1_jit & backflush (g2)

7/27/2019 1_jit & Backflush (g2)

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JUST IN TIME (JIT)

NAME UK NO.

NORHIDAYU BINTI MISNI UK 25668

SITI MUNIRAH BINTI MOHD ARIFFIN UK 26068

NUR HANIS BINTI HARUN UK 24997

SITI HAMIZAH BINTI A. HAKIM UK 25566


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History of JIT.JIT is a Japanese management philosophy, practicesince the early 1970s in many Japanese manufacturingorganizations.

Developed and perfected within the Toyotamanufacturing plants by Taiichi Ohno (father of JIT).

Toyota realized that JIT would only be successful ifevery individual within the organization was involvedand committed to it, if the plant and processes werearranged for maximum output and efficiency, and ifquality and production programs were scheduled tomeet demands exactly.


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What is JIT ?Is a pull system of production, so actual ordersprovide a signal for when a product should bemanufactured.

From the vision and philosophy of Toyota group itsmeans making "only what is needed, when it isneeded, and in the amount needed.Demand-pull enables a firm to produce only whatis required, in the correct quantity and at thecorrect time.


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LOWER INVENTORYHOLDING.

Reduction in storagespaces.

Saves cost for rent storageand insurance cost.

Less time is spent onchecking inventory and re-

working the product ofothers as the emphasis is ongetting the work right first

time.

Lower cost spent forinventory.

INVENTORY IS ONLYOBTAINED WHEN IT IS

NEEDED.

Less working capital is tiedup in inventory.

Prevent inventorybecoming obsolete or out

of date.Avoid the build-up ofunsold finished product

that can occur withsudden changes in demand


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Disadvantage of JITThere is little room for mistakes

as minimal stock is kept for re-working faulty product

Production is very reliant onsuppliers and if stock is notdelivered on time, the wholeproduction schedule can be

delayed

There is no spare finishedproduct available to meet

unexpected orders, because allproduct is made to meet actual

orders


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User Behind JITinvolved

employees whoknow they

work in a process

and their jobs areconnected.

JIT accomplishedthrough a pullsystem where

Kanbans areused by trainedemployees whoknow what they

should be doing in

the process aswell as

what otheremployees should

be doing.

JIT productionwont work unless

employees feelthey are on a team

and believe their

success dependson their co-

workers who areworking along

with them in theprocess.


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How Do Kanban Fit in JIT

Production?

JIT uses a simplemechanism called

Kanban tocommunicate what

needs to be pulledthrough the system.

Kanban

connectand

synchronize all the

sub-

processesin the JITprocess

Kanban are

normally just pieces

of brightly coloredpaper or cards in

plastic or other typesof signals

that are highly visual,contain preciseinformation and

notify employees inthe process of what

they need to do.


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The Advantages Of Kanban

Once theKanban system isset up, it isamazingly simple.It greatlyreduces the needfor managers,schedulers andexpeditorsrunning around.

a long waytoward avoidingoverproductionand waste, and

that reducescost andimproves quality

ImplementingKanban in theworkplace issimilar. A simple,

understandablesignal is sent up

the chain to pullmaterial as it isneeded by the

downstreamcustomer, inexactly thequantity andspecifications

desired.


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JIT IMPLEMENTATIONSTRATEGY.


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Top Management Commitment

To develop and declarea series of policy

statements mentioningits commitment to JIT

Procurement

what internal and externalsub-contractors are

involved in theimplementation process

what is the timetable for

implementation,

who is responsiblefor what resources

are available forimplementation

how all functions must becoordinated,

which plants orportion of theplants must be

included,

distributionstrategy stating

which products or

product lines areinvolved


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Implementation process of JIT.Reduction of Set-up time.

Set-up time as a process which begins when a companyallocates funds for raw materials and ends with the receiptof final payment for the product .

Reduction of Lot sizes of operations

This reduction in batch or lot size would facilitate quickerresponse time to quality problems, engineering changes,and on-time delivery.

Implementation of Group technology process.

Concept to simplify the engineering and productionprocess by identifying the parts that tend to require the

same procedures for designing and production.


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Scheme of Cross-training of employees.

Helps to maintain flexible work force that looks forand solves production problems.

- Job rotation

- standardization of activities

Preventive maintenance scheduling.

Responsibility for eliminating breakdowns is dividedbetween the operator and the maintenance

department.


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Conclusion of JIT


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BACK FLUSH

ACCOUNTING SYSTEM


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An accounting methodwhereby the costs

associated with producinga good or service are

recorded only after thegood or service is actually

produced, completed orsold.

Used to support just-in-time operations and

focuses on the output ofan organisation and thenworks backwards whenallocating costs betweencost of goods sold and

inventories.

simplifies the accountingrecords by avoiding the

need to follow themovement of materialsand work-in-progress

through the manufacturingprocess within the

organisation.

involve the maintenanceof a raw materials andwork-in-progress accounttogether with a finished

goods account.

DEFINITION


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Number ofunits

produced

Unit countlisted

in the bill ofmaterials

eachcomponent


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SUBJECT TO THE

FOLLOWING PROBLEMS:

Requires an accurate production count:

number of finished goods produced is the multiplier inthe backflush equation, so an incorrect count will

relieve an incorrect amount of components and rawmaterials from stock

Requires an accurate bill of materials:

bill of materials contains a complete itemization of

the components and raw materials used toconstruct a product. If the items in the bill areinaccurate, the backflush equation will relieve anincorrect amount of components and rawmaterials from stock.


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Requires excellent scrap :

will inevitably be unusual amounts of scrap orrework in a production process that are notanticipated in a bill of materials. If you do not

separately delete these items from inventory, theywill remain in the inventory records, since thebackflush equation does not account for them

Requires a fast production cycle :

does not remove items from inventory untilafter a product has been completed, so the

inventory records will remain incomplete until

such time as the backflushing occurs. Thus, avery rapid production cycle time is the bestway to keep this interval as short as possible.

Under a backflushing system, there is norecorded amount of work-in-process inventory.


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WHO SHOULD USE THEM?

Most sense for private companies with just-in-time inventorysystems or those that use activity-based costing.

Not consistent with GAAP and cannot be used by publiccompanies that are subjected to strict reporting requirements.

Companies that must be audited, either internally or byindependent third-party auditors, may not be able to usebackflush costing because it does not leave much of an audittrail.


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Backflush is not suitable for longproduction processes, since it takestoo long for the inventory records tobe reduced after the eventualcompletion of products.

It is also not suitable for theproduction of customized products,since this would require the creation

of a unique bill of materials for eachitem produced.


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DIFFERENT VARIATION

Other backflushcosting methodsrecord the rawmaterials when

they arepurchased by the

company.

The actual method

of backflushcosting can vary

betweencompanies,

depending on

their individualprocedures


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ADVANTAGES

Companies can measure the true andcomplete costs of a particular

production run because they record all

of the costs at once, at the end of theprocess, rather than before, during,and after the production process.

Avoiding all manualassignments of costs to productsduring the various productionstages, thereby eliminating alarge number of transactionsand the associated labor.


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DISADVANTAGES

By eliminating thework-in-process

account, backflushcosting makes themethod go

against generallyaccepted

accountingprinciples (GAAP).

The main concern isthat inventory is

undervaluedduring somephases of

production becausethere is no work-in-

process account tocatch those costs

1_jit & backflush (g2)

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