Application of Just in Time System in Ford - Milestone
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Technology and Business Practices
Just in Time system relies on reduction of lead times for its success. Ford should ensure that it reduces its lead-time in order to implement this system effectively. It needs to measure all its current lead times and try setting up new targets that will help in the shortening of the lead-time (Lai & Cheng, 2009). Through effective collaboration between the production manager and all its suppliers, Ford will be able to plan on how it can effectively reduce its lead-time. It should also consider trying to change its organizational structure to move away from functional orientation to product orientation. This will make the departments responsible for producing various products to be close to each other and thus it will be easy for the assembling of the new 2012 Ford Explorer. It should also ensure that it reduces the batch sizes in all its work centers. It should also consider reducing its order submission process. It can achieve this by reducing the period between order entry, order acceptance and the time that it carries out the actual production of cars (Sulivan, 2005). It could also consider reducing scheduling and sequencing time spent while assembling its vehicles. This can be achieved by increasing the frequency of scheduling of the assembling plant.
Ford should consider using radio-frequency identification technology (RFID) in its Just in Time system. This technology uses radio frequency electromagnetic fields to transfer data from the stock to the computer systems of an organization. This technique will assist the inventory management of Ford in several ways. If the inventory at warehouses or distribution centers of Ford drops to a certain level, it will automatically place orders to suppliers. In addition to this, RFID technology will assist Ford in tracking the location of its entire inventory within a short time. This system uses radio transmitter receivers known as interrogators to send signals to tags attached to an inventory (Shepard, 2005). The information contained in a tag is electronically stored in a non-volatile memory. It stores information on production date of a particular component, stock number or batch number of a particular component in stock. There are several types of tags that Ford could opt installing in its Just in Time systems. These tags include battery assisted passive and active tags. A tag transmits its signals depending on the frequency that the tag uses (Shepard, 2005). The frequencies normally used by tags include HF frequencies and LF frequencies.
Conclusion and Overall Recommendations.
The goal of this proposal was to determine how Ford could reduce mismanagement of its inventory using Just in Time system. It also aimed at determining whether Ford could reduce inventory wastage, delays in production and high storage costs. It wanted to prove that by Ford using electronic data interchange and total quality control in its inventory management it would reduce inventory mismanagement. From the review I conducted from various sources, I was able to discover that Ford will reduce its wastages if it adopts Just in Time system. This is because it will eliminate the waste arising from overproduction of cars since it will only produce cars when the customers demand them (Bragg, 2009). Furthermore, it will reduce the wastes arising from production of defective cars. It will also add value to its production system. This is because it will have the opportunity of reducing its lead-time and thus the level of consumer satisfaction will increase. I also discovered that the level of supplier’s satisfaction would increase if ford adopts JIT. This is because the suppliers will be incurring minimal costs while supplying the components used to manufacture 2012 Ford Explorer to the premises of Ford. From my research, I also discovered that Ford would improve job satisfaction if it adopts just in time systems (Jeston & Nelis, 2008). This is because this system requires employee’s participation and thus the employees will appreciate the fact that Ford appreciates their efforts. Since Just in Time system concentrates on total quality control, Ford will improve its competitive advantage due to production of high quality goods. This will improve its brand loyalty.
In order to implement JIT in Ford, it needs to use electronic data interchange. This will help Ford to transfer documents and other business data from its head office to its supplier’s computers without the need of physical movement. It also needs to use value-added networks to connect its supplier’s computers with its systems. This system facilitates easy audit of all the documents and books of account in Ford’s accounting system and thus Ford will be able to reduce the amount of fraud involved in the supply of its products (Kaynak, 1997). Ford should also adopt total quality control as a business practice. This practice will assist Ford to improve its production process in an attempt of reducing wastages and shortages of production due to improved and efficient production processes.
- Ford should train all its employees on the new technological methods of production that it will implement after adopting Just in Time systems. By training its employees, it will reduce the dangers that its employees may be exposed to while operating the new system. In addition to this, it will reduce the level of employee’s resistance due to the change in the business processes.
