In a time when global competition requires faster response times and lower prices, having an accounting system in place to accurately and effectively support business operations is extremely important.
Operational efficiencies lead to lower operating costs and higher operating margins, and Just—in—Time Accounting helps identify many potential candidates for increasing efficiency. Enter your mobile number or email address below and we'll send you a link to download the free Kindle App.
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Then you can start reading Kindle books on your smartphone, tablet, or computer - no Kindle device required. Would you like to tell us about a lower price? If you are a seller for this product, would you like to suggest updates through seller support? Just—in—time inventory management is a performance improvement tool adopted by many companies recently. Now in a new edition, Just—in—Time Accounting shows how to turn an accounting department into a quicker and more reliable unit. The new edition includes updated text, exhibits, and examples.
Plus, example controls flow charts are added. Whether they are changing their accounting department out of necessity or just looking to enhance it, controllers and CFOs using this book will transform their current department and increase the efficiency and effectiveness of their operations. Read more Read less. Save Extra with 4 offers. To get the free app, enter mobile phone number. See all free Kindle reading apps.
Tell the Publisher! I'd like to read this book on Kindle Don't have a Kindle? No customer reviews. Share your thoughts with other customers. Write a product review. Most helpful customer reviews on Amazon. I wish this book existed during the turbulent 80's and early 90's. Outmoded accounting system's, corporate reorganizations, high employee turnover, pressure to do more, faster with fewer resources. As a Controller, most of my biggest headaches involved the amount of time required to close the books. The original closing schedule was 10 days into the new period.
Then it was 8 days.
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Then 5, then 4 days. Production volumes can be smaller than lots likely to be purchased. Inventories build up and must be tracked. Output varies too much for pull systems to work well. Look ahead, and build what will be needed. At the shop floor level, work orders must be tracked. In some early common operations such as metal pressing, blanking, or molding, volumes may be high enough and level enough to use a pull system. Work orders, generating a master schedule, tie together purchasing, parts, subassemblies, assemblies, and customer orders. Customer Engineering: With low-volume, complex engineered products or with custom manufacturing, there is no regularity in production patterns.
The load on the facility can vary widely; what took two weeks when ordered in January might take four months in June. Queues and congestion are a major concern, and lead-time management requires a high level of analysis and detail.
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Examples of such facilities are machine tool manufacturers, custom-equipment builders, and products with a high option and custom content. There is no regularity in materials usage; some materials may be ordered only after a customer order is received. MRP is invaluable as an information management tool. It books orders, maintains bills, whether custom or standard, and coordinates customer orders, shop orders, and purchasing orders.
The factory runs on work orders generated by MRP. MRP still plays a role, however, in maintaining information about materials and inventory availability and coordination between departments. They are too complex and costly for smaller shops. Moreover, the production supervisor owns the inventories that are produced; they are not pushed into other hands. He or she is thus forced to recognize that increasing the lead time of manufacturing increases WIP as well as finished inventory. This is completely unlike conventional pull systems like OP, OQ in which the inventory management function is separated from production or replenishment.
Indeed, the kanban method of posting circulating work orders makes the current work commitment of the manufacturing cell immediately obvious to everybody in the cell. Planning setups in advance, therefore, or opportunistically consolidating batches to save setups can become routine. The mix changes and demand surges that call for personnel reassignments become more transparent.
Kanban has another virtue that JIT people like. The fixed pool of cards in a kanban cell reduces the extent to which demand fluctuations are passed on by the cell to other upstream cells. The cards provide an upper bound that filters out extreme variations. At the same time, the system disciplines the downstream customer by punishing wide fluctuations or demand surges. A sudden surge will not be satisfied until the limited number of cards circulate many times. This encourages uniform demand and level schedules on the downstream side.
Kanban Is Reactive. Kanban is not without difficulties, though, which show up especially when it is forced to operate in complex operations where variations are too great or too intractable to be disciplined easily. The kanban method works best where there is a uniform flow—a level-loaded, synchronous, or balanced system. It does not plan well. JIT enthusiasts should realize that when a kanban system is implemented in an environment full of variations in supply and demand, it is even less likely than MRP to operate in a stockless manner—that is, without a burdensome amount of WIP.
Variability causes the same extreme problems that it does in other pull systems Extra cards or containers—buffers, for example—have to be introduced to cover variability and avoid back orders. Nothing in a kanban system magically reduces inventory levels due to some internal rule or formula. Since the system is reactive, changes in demand level percolate slowly from stage to stage. Even if it is perfectly obvious that demand is rising, there is no standard way to prepare for the situation. Some U. Where does all this leave us?
Which system should the manufacturing manager choose? The simple fact is that there is no need to choose between push or pull. These methods are not mutually exclusive, and each has its pros and cons. The best solution is often a hybrid that uses the strengths of both approaches. Pull methods tend to be cheaper because they do not require computerization—hardware or software.
