to be developed or purchased.

4. All other departments, such as R&D and transportation are required to participate in the JIT project. Every department has been instructed to investigate how to make the shop floor operate in a simpler and more efficient way.

Since beginning the implementation of JIT, many difficulties have occurred. For example, although suppliers (subcontractors) have been tying to co-operate with Daioku, there
exist many problems in practice. For example, every supplier is required to collect the �Kanban' back from the order-post and ship their materials based on the information in the Kanban. This is certainly different form the traditional ways shipping material based
on the pre-determined plan. In 1992, numerous discussions and meetings took place, Also, Daoku sent experts in helping suppliers to solve their problems gradually. The inventory of parts in Daioku was therefore reduced dramatically in this year.

The implementation methodology adopted at the Daioku

Since 1990, intensive education, training and promotions have been organized to lay the foundation for JIT implementation. This training was further extended to every small plant within the company in 1991. The JIT implementation committee selected assembly works in rear lamps plant to start with. The have
(i) used standardization to eliminate overproduction and waiting time of material;

(ii) provided a rational level of parts to eliminate unnecessary spare parts and allow the packaging and moving of materials smoothly;

(iii) implemented a single-person and multi-machine scheme on some cells and reviewed the fast- change- moulding activities together with some training. A small batch production procedure has been implemented and the efficiency of the plant is much improved.

Other plants therefore followed the footsteps of the rear lamps plant to implement the JIT system. The committee also extended the scope of the JIT system from each cell to each buffer and store so that every area has been carefully planned and the location of every part of product is clearly identified. The 5S activities that were introduced in the previous year have come to be very useful in this stage. In the long run, each cell is operated as
a small module of a large system and the whole JIT system is therefore accomplished.

To prevent the production of unnecessary products (including parts, and documents), many �idle facilities' are created. Every check point in the company is created with this kind
of facility so that workers would not carry out unnecessary tasks accidentally.

The idea of a JIT production system is that its produces the necessary items of products at the necessary time with necessary quantities - this has finally been achieved in Daioku

Discussion on the results of the implementation.:-

Tremendous resistance form suppliers and workers was faced during the early stage of developing the JIT system. High level commitments of top manager, determination of pushing JIT system and suppliers' involvement have helped to achieve JIT material flow. A
major success in the implementation of the JIT system is the reduction in the amount of inventory and workers. The wrok �in process inventory level has reduced from a market value of 30 million NT to 5 million NT, parts inventory has reduced from 130 million NT
to 60 million NT, and the number of workers has reduced from 580 to 520 during the past three years � where the growth rate of the company is 5-10% per year. Besides the physical outcomes from operating a JIT system, a major advantage is allowing every worker to
have improvement motivation and ability. From this, quality and productivity problems �under the water' have shown up and are solved. This kind of cycle can strengthen the organization and spirit of the Daioku Company so that it can be more competitive in the long run.

4. Future research directions on the implementation issues of JIT in SMEs

The following are some future research directions to motivate the researchers and practitioners in the implementation issues of JIT in SMEs.

1. A systematic methodology to evaluate the performance of the JIT implementation process over time would certainly add the advantage of knowing if there is any bottle-neck in the implementation process of JIT in SMEs. There is an obvious need to measure the level of JIT success with reduction in inventory cost, and productivity and quality improvements.

2. A systemic framework should be provided fro determining the level and type of training required for implementing JIT in SMEs. Also, suitable incentive schemes should be established to promote teamwork for an effective implementation of JIT in SMEs.

3. The factors critical to the successful supplier customer relationship
development should be identified in SMEs.

4. Conclusion

The major benefits of implementing JIT manufacturing to the small manufacturing firm
include smaller inventories, improved quality, and shorter lead times. Directly related are potential improvements in both future competitiveness and current cash flow. Once the decision to adopt JIT is made (the optimal starting point is internal production factors' especially layout revision) are a result of factory reform, not an implementation technique. The small firm literature agrees with this view. The implementation of the JIT philosophy
assumes the willingness and ability of a firm to address each relevant element. (Brown and Inman 1993.)

5. JIT in manufacturing are conceptual and related to large-scale industries. Hence there is a need to identify the critical variables associated with each basic JIT philosophy in SMEs. These studies typically used a small sample size, are industry specific or collected data from the effectiveness of the JIT implementation. However, there is need to investigate the major factors there are not many reports that deal with the implementation of JIT in SMEs. To provide insights into the implementation and benefits of JIT in SMEs, a case study conducted in a small company in Taiwan is presented in the following section.

Concluding remarks :-

In this paper, a case study is presented with the objective of discussing the implementation issues of JIT in SMEs. In addition, an overview of the JIT implementation issues and future research directions concerning SMEs. Are presented. Continuous improvement is a key goal for a healthy company. JIT is a holistic approach that needs the involvement of all people in the company. Improvement activities are required to be carried out to survive in a highly competitive international market. Emphasis should be placed on reduction in
throughput time and elimination of unessential activities and simplification of essential of unessential activities and simplification of elimination of unessential activities of essential
activities in implementing a JIT system. Most of the companies in Taiwan are currently facing the impact of entering GATT and other international competition and so they are under great pressure to improve their competitiveness. Daioku proves that with t he JIT system
and other improvement projects, the company can survive with lower manufacturing costs and higher quality. Multimedia can be used in educating the workers about JIT concepts and their implementation issues.

1.The implementation of JIT in SMEs should start with layout revision, schedule stability, and the development of long term supplier � customer relationships.

2. A new purchasing philosophy supporting frequent purchases of small lot sizes may help SMEs. In implementing a JIT system,

3.Education and training of workers in SMEs. About JIT cnceps and their high leverage opportunities would tremendously support the implementation of JIT in SMEs. In order to implement JIT in SMEs. Workers must be cross trained, highly skilled and very disciplined.

4.Identifying the value-added and non-valueadded items in shop floor activities are important to implement JIT in SMEs.

5.Top management commitment is necessary to ensure the effectiveness and success of implementing JIT in SMEs.


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