- Ford should seek additional finance from external sources of finance in order to finance this project. This is because the implementation of Just in Time system requires the instillation of radio frequency identification technology in all its stocks. It also needs funds to pay for the legal fees in signing new contracts with suppliers
- Ford should increase the number of staff in the quality control department. This is because Just in Time systems require continuous inspection of stock so that obsolete or damaged stock can be eliminated from the inventory systems.
- Ford should consider hiring new experts in the IT department. This is because it needs to monitor how it carries out electronic data interchange
- Ford should consider signing new contracts with efficient and reliable suppliers. This is because it needs to ensure that it receives supplies for components used in the manufacture of 2012 Ford Explorer on time.
- Ford should consider conducting business process re-engineering in all its production processes.
High level Implementation Plan
Ford should adopt several approaches so that it successfully implements Just in Time systems. It should first redesign its flow process. If it successfully redesigns its flow process, it will reduce the time it spends while setting up machines for vehicle assembly. In addition to this, it will balance the capacity of each workstation and thus each workstation will be producing optimal results (Kaynak, 1997). After redesigning its flow process, it should consider adopting total quality management approach in all its production process. It could achieve this by setting up policies that will force the workers to adhere to the rules of maintaining quality. It should also conduct routine inspection on all the supplies that it receives from its suppliers so that it identifies whether the quality of its supplies is good. It should also increase the number of staff in the quality control department. After it adopts total quality control, it should stabilize its production schedule. If it stabilizes its production schedules, it will achieve maximum utilization of capacity. In addition to this, it will reduce its lead-time thus improving customer satisfaction.
Ford should adopt a Kanban pull system in its implementation of Just in Time system. In this approach, Ford will be producing its cars if the demand for these cars increases. It should use Kanban cards that will help it track how several components move along the assembly plan (Sulivan, 2005). This system will help in stabilizing production level in Ford. Ford should also work closely with all its suppliers. This will ensure that it receives all its supplies on time and thus reducing production delays. Ford should provide fair terms of purchase and pay all its suppliers on time so that it gains the trust of all its suppliers.
Ford should adopt several forms of technology for it to implement Just in Time system. It should first adopt electronic data interchange in all its transactions. This will help Ford since it will reduce errors that are associated with manual data entry. It should also install RFID in its entire inventory and this will help it track the level of its inventory to avoid stock out costs (Shepard, 2005).
Summary of the project
Ford is a successful company since it was eighth in the Fortune 500 list. Furthermore, it has about 90 plants where it has employed 213,000 employees. It supplies engines to Lotus and McLaren. It also produces buses such as E-Series, F-650 and B700. Demand for Ford’s products has been increasing since it produces high quality vehicles. Due to the increase in demand, the inventory level of this company has also increased and thus there is a need to manage this inventory so that it reduces wastages due to obsolete stocks (Kaynak, 1997). Ford has been receiving its supplies from various suppliers and thus it spends a lot of money in managing its supply chain. It discovered that it lost a lot funds since most of its air bags and electrical wiring systems became damaged while they were in its warehouse. If Ford adopts Just in Time system, it will have an opportunity of managing its stock so that it reduces its stock holding costs and lost goodwill due to production delays.
If Ford adopts Just in Time systems, it will be producing cars when customer demand for cars increases. This will help to reduce its inventory levels to almost zero and thus reducing its stock holding costs (Bragg, 2009). This system also uses automatic delivery systems and thus it will reduce its lead-time. It needs to invest about $ 6 million for the purchase of new delivery trucks so that it improves the delivery time and the number of times that it places orders to its suppliers for the supply of components such as air bags and electrical wiring systems.
In the first stage of implementation of Just in Time system, Ford needs to redesign its flow process. After the redesign of the flow process, it should implement total quality control in all its processes. It should then stabilize its schedules and adopt a Kanban pull system. After adopting this system, it should work closely with its suppliers and this will help it reduce its lead-time and shortages in supply. Moreover, it needs to invest funds in acquiring the latest technological equipment that will assist it implement electronic data interchange. Furthermore, it will use these funds in purchasing RFID technology for tracking inventory.
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