Advantage And Disadvantage Of Just In Time (JIT)

TOPIC 6 (WEEK 7)

ADVANTAGE OF JUST IN TIME (JIT)

Just-in-time inventory systems, pioneered by Toyota, move inventory through a production system under a pull ideology, with customer orders pulling the inventory through the system. Production begins with a customer order and the order is moved through production with visual symbols, called Kanban, that tell workers to start making the next part. While just-in-time has many advantages, it is important to know that the system has weaknesses as well. Examples of the companies that implement the JIT production such as TOYOTA.

By using just-in-time concepts, there is a greatly reduced need for raw materials and work-in-process, while finished goods inventories should be close to non-existent. Just-in-time inventory has the following advantages:          

There should be minimal amounts of inventory obsolescence, since the high rate of inventory turnover keeps any items from becoming old.

Since production runs are very short, it is easier to stop the production of one product type and switch to a different product to meet changes in customer demand.

The very low inventory levels mean that inventory holding costs are minimized such as warehouse space.

The company is investing far less cash in its inventory, since less inventory is needed.

Less inventory can be damaged within the company, since it is not held long enough for storage-related accidents to arise.

Production mistakes can be spotted more quickly and corrected, which results in fewer products being produced that contain defects.

DISADVANTAGE OF JUST IN TIME (JIT)

Despite the magnitude of the preceding advantages, there are also some disadvantages associated with just-in-time inventory, which are:

A supplier that does not deliver goods to the company exactly on time and in the correct amounts could seriously impact the production process.

A natural disaster could interfere with the flow of goods to the company from suppliers, which could halt production almost at once.

An investment should be made in information technology to link the computer systems of the company and its suppliers, so that they can coordinate the delivery of parts and materials.

A company may not be able to immediately meet the requirements of a massive and unexpected order, since it has few or no stocks of finished goods.

what is just in time and history of just in time

WHAT IS JUST IN TIME ?

Production system that allows the firm to produce what is needed in the right quantity and at the right time.

This means that stocks of raw materials, components and finished goods can be kept to a minimum and at once it can minimize cost of storage. This process must have a carefully planned scheduling and systematic production system . In modern manufacturing firms use production scheduling software to plan production for each period of time, which includes ordering the correct stock. Information is exchanged with suppliers and customers through EDI (Electronic Data Interchange) to help ensure that every detail is correct.

Supplies delivered directly to the production line only when they are needed. For example, a car manufacturing plant may receive the necessary components with the right amount and the right type of tire for the production of the day.

Supplies delivered directly to the production line only when they are needed. For example, a car manufacturing plant may receive exactly the right amount and type of tire for the production of a single day, and suppliers are expected to be delivered to the correct payload bay on a production line in a very narrow time slot.

HISTORY OF JUST IN TIME

Just-In-Time is a Japanese manufacturing management method developed in 1970s. It was first adopted by Toyota manufacturing plants by Taiichi Ohno. The main concern at that time was to meet consumer demands. Because of the success of JIT management, Taiichi Ohno was named the Father of JIT.

After the first introduction of JIT by Toyota, many companies followed up and around mid 1970s’, it gained extended support and widely used by many companies.

One motivated reason for developing JIT and some other better production techniques was that after World War II , Japanese people had a very strong incentive to develop a good manufacturing techniques to help them rebuilding the economy. They also had a strong working ethnic which was concentrated on work rather than leisure, seeked continuous improvement, life commitment to work, group conscious rather than individualism and achieved common goal. These kind of motivation had driven Japanese economy to succeed.

IDEAS OF SUZAKI FOR THE OBJECTIVES OF JIT

• ·         Increasing the organization’s ability to compete with others and remain competitive over the long run. The competitiveness of the firms is increased by the use of JIT manufacturing process as they can develop a more optimal process for their firms.
• ·         Increasing efficiency within the production process. Efficiency is obtained through the increase of productivity and decrease of cost.
• ·         Reducing wasted materials, time and effort. It can help to reduce the costs.

MEGAFACTORIES PORSCHE PANAMERA

PORSCHE Brand History:

Who hasn't heard of Porsche? In 2006 it won the most prestigious automobile brand for over 70 years of excellence and dedication to the four-wheel god. Established at first as a consulting and development company by Dr. Ing. Ferdinand Porsche in 1931, Porsche SE has since become synonymous with luxurious sports cars as well as cutting edge technology. Situated in downtown Stuttgart, Porsche's first contract of developing a people's car, a Volkswagen, appointed by the German government. The result was one of the most famous cars in history, one of the best sold and one of the most easily recognizable out there, the Beetle. Many features of the Beetle would find their place on the first ever Porsche, the 64, developed in 1939.

Production:

Engines are first assembled in Stuttgart, and the car's body is built and painted at the Volkswagen Group facility in Hannover. The final assembly of the vehicle takes place in Leipzig, Germany, alongside the Cayenne. Production began in April 2009, one month after its debut in the Shanghai Motor Show in China. Porsche has applied for patents on a four-door convertible version of the Panamera that keep the same general dimensions.