They leave control and responsibility at a local level and offer attractive incentives for lead-time management. MRP systems are good at materials planning and coordination and provide a natural hub for inter-functional communication and data management. When it comes to work release, they are good at computing quantities even if they are weak on timing. A successful hybrid system can use each approach to its best advantage. The key to tailoring production control lies in understanding how the nature of the production process drives the choice of control method.
The accompanying exhibit summarizes various manufacturing control methods and process characteristics. For a continuous-flow process, ongoing materials planning is not essential and JIT supply techniques work well. Order releases do not change from week to week, so a rate-based approach can be used. At the shop floor level, JIT materials-flow discipline combined with pull release—kanban, for example—is effective.
Order release may require MRP calculations if changes are frequent or if it is necessary to coordinate with long lead times or complex materials supply and acquisition. Pull methods work well on the shop floor. As we move to more dynamic, variable contexts—like job shop manufacturing—MRP becomes invaluable for planning and release. Pull techniques cannot cope with increasing demand and lead-time variability. Shop floor control requires higher levels of tracking and scheduling sophistication. Materials flow is too complex for strict JIT.
Finally, in very complex environments, even job release requires sophisticated push methods. Where these are too expensive, the only option is to live with poor time performance, large inventories, and plenty of tracking and expediting. The Best of Both. The dividing line between push and pull is obviously not sharp. In many situations, the two can coexist and are complementary. Most important, it is perfectly possible to take elements of one system and add them to the other. If pull systems have natural lead-time reduction incentives and push systems do not, for example, there is nothing to prevent managers from instituting a program of incentives in the context of a push system.
Given the importance of lead-time reduction, in fact, it is crucial for managers to measure lead-time performance and provide feedback on response and turnaround times to each work center and shop. There is nothing to stop managers from compensating for the deficiencies of pull systems either. Pull systems, for instance, have no means of lot tracking—pegging lots to specific customers. So why not add lot tracking and data collection systems to a kanban line, leaving the release function as a pull system?
Just-In-Time Accounting: How to Decrease Costs and Increase Efficiency by Steven M. Bragg
One simple and effective approach is to accumulate the information physically, with the lot itself as it moves through various process stages, and then record it electronically at inventory points in the process. Theoretically, there is no limit on the variety of control methods that can be developed. Most are hybrids.
Attempts to implement pure push systems are usually accompanied by the growth of some informal, reactive pull procedures. In a way, such informal procedures are only piggybacking on the official MRP system, using short-term release information that MRP has not yet processed. Moreover, it undermines the credibility of the official system. Since there can be no coordination between the two, disbelief in the official system becomes self-fulfilling.
In these situations, the order release and inventory management functions are of little value. The facility can be designed to operate in a JIT manner so that any material that enters the facility flows along predictable paths and leaves at predictable intervals. Work is released by a pull mechanism, so there is no WIP buildup on the floor.
Such a JIT-MRP line produces to meet a daily or weekly build rate rather than build to specific individual work orders. In short, MRP serves mainly for materials coordination, materials planning, and purchasing and not for releasing orders. The shop floor is operated as a JIT flow system.
Tandem Push-Pull. In a repetitive batch environment where lead times are fairly stable, either an MRP or a pull approach can achieve order release. MRP would be best for purchase planning of items with long lead times.
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Actual build routines closely correspond with the MRP II schedule, yet the timing of subassembly and assembly releases can be eliminated to allow the shop floor to change rapidly in response to short-term demand pull. Subassembly and assembly are flexible, short-cycle processes that can easily be run on a pull basis. In this common situation, push and pull systems can simply be juxtaposed—MRP II to ensure parts availability based on end-item schedules and kanban for actual subassembly and assembly releases.
I believe the knowledge and experience I gathered during the assignment will be extremely helpful in my future academic life and professional life. I will be grateful to you if you accept the assignment. Your support in this regard will be highly appreciated. Thanking you. It was first adopted by Toyota manufacturing plants by Tahiti Ohio. The main concern at that time was to meet consumer demands.
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 good manufacturing techniques to help them rebuilding the economy. They also had a strong working ethnic which was concentrated on work rather than leisure, sleeked continuous improvement, life commitment to work, group conscious rather than individualism and achieved common goal. This kind of motivation had driven Japanese economy to succeed.
Because of the natural constraints and the economy constraints after World War II, Japanese Manufacturers looked for a way to gain the most efficient use of limited resources. Before the introduction of JIT, there were a lot of manufacturing defects for the existing system at that time.
