1_jit & backflush (g2)
TRANSCRIPT
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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Prevent inventorybecoming obsolete or out
of date.Avoid the build-up ofunsold finished product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