Comparison of MRP and JIT

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Comparison of MRP and JIT
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Planning Horizon
Figure 14-4
Assembly
Subassembly
Fabrication
Procurement
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Issues to Consider

• Forecast
• Inventory/Backlog
• Lead Times
• Capacity constraints
• Supplier information
• Decides - when to place an order and how much.
  May choose supplier.

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What is JIT?

• What is Just in Time?
• Delivery of parts to meet production
• Production to meet customer demands
• Means of production control
• Which aspects are under the control of the
  company? Which are not?

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JIT Production
C u s t o m e r
W H S E
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B
C
D
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Assembly Time Chart
Figure 14-9
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Inventory Hides Problems

• Machine downtime
• Scrap
• Vendor Delinquencies
• Change orders
• WIP

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JIT Focus on Eliminating Waste

• Over production
• Waiting Times
• Transportation
• Idle inventory
• Waste of motion
• Production defects

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How to Accomplish JIT

• Design Process for JIT
• Total Quality Control
• Stable Schedule
• Kanban Pull System
• Work with Vendors
• Reduce Inventory
• Improve Product Design

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Preconditions for JIT to Work

• Stable Schedule
• Stable Design
• Perfect Supplier Quality and Delivery
• Perfect Production Quality
• Flawless Data

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Concepts Applied in JIT Systems

• Focused factory networks
• Group technology
• Quality at the source
• JIT production
• Uniform plant loading
• Kanban production control system
• Minimized set-up times

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Shouldnt everyone use JIT?

• For any company, how will the business situation
  change if JIT is implemented?
• Can (shouldnt) Just in Time Production be used
  to meet customer needs?
• What do we need to do from an operational
  standpoint to make JIT work?
• What are the costs? What will be the benefits?
• Best to view JIT as a set of practices which can
  provide ideas on ways to improve production.

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For JIT Delivery

• Steady planned production schedule
• Can this be achieved if there are lots of changes
  to the mix or volume of what is delivered?
• Short transportation distance to customer site
• High supplier quality
• Great communications with supplier
• Fast and efficient movement, handling and
  tracking of parts coming into production.
• Information System

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For JIT Production

• Available JIT supply
• Reliable capacity (machines, labor, etc.)
• Special equipment, containers, and transportation
• Regular or known demand (Is this possible?)
• Quality Output
• Toyota Production Control System

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The Production Control Difference

• Given the short lead times and high variation
  required of todays production
• One of the primary implementable items of JIT is
  as a production control system.
• Focus on eliminating waste where practical
• Queue limitation
• Pull system
• Attack quality problems at the source

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What are the benefits of JIT?

• Radical reductions in inventory
• Squeeze out system variation
• Usefulness of supplier relationships to improve
  quality and flow control
• What is the cost to change the business to run
  this way? Training, new systems?
• If you dont, you cant compete. Wallmart

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MRP vs JIT

• How do we tradeoff?
• the needed to build in advance of an order(hold
  inventory) at several strategic points in the
  line so we can deliver on time.
• the need to minimize inventory to reduce costs
  and improve efficiency.

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MRP vs JIT - Strategic Supply Chain Management

• Consider the IBM Situation
• Suppose customers will wait only 4 weeks for
  delivery.
• What length of forecasts will you need?
• Should you hold inventory? At what stage in
  production? How much? Why?
• How will demand or supply variability affect your
  decision?
• Should we implement JIT here?

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MRP JIT Systems
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PS
C
FR 1
Where to hold the inventory?
1
2
C
1
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B
Fr 2 4
TCM
Chips
Cus
MF
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2
8
T
S
4
3
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M
FR 3
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FR 3
TCM
Chips
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What will you consider?

• Cost of parts
• Amount of value add at each stage
• Shelf life and quality issues
• Reduction of flexibility at each step
• Risk of over purchasing/producing vs shortage
• Ability to hold and handle inventory
• Remaining lead time and needs of market place

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Questions

• How do we apply JIT in the IBM scenario?
• What items can we try?
• Should we implement JIT full board?
• How does variability effect the system?
• What does variability make us want to do?
• What is the JIT approach to solving a variability
  problem?

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Compare MRP with JIT

• Consider necessary production lead times
• How can JIT compress the schedule?
• What elements of the schedule must remain?
• How does JIT overcome the necessary production
  schedules and lead times to deliver products Just
  In Time?

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MRP vs JIT

• How does a grocery store operate? Using
• MRP
• JIT
• Mixed MRP/JIT
• What factors would contribute to making a grocery
  store operate better?