Provided by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida
Citation: Martin, J. R. Not dated. Just-in-Time Systems Attitude and Practice Elements. Management And Accounting Web. http://maaw.info/JITSUM.htm
The following material was summarized from MAAW's Textbook Chapter 8 and a couple of other papers as indicated below.
The JIT Attitude
Develop a holistic view of the system including:
1. Cooperation with a value chain perspective. The value chain includes cooperation extending from the vendors to the firm’s customers.
2. Respect for people at all levels - optimize the system with system wide cooperation and no adversarial relationships.
3. Quality at the source - jidohka - Stop the line and fix the problem at the source of the problem. Everyone is responsible for quality.
4. Simplification or just enough resources - JIC. Just enough vendors, capacity, employees, inventory, handling and effort. Seek zero waste of any kind.
5. Continuous improvement - Kaizen - Use the plan-do-check-action technique (PDCA), statistical process control (SPC) and other improvement tools such as the five whys.
6. A long term perspective - reflects the life cycle concept although this is not usually explicitly stated in the JIT literature.
7. Recognize seven types of waste or muda to be eliminated (Deluzio, 1993).
Muda that results from: overproduction, waiting, moving and transporting, processing, unneeded stock, unnecessary motion, and defective goods.
8. Other waste (Martin, 1992) results from:
Mura - waste caused by the irregular or inconsistent use of a resource.
Muri - waste caused by placing excessive demands on a resource.
9. Think in terms of the five Ss:
Seiri - straighten up and organize.
Seiton - arrange things in order.
Seiso - clean up the workplace.
Seiketsu - incorporate personal orderliness & neatness into your work habits.
Shitsuke - use discipline in following workplace procedures.
The JIT Practices
1. Just-in-time purchasing including long term agreements with a smaller number of vendors who are certified in terms of price, quality and delivery to the shop floor in shop ready containers that require little or no inspection. Emphasis on zero WIP and FG inventory and minimum warehouse or storage space for incoming materials.
2. Focused factories - factories dedicated to a few products.
3. Cellular manufacturing - arrange the plant so that all the equipment needed to produce a product is located together, typically within a U-shaped cell to reduce the need for inventory buffers and materials handling. Use cross trained workers who perform many different tasks or operations to reduce the number of workers required. Locate support services within the cell, e.g., workers perform maintenance to convert indirect cost to direct cost. This results in less allocations from outside and produces more accurate product costs and less need (or no need) for ABC.
4. Just-in-time production - Use demand pull kanban system where parts are produced only as needed by the next down stream operation. A kanban is a type of authorization to produce. Reduce lead time or cycle time and set-up time ( single minute exchanges), practice jidohka, use cellular arrangement with one piece work flow, i.e., demand pull batches of one, fail- safe devices (poke yoke), standard work concept, visual control - make it (waste) ugly and preventive maintenance.
5. Just-in-time distribution - use the reverse of JIT purchasing.
6. Simplified accounting. Batch deliveries before recording, few cost pools, limited variance analysis and backflush cost accumulation, i.e., few inventory accounts. Charge cost to COGS as incurred, count inventory at the end of the period and charge back a standard cost to RIP and conversion cost accounts as needed for remaining inventory. The throughput backflush approach only capitalizes materials costs.
7. Process oriented performance measurements, e.g., vendor quality, % of defects, schedule attainment, average inventory, inventory turnover, head count productivity etc.
Summarized from Martin, J. R. Not dated. Chapter 8: Just-In-Time, Theory of Constraints, and Activity Based Management Concepts and Techniques. Management Accounting: Concepts, Techniques & Controversial Issues. Management And Accounting Web. http://maaw.info/Chapter8.htm
Deluzio, M. C. 1993. The tools of just-in-time. Journal of Cost Management (Summer): 13-20. (Summary).
Goodson, R. E. 2002. Read a plant - fast. Harvard Business Review (May): 105-113. (Summary).
Imai, M. 1986. Kaizen: The Key To Japan's Competitive Success. New York: McGraw-Hill Publishing Company. Appendix C. (Summary).
Martin, J. R. Not dated. Lean concepts and terms. Management And Accounting Web. http://maaw.info/LeanConceptsandTermsSummary.htm
Martin, J. R., W. K. Schelb, R. C. Snyder, and J. C. Sparling. 1992. Comparing the practices of U.S. and Japanese companies: The implications for management accounting. Journal of Cost Management (Spring): 6-14. (Summary).