Lakshya kaizen

Kaizenâ€&#x;s Operations & Research Entity Presents 4th Edition

Just-in-time: A Manufacturing Philosophy

By Benazeer Khan

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EDITOR’S LETTER “"With Evolution, Changes happen in every part of the world every day, every time."”

Welcome to the fourth edition of “LAKSHYA”, our monthly supplement designed for people who dare to think above the average and believe in connecting the dots. In an age where technology has taken over every sphere, information is abundant and data is omnipresent, we have conspired to bring to you a collection of thoughtfully created and carefully curated pieces of work by some bright aspiring minds of ICFAI Business School, Hyderabad on the current trends and hot topics in the field of Operations Management and their relevance in different industries.

Just-in-time (JIT) is an inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. This method requires producers to forecast demand accurately.This inventory supply system represents a shift away from the older just-in-case strategy, in which producers carried large inventories in case higher demand had to be met.

We look forward to providing you with some valuable insights and inculcate the passion for reading once again within you all. We hope that you enjoy this first issue and do let us know if there are any topics you‟d like to see covered in the future.

Please write to us and become a part of this discussion Email ID: kaizenclub.ibs@gmail.com

SUHAIL SHAIKH IT HEAD Kaizen – IBS Hyderabad 2 |K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y

CONTENTS Cover Story: Just In Time: A Manufacturing Philosophy

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KANBAN Production Control System

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Green Production

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Just In Time: A manufacturing Philosophy BY

Benazeer Khan

Just In Time: A manufacturing Philosophy

In my point of view, the primary objective for the company is customer's satisfaction and if company cannot reach perfection in this area then all the processes are ineffective. All parts of the value chain and everything in the enterprise must be healthy for recognition of competitive business processes. One of the most important constituent inside value chain is logistics. Logistics is concerned with the physical distribution and storage of products and services. During the 20th century several approaches of implementation of logistics were developed. Surely, one the most acclaimed and important logistics concept is the Just-In-Time concept.

What is the Just-In-Time concept? Since the inception of this term it was difficult for sciences and business people to define it. Even today many companies think that they are using JIT concept, but actually, they are not realizing that JIT must be integrated in company philosophy and no just dead letters. Just in Time (JIT) production is a manufacturing logic which eliminates waste associated with time, labor, and storage space. Basics of the concept are that the company produces only what is needed, when it is 4 |K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y

needed and in the quantity that is needed. The company produces only what the customer requests, to actual orders, not to forecast. JIT can also be represented as producing the necessary units, with the required quality, in the necessary quantities, at the last moment. It means that company can manage with their own resources and allocate them very easily.

Complications before JIT system were that companies could not properly calculate their material flows. Also, there were problems with warehouses because there were situations that in one moment warehouses are full with stocks, and in other they are almost empty. Because of these problems it was really difficult for engineers and managers to deal with logistics. JIT, however, is not new. The technique was first used by the Ford Motor Company during 1920s, but the technique was eventually adopted and propagandized by Toyota Motor Corporation of Japan as part of its Toyota production System (TPS). In 1954 Japanese giant Toyota implemented this concept in order to minimize wasteful overstocking in car production.

Just-in-time (JIT) inventory systems are not just a simple method that a company has to buy in to; it has a whole logic that the company must follow. The ideas in this logic come from many different disciplines including; statistics, industrial engineering, production management and behavioral science. In the JIT inventory philosophy there are viewpoints with respect to how inventory is looked upon, what it says about the management within the company, and the main principle behind JIT. Firstly, inventory is seen as incurring costs instead of adding value, contrary to traditional thinking. Under the philosophy, businesses are encouraged to eliminate 5 inventories that donâ€&#x;t add value to the product. Secondly, it sees 5 |K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y

inventory as a sign of poor management as it is simply there to hide problems within the production system. These problems include backlogs at work centers, lack of flexibility for employees and equipment, and inadequate capacity among other things.

In short, the just-in-time inventory system is all about having “the right material, at the right time, at the right place, and in the exact amount.”

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KANBAN Production Control System BY Rahul Utwal

Kanban is a Japanese term which in simple terms means signboard or use of signals and other means for managing activities in the organisation. It is a scheduling system for lean manufacturing and just-in-time manufacturing.

Taiichi Ohno an engineer at Toyota first started this system to be implemented in operations of the company. One common method of Kanban seen in the factories is the use of Kanban cards which act like a signalling device for tracking and managing production in the factories.

The above example shows the typical Kanban production control system in the factory where tracking and completion of tasks is monitored sorted by their number of tasks or activities to be performed. Thus, we can deduce that another major advantage of this system is the control and reduction of excess inventory in factories.

