The cost of material constitutes a major part of the total turnover of any manufacturing industry. Therefore, it is very important to have an optimum inventory of raw material, work- in-progress and finished goods, for overall reduction in cost.
By focusing on these external and internal measures, manufacturing industries can achieve overall reduction in costs by optimizing their inventory levels and ensuring the right materials are available at the right time, quantity, and place.
The "Just in Time" (JIT) principles are applied in a manufacturing context, particularly focusing on optimizing inventory management both within the plant (internal) and outside the plant (external). JIT is a well-established strategy aimed at reducing waste and improving efficiency by ensuring that materials arrive just when they are needed for production.
The following systems are adapted to achieve JIT:
- External Supply Chain (Outside the Plant):
- Information and Material Flow: Highlighting the importance of smooth flow of both information and materials across the supply chain.
- Material Procurement Network: Managing both import and local procurement channels efficiently.
- Logistics Management: Utilizing techniques like Cross Docks, Milk Runs, and Main Routes for efficient transportation and delivery of materials.
- Material Procurement Systems: Implementing various methods such as Jumbiki, Kanban, and Scheduling to ensure timely availability of materials.
- Internal Supply Chain (Inside the Plant):
- Jundate: Internal Sequential Supply: Managing the flow of materials within the plant in a sequential manner.
- Set Part Supply: Ensuring availability of specific parts required for production.
- Chorokyu: Small Lot Supply: Handling smaller batches of materials efficiently within the production process.
- Addressing the question of whether JIT works in the context of India:
- Milk Run: Efficient Material Collection: Utilizing systems like the Milk Run to collect materials from various suppliers.
- Proactive Issue Resolution: Identifying abnormalities early and taking corrective actions promptly.
- Contingency Planning: Employing strategies such as special trucks or air transportation to address delays or material rejections.
- Monitoring and Tracking: Tracking trucks to anticipate delays and deploying relief vehicles when necessary.
- Flexibility: Being able to air-lift materials in case of significant delays to ensure production continuity. In a streamlined operation, such costs are negligible when compared to inventory holding costs.
- Supplier Support and Training: Assisting suppliers to meet requirements and improve their processes as needed.
Overall, JIT principles are shown to be effective in the manufacturing industry in India through proactive measures, efficient logistics, and collaborative efforts with suppliers.
These practices help in achieving optimal inventory levels, reducing costs, and improving overall operational efficiency.
