Murphy Case Analysis Essay

Just-In-Time Concept.Just-In-time manufacturing, or JIT, is a way philosophy aimed at eliminating manufacturing wastes by producing only the right amount and combination of parts at the right place at the right time. This is based on the fact that wastes result from both activity that adds cost without adding value to the product.The goal of JIT, is to minimize the presence of non-value-adding operations and non-moving inventories in the mathematical product line. This will result in shorter throughput times, better on-time delivery performance, higher(prenominal) equipment utilization, lesser space requirement, lower costs, and greater profits. The key behind a successful slaying of JIT is the reduction of inventory levels at the various stations of the production line to the absolute minimum.This necessitates good coordination between stations such that every station produces only the exact volume that the next station needs. On the separate hand, a station pulls in only the ex act volume that it needs from the preceding station. In this case, Murphys management started the implementation of JIT without wholly apprehension the concept the poor performance was caused by lack of knowledge about JIT and lack of communication/coordination between the departments.Problems at MurphyThe CEO of Murphy Manufacturing cargon the idea of JIT (reducing inventory holding cost while improving production efficiency) based on a few books he read, thus he wanted to implement this concept in his comp some(prenominal) even though the present MRP system had been working very well for a long time. On the former(a) hand, Joe Vollbrach, Vice President of Operations for Murphy Manufacturing, initiated the implementation process based on the way it was working in the book examples he read without doing any feasibility study a or having a complete understanding about how to implement JIT concept in a slender manufacturing environment identical which Murphy is in.The result is d isastrous, purchasing department are constantly ranking strongs at very high cost the shipping/receiving department are harry by endless loading/unloading task production efficiency was down due to lack of production materials and no clear production chronicle sales people has to deal with angry customers because or so the order arent shipped/delivered on time.General JIT Implementation GuidelinesSince JIT encompasses a number of functional areas of the company, top management support are a must. Full acceptance by top management is required to empower middle management to overcome the inevitable roadblocks in implementation. In this case, John should take the initiative to be the champion of JIT concept and provide the full support for implementation.Second, training and education as a original requirement for JIT implementation in order to promote a signifi evoket change in attitude of the workforce that will create an environment conducive to completing the implementation. T raining courses should be made available for employees to fully understand JIT concept and harness it.Third, it is important that JIT is seen as a philosophy rather than a set of add-on techniques to current practices. The company must question why and how it uses JIT and be able to figure out the results of undertaking JIT and incorporate them into its marketplace strategy. By adhering to these guidelines on implementation and instill the knowledge of JIT concept to entire employees at Murphys, the transition process to JIT will go smoothly and best JIT implementation techniques will be utilized.The pros/cons of implementing JIT in Small Manufacturing EnterprisesMost publications discussing JIT implementation cerebrate on large manufacturing firms, the environment in which the concepts arose. Because of the limitations that small manufacturing enterprises face, which include special(a) staffing and material resources and reduced bargaining power with customers suppliers and fina ncial institutions, it is not clear that all JITcomponents are applicable to every environment. Thus choosing the right JIT implementation strategy is crucial for Murphys future successes.Most Small Manufacturing Enterprises depend heavily on a few study customers, thus normally suffer displace demand from these key customers. In regard to vendor relationships, their purchase volume is not large enough to give them leverage over their suppliers to purchase in a small batch size with a good quality at a definite time. Compared to large firms, Small Manufacturing Enterprises normally have limited free cash to fund investment in new production concepts or technologies. They also lack bargaining power with their creditors and debtors, and have difficulties in maintainting loans from financial institution. Hence, forward planning is constrained by cash flow maintenance. Consequently, if Small Manufacturing Enterprises get involved in innovative projects at all, they will focus on pr ojects with short term returns and overlook initiatives promoting long-term results.Small Manufacturing Enterprises also have limited non-cash resources (machinery or people). They do not normally have peculiar(prenominal) departments such as a training department or an engineering department. With limited management staff there is a small pool for potence champions of new techniques. Also, small firms may be so small that a change in production cannot be implemented without affecting the entire plant. This is another(prenominal) barrier for Small Manufacturing Enterprises to improve their operations as they have to risk the whole factory in order to know whether a certain technique is appropriate or not to the company. Which is very true in this situation, slight modification in any one of the major operation departments, will affect the entire company. Thus, every step has to be carefully analyzed and backup techniques needs to be developed.However, there are also several advant ages for small manufacturers compared to heavy(a) ones. Small firms normally do not have union contracts and usually have fewer problems with resistance to change compared to large companies. A flatter arrangement is typical in small firms and it fosters more frequent open communication. Therefore, the decision making process is simpler and the result is conveyed faster throughout the employees. Compared to largefirms, small firms are used to working in smaller batches and are more accustomed to a flexible response to demand changes.Problems in Implementing JIT ComponentsFirst, Cross training is general for small manufacturers because of the need to cover absent employees from a small labor pool and is also easier to implement than in large companies. The only problem is that lengthened training is costly. Small manufacturers may train key employees individually and ask them to impart their knowledge to other worker. In this case, all the middle management can learn about JIT co ncept then passing it to production employees.Second, most small companies are very dependent on a few major customers. They lack bargaining power with their key customers and will not be able to compel these customers to order on a stable demand rate. The most desirable situation would be the cooperation of their customers in sharing their forecast demand and production schedule. Achieving this may be limited by bargaining power and hence the result may be production based on inaccurate forecasts resulting in using finished goods inventory as a buffer. Production level can be a great barrier for small businesses to fully adopt JIT.Third, JIT Purchasing is normally implemented as the last component, especially for small manufacturers, due toe lack of bargaining power with their suppliers. Small manufacturers normally do not give enough sales to their vendors and are forced to order in large batches and store a large amount of raw material or they will suffer a higher cost to get th e materials just-in-time. All these potential problems need to be studied, when implementing the JIT concept at Murphy.