Process Cycle Efficiency (PCE) and JIT The manufacturing company for which you currently serve as plant controller is contemplating moving from a conventional manufacturing layout to a just-in-time (JIT) system. The overall strategy is to improve manufacturing operations, thereby enabling the company to compete more effectively in an increasingly competitive environment. As a member of the decision-making team, you have been asked to provide input regarding the decision at hand.
Required: Prepare a memo for management in which you address the following issues:
1. Comment on the relative costs and benefits of adopting a JIT manufacturing strategy.
2. For which type of companies, from a competitive standpoint, would the adoption of JIT be most useful? Why?
3. Define the term processing cycle efficiency (PCE). Given the estimated data below, calculate the PCE for your plant under the existing manufacturing layout and after the proposed implementation of JIT:
|
Activity
|
Current System
|
After JIT Implementation
|
|
Storage
|
3 hours
|
1 hour
|
|
Inspection
|
40 minutes
|
8 minutes
|
|
Moving
|
75 minutes
|
20 minutes
|
|
Processing
|
2 hours
|
75 minutes
|
4. Distinguish between value-added time and non-value-added time within the present decision context.