A professional logistics system is the basic requirement for efficient, high-capacity production. At Porsche Leipzig we therefore focus on the Japanese principles of  "Lean Production" and the "Just in Time" method. Which is why for example the loading sequence for the Panamera bodywork, which are delivered to Leipzig by train, corresponds exactly to the production sequence.

Systems suppliers deliver the components at the same time. In Panamera production line, car bodies and components are processed immediately  with no long intermediate storage. This allows production completely free of fork lift trucks. The Leipzig facility receives deliveries from 150-160 trucks, fourteen times a day. The new project uses complete planning procedures that incorporate all the parts suppliers. As a result of the efficiency program, the parts for the Panamera is to reach the production site just one hour before they enter the production line. This eliminates the need for large storage areas and thus reduces production costs.

Free Trade Zone

Free Trade Zone(FTZ)

A free trade zone (FTZ), also called foreign-trade zone, formerly free port, is an area within which goods may be landed, handled, manufactured or reconfigured, and re ex ported without the intervention of the customs authorities. This is not to be confused with an "Export Processing Zone" (EPZ) which is actually a type of free trade zone (FTZ), set up generally in developing countries by their governments to promote industrial and commercial exports. Only when the goods are moved to consumers within the country in which the zone is located do they become subject to the prevailing customs duties. Free-trade zones are organized around major seaports, international airports, and national frontiers areas with many geographic advantages for trade.

The world's first Free Trade Zone was established in Shannon, Ireland (Shannon Free Zone). This was an attempt by the Irish Government to promote employment within a rural area, make use of a small regional airport and generate revenue for the Irish economy.

Malaysia 's objectives in negotiating FTZ are to:

1.       Seek better market access by addressing tariffs and non-tariff measures.

2.       Further facilitate and promote trade, investment and economic development.

3.       Enhance the competitiveness of Malaysian exporters.

4.       Build capacity in specific targeted areas through technical cooperation and collaboration.

 Malaysia has established FTZ with the following countries:

1.       Japan

2.       Pakistan

3.       New Zealand

4.       India

5.       Chile

6.       Australia.

Malaysia has 11 free-trade zones, established as areas where manufacturing companies can produce and/or assemble imported products. Customs controls in these zones are minimal, and all machinery and raw materials and components used in the manufacturing process may be imported duty free.

Of the 11 zones, four are in the state of Penang, three in Selangor, two in Melaka, and two in Johor. They are administered by the states within which they are located. In order to operate in a zone, a company must export at least 80 percent of its output.

Malaysia also has two free ports, Labuan Island, off the coast of the state of Sabah, and Langkawi Island, off the coast of the state of Kedah. Labuan is the location of several industries based on the petroleum industry; Langkawi's development is based primarily on tourism. In 1989, the Malaysian government made Labuan a tax haven and international offshore center, thus making the island a center for off shore banking and insurance, trust fund management, offshore investment holding and licensing companies, and other offshore activities carried out by multinational corporations, excluding dealings in petroleum or shipping. Income from offshore non trading activities is tax exempt, and taxes on income from trading activities based there is taxed at a rate of three percent of net profits or Rm20,00000 million maximum per year.

Free Trade Zone In Malaysia:

·         Johor Port

·         Tanjung Pelepas Port

·         Pelabuhan Kuantan

·         Tanjung Keling

·         Batu Berendam

·         Teluk Panglima Garang

·         Ulu Klang

·         Sungai Way

·         Prai Whraf

·         Prai

·         Bayan lepas

Two types of warehouse

Main Warehouse:

A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, customs and many others. They usually have loading docks to load and unload goods from trucks. Sometimes warehouses are designed for the loading and unloading of goods directly from railways, airports and seaports. They often use a cranes and forklifts for moving goods, which are usually placed on ISO (International Organization for Standardization) standard pallets loaded into pallet racks. Stored goods can include any raw materials, packing materials, spare parts, components, or finished goods associated with agriculture, manufacturing and production.

In the warehouse, there are many of the transportation to bring the goods from one point to another point. For example is forklifts, cranes, drum lifters, chain hoists, flammable storage cabinets, electronic workbenches, industrial shelving, lift tables, pallet trucks, plastic storage bins, platform trucks, rolling ladders, utility carts and more others.

In the warehouse, there are many of the transportation to bring the goods from one point to another point. For example is forklifts, cranes, drum lifters, chain hoists, flammable storage cabinets, electronic workbenches, industrial shelving, lift tables, pallet trucks, plastic storage bins, platform trucks, rolling ladders, utility carts and more others.

The function of each one material handling in a warehouse is differences. Firstly the most familiar material handling in the warehouse is a forklift. A forklift truck also called a lift truck, a fork truck, or a forklift is a used to lift and move materials for short distances. The forklift was developed in the early 20th century by various companies including the transmission manufacturing company Clark. Forklifts have become the most important piece of equipment in manufacturing and warehousing operations until now.

                                           










          Secondly is crane. A crane is a tower or derrick equipped with cables and pulleys that can be used both to lift and lower materials and to shift them horizontally. Cranes are commonly employed in the construction industry and in manufacturing heavy equipment. Construction cranes are usually temporary structures, either fixed to the ground or mounted on a purpose-built vehicle. Cranes may either be controlled from an operator in a cab that travels with the crane, by a push button pendant control station, or by infrared or radio control.