It all began way back in the 1940s when Toyota was studying markets and analysing and at the right time identified the appropriate opportunity for controlling inventory levels. This novel idea came from the concept of supermarkets where shelf-stocking techniques could be applied practically where consumption and inventory could be matched. The process was simple in a supermarket, the customer only picks and selects those items relevant to his purchase. Supermarkets on the other hand performed the job

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of predicting and forecasting the demand and supply of inventory which is congruent with the customer‟s demands.

This simple opportunity led Toyota to incorporate this idea into its process where Kanban production control system was born. The entire idea behind the process is easy to understand, because Kanban aligns inventory levels with actual consumption. A Kanban card(signal) tells a supplier to produce and supply the new shipment/inventory whenever the material is being consumed. These signals are tracked throughout the replenishment cycle which bring visibility to suppliers, consumers, workers etc. One of the most efficient and effective implementations of the Kanban production control system is the three-bin system. This entire process runs like a closed loop in the production system consisting of three areas The factory floor (initial demand point)  The factory store (inventory control point)  Supplier bin The start of the process is from the point where the first bin in the factory floor uses components or parts which are not manufactured in-house. The bin along with the Kanban card is sent to the factory store or the „second bin‟, basically the Kanban card in the first bin contains product information, number of components needed etc., which is relevant to the process. The factory store upon receiving the bin from the factory floor replaces it with 8 |K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y

another bin full of components and parts needed at the factory floor along with the Kanban card. The last stage of this process ends with the factory store sending the empty bin to the supplier area along with the Kanban card conveying the parts/components needed. The supplier on the other end verifies and replaces and sends the full bin to the factory store, with the supplier in turn keeping the empty bin. This method is one of the many effective and useful ways why Kanban can be used and implemented for controlling the production and consumption in the process.

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GREEN PRODUCTION BY RAYMAN KAUR

Green production is a business strategy focusing on profitability through environmentally friendly operating processes. It can be looked at in two ways: the manufacturing of “green” products, particularly those used in renewable energy systems and clean technology equipment of all kinds, and the “greening” of manufacturing — reducing pollution and waste by minimizing natural resource use, recycling and reusing what was considered waste, and reducing emissions.

Green production along with providing benefits for the natural environment, is strategically sound. As Stuart Hart, director of the University of Michigan‟s Corporate Environmental Management Program (CEMP), indicated in Northwest Environmental 10 |K A I Z E N ’ S O P E R A T I O N S & R E S E A R C H E N T I T Y

Journal, “green business strategies based on the principle of environmental sustainability may constitute a key basis for competitive advantage in the coming decades.”

Green production is rapidly gaining importance. With the increase in population and expansion of emerging economies, the planet‟s ecosystems and resources are experiencing tremendous challenges.

Production systems which are furnishing for the growing demand of goods are linked to adverse environment impacts. For example, with countries such as China enjoying the benefits of lifestyles close to those of western societies, the impact of human activities is estimated to rise ten-fold by 2050.

Green production process With governments formally adopting environmental policies and regulations, the free market is placing a clear premium on companies which are offering green credentials. For “production” based companies, green credentials can be obtained by including the raw materials used within products, production processes, and the ease of dealing with a product at the end of its life.

Work on green processes includes machine that reduce air emissions, minimizing solid and liquid wastes, saving water and energy, and protecting health and safety of production workers, customers and the local community.

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There are many companies that have incorporated green issues into their business practices. These include the “Dow Jones Sustainability Group Indexes” which aims at enabling a more transparent assessment of sustainability driven companies on the financial market “The global 100 most sustainable corporations”

project which each year releases the list of the top 100 corporations in the world based on specialist evaluation of achievements on social, environmental, and strategic governance issues.

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ABOUT US:

The word “Kaizen”, where “Kai” = change “Zen” = good, simply means “change for better”. In English Kaizen is typically applied to measures for implementing continuous improvement. It is an approach to activity organisation based on common sense, self-discipline, order and economy and is a strong contributor and fundamental part of a lean production process model in lean manufacturing. Kaizen- The Official Operations Club of IBS Hyderabad believes in relishing in the essence of "Constant Change and Evolvement" and hence we, as an organization work willingly for the betterment of the student community. KORE- Kaizen‟s Operations and Research Entity, one of our primary wing which flaps to cater to the needs of students and motivate them to soar high by polishing their technical competencies. KORE‟s area of expertise includes Case Based Research, Consultancy, Live Projects and Workshops. LAKSHYA, an initiative taken by KORE primarily focuses on the concepts of operations management and various articles based on the day to day operations and logistics of an organisation - SHUCHITA SRIVASTAVA

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