According to Hirano, this included inventory problem, product defects, risen cost, large lot production and delivery delays. The inventory problems included the unused accumulated inventory that was not only unproductive, but also required a lot of effort in storing and managing them. Other implied problems such as parts storage, equipment breakdowns, and uneven production levels.
They must create a "defect-free" process. Instead of large lot production - producing one type of products, they awarded that they should produce more diversified goods. There was also a problem of rising cost, the existing system could not reduce cost any further but remember improvement always leads to cost reduction. When sales activities warrant more production, inventory is "pulled" and more manufacturing supplies are ordered. The result is a smooth flow of production and reduced inventory costs.
This method relies on signals given at different points in the production process that tell the manufacturer when to make the next part. Stock depletion signals the ordering of new parts. The just-in-time method is used by major auto manufacturers, such as Toyota, who take advantage of synchronized assembly line systems. Effects of just in time: A surprising effect of JIT was that car factory response time fell to about a day. This improved customer satisfaction by providing vehicles within a day or two of the minimum economic shipping delay. Also, the factory began building many vehicles to order, eliminating the risk they would not be sold.
This improved the company's return on equity. Since assemblers no longer had a choice of which part to use, every part had to fit perfectly. This caused a quality assurance crisis, which led to a dramatic improvement in product quality. Eventually, Toyota redesigned every part of its vehicles to widen tolerances, while simultaneously implementing careful statistical controls for quality control. Toyota had to test and train parts suppliers to assure quality and delivery.
In some cases, the company eliminated multiple suppliers. When a process or parts quality problem surfaced on the production line, the entire production line had to be slowed or even stopped. No inventory meant a line could not operate from in- process inventory while a production problem was fixed. Many people in Toyota predicted that the initiative would be abandoned for this reason. In the first week, line stops occurred almost hourly.
But by the end of the first month, the rate had fallen to a few line stops per day. After six months, line stops had so little economic effect that Toyota installed an overhead pull-line, similar to a bus bell-pull, that let any worker on the line order a line stop for a process or quality problem. Even with this, line stops fell to a few per week. The result was a factory that has been studied worldwide. It has been widely emulated, but not always with the expected results, as many firms fail to adopt the full system.
In the commercial sector, it meant eliminating one or all of the warehouses in the link between a factory and a retail establishment. Examples in sales, marketing, and customer 6. Cutting setup time allows the company to reduce or eliminate inventory for "changeover" time.
The tool used here is SMED single-minute exchange of dies. Small or individual piece lot sizes reduce lot delay inventories, which simplifies inventory flow and its management. Having employees trained to work on different parts of the process allows companies to move workers where they are needed. If there is no demand for a product at the time, it is not made.
This saves the company money, either by not having to pay workers overtime or by having them focus on other work or participate in training. A company without inventory does not want a supply system problem that creates a part shortage. This makes supplier relationships extremely important. Supply is synchronized with production demand and the optimal amount of inventory is on hand at any time.
When parts move directly from the truck to the point of assembly, the need for storage facilities is reduced. Just in time Implementation: To implement Just In Time JIT the first things we need to do is lower inventory levels, to do this we have to tackle several issues, the first to tackle is almost always the issue of setup times. In most companies the size of the batch is driven by the time taken to setup the machines, often many hours to change from one production item to the next. This time has to be paid for so it is allowed for within the cost and an economical batch quantity is defined, normally a few weeks worth of production or more depending on the industry.
The aim of SMED is exactly what it says, it wants to reduce setups to single minutes or seconds. This reduces the need for transportation and excessive amounts of space. The reduction in batch sizes immediately reduces your lead times as each batch will take less time to be processes before you Some Key Elements of just in time: 1.
Reduce or eliminate setup times: Aim for single digit setup times less than 10 minutes or "one touch" setup -- this can be done through better planning, process redesign, and product redesign. A good example of the potential for improved setup times can be found in auto racing, where a NASCAR pit crew can change all four tires and put gas in the tank in under 20 seconds. How long would it take you to change just one tire on your car? Reduce lot sizes manufacturing and purchase : Reducing setup times allows economical production of smaller lots; close cooperation with suppliers is necessary to achieve reductions in order lot sizes for purchased items, since this will require more frequent deliveries.
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Reduce lead times production and delivery : production lead times can be reduced by moving work stations closer together, applying group technology and cellular manufacturing concepts, reducing queue length reducing the number of jobs waiting to be processed at a given machine , and improving the coordination and cooperation between successive processes; delivery lead times can be reduced through close cooperation with suppliers, possibly by inducing suppliers to locate closer to the factory.
Preventive maintenance: use machine and worker idle time to maintain equipment and prevent breakdowns. Flexible work force: Workers should be trained to operate several machines, to perform maintenance tasks, and to perform quality inspections. In general, JIT requires teams of competent, empowered employees who have more responsibility for their own work.