Refrigerator Warehouse:                                       

Cold storage preserves agricultural products. Refrigerated storage helps in eliminating sprouting, rotting and insect damage. Edible products are generally not stored for more than one year. Several perishable products require a storage temperature as low as -25°C.

Ammonia and Freon compressors are commonly used in cold storage warehouses to maintain the temperature. Ammonia refrigerant is cheaper, easily available and has a high latent heat of evaporation but it is also highly toxic and can form an explosive mixture when mixed with oil containing high percentage of carbon. Insulation is also important, to reduce loss of cold and to keep different sections of the warehouse at different temperatures.

There are two main types of refrigeration system used in cold storage warehouses, a Vapour absorption system (VAS) and Vapour compression system (VCS). VAS, although comparatively costlier, is quite economical in operation and adequately compensates the higher initial investment.

The temperature necessary for preservation depends on the storage time required and the type of product. In general, there are three groups of products, foods that are alive (e.g. fruits and vegetables), foods that are no longer alive and have been processed in some form (e.g. meat and fish products), and commodities that benefit from storage at controlled temperature (e.g. beer, tobacco).

There are state and local laws which regulate the cold store industry, requiring safe working conditions for employees, and operational procedures must be in accordance with these laws. Those companies which do their homework and prepare in advance for inspections and other routine enforcement protocols will be able to continue operating at full capacity, ensuring greater customer service and more product flow seven days a week.

MODES OF TRANSPORTATION IN MALAYSIA

Road

Road transportation is one of the most basic and historical means of transportation from one place to another. There are many different types of automobiles found on roads, although trucks and carriers typically are used for carrying or delivering freight. Advantage for this transportation is ideal for short distance, ideal for sending by courier shortage to customer and so on.  Example of big road company  transportation in Malaysia:

Kontena Nasional Berhad (KNB) is Malaysia’s premier logistics company with 41 years of experience in logistics operations. KNB began operation in 1971 when containerisation was introduced to the country. KNB is one of Malaysia’s largest one-stop logistics companies providing comprehensive logistics solutions customised to customers’ requirements.

  

Rail

Rail transport using freight trains for shipping goods. Freight trains are usually powered by diesel, electric and steam. Usually trains are used to carry heavy goods such as coal, iron, tin, and others. Advantage: This transport is, prompt delivery, cost effective, and has a huge space capacity. Example of big rail company transportation in Malaysia:

Rail based freight transportation service in Peninsular Malaysia is operated by KTMB covering a total track length of 2,262 km. KTMB also has terminal facilities at 11 locations comprising dry-port, inland container terminal, seaport and freight terminal.

Water

Water transport uses ships and large commercial vessels that carry billions of tons of cargo every year. Developed in the 18th century, steam engines have been a long favourite choice for making ships move. Moreover, transport via water is considerably less expensive than other logistics methods, which makes it one of the most widely used choices of transport for merchandise. Example of big water company transportation in Malaysia:

Malaysia International Shipping Corporation Berhad (MISC Berhad) was incorporated on 9 November, 1968. MISC is the leading shipping company in Malaysia. Shareholders are Petronas and the Employees Provident Fund.

Major trading company including ownership and operation of ships, activities related to shipping and handling offshore floating facilities as well as ship repair and renovation, construction works and engineering ship alteration. With a fleet of 115 ships with a variety of modern and combined tonnage of more than 15,000,000 DWT. DWT are a measure of how much weight a ship is carrying or can safely carry.

Air

Air transport is more expensive than all other means of transportation it is undeniably most time-efficient. Perishable merchandise like fruits and vegetables are mostly sent by air. Example of big air company transportation in Malaysia:

The Company ("MASkargo") is a cargo airline with its head office in the Advanced Cargo Centre (ACC) on the grounds of Kuala Lumpur International Airport (KUL) in Sepang, Selangor, Malaysia. It is a cargo division of its parent company Malaysia Airlines that operates scheduled, charter air cargo services as well as airport to seaport cargo logistics via ground transportation.

Pipeline

Pipeline transport is the transportation of goods through a pipe. Liquids and gases are transported in pipelines and any chemically stable substance can be sent through a pipeline. Advantage of this transportation is Large-volume transportation, Excellent safety , with fewer than two incidents per 10,000 kilometres of pipeline per year , Secure supply and so on.  Example of big pipeline company transportation in Malaysia: Misi Setia Oil & Gas Sdn. Bhd. (MSOG) was incorporated in June 2002 to venture into Malaysian Oil & Gas Industry. MSOG, a company with dual certifications of ISO 9001:2008 & OHSAS 18001:2007 and Petronas Product Services Registration, has grown to his full capabilities and abilities in the following business activities:

INTRODUCTION

This is a group stand up by Mohd Aqiff , Muhammad Amirul Hafiz , Mohamad Khairi , Syafieq Shaafee.This blog is created for Purchasing assignment lectured by Sir Muzani Zainon.This group name taken by us because we have a dream to further our career with Maersk Company since they are a big company in Logistics