Murphy Case Analysis.

1218 words - 5 pages

Just-In-Time Concept.

Just-In-time manufacturing, or JIT, is a management 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 any 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 production line. This will result in shorter throughput times, better on-time delivery performance, higher equipment utilization, lesser space requirement, lower costs, and greater profits. The key behind a successful implementation 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 other hand, a station pulls in only the exact volume that it needs from the preceding station. In this case, Murphy's management started the implementation of JIT without wholly understanding the concept; the poor performance was caused by lack of knowledge about JIT and lack of communication/coordination between the departments.

Problems at Murphy:

The CEO of Murphy Manufacturing liked 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 company even though the present MRP system had been working very well for a long time. On the other 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 small manufacturing environment like which Murphy is in.

The result is disastrous, purchasing department are constantly ordering materials at very high cost; the shipping/receiving department are harassed by endless loading/unloading task; production efficiency was down due to lack of production materials and no clear production schedule; sales people has to deal with angry customers because most the order aren't shipped/delivered on time.

General JIT Implementation Guidelines:

Since 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 fundamental requirement for JIT implementation in order to promote a significant change in attitude of the workforce that will create an environment conducive to completing the implementation. Training courses should be made...

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