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Ved FSN Jit
Ved FSN Jit
The VED analysis is done to determine the criticality of an item and its effect on production and
other services. It is specially used for classification of spare parts. If a part is vital it is given V
classification, if it is essential, then it is given E classification and if it is not so essential, the
part is given D classification. For V items, a large stock of inventory is generally maintained,
while for D items, minimum stock is enough.
VED Analysis attempts to classify the items used into three broad categories, namely Vital,
Essential, and Desirable. The analysis classifies items on the basis of their criticality for the
industry or company.
Vital: Vital category items are those items without which the production activities or any other
activity of the company, would come to a halt, or at least be drastically affected.Essential:
Essential items are those items whose stock out cost is very high for the company. Desirable:
Desirable items are those items whose stock-out or shortage causes only a minor disruption for a
short duration in the production schedule. The cost incurred is very nominal.
VED Analysis is very useful to categorize items of spare parts and components. In fact, in the
inventory control of spare parts and components it is advisable, for the organization to use a
combination of ABC and VED Analysis. Such control system would be found to be more
effective and meaningful.
VED analysis is used mainly for the control of spare parts, where V stands for vital, E stands for
essential and D stands for desirable. Absence of vital spare parts will immediately affect
production, absence of essential spare parts will affect production after a few hours or so and
absence of desirable spare parts will affect production only after a week or so.
It is the analysis for monitoring and controlling stores and spare parts inventory by classifying
them into three categories, viz, vital, essential and desirable. The mechanics of VED analysis is
similar to that of ABC analysis. Whereas in ABC classification inventories are classified on the
basis of their consumption value and in HML analysis the unit value is the basis, criticality of
inventories is the basis for vital, essential and desirable categorization.
The stores when subjected to analysis based on their criticality can be classified into vital,
essential and desirable stores. This analysis is termed as VED analysis
. Vital: items without which treatment comes to standstill: i.e. non- availability can not be
tolerated.
Essential: items whose non availability can be tolerated for 2-3 days, because similar or
alternative items are available.
Desirable: items whose non availability can be tolerated for a long period. Although the
proportion of vital, essential and desirable items varies from hospital to hospital
depending on the type and quantity of workload, on an average vital items are 10%,
essential items are 40% and desirable items make 50% of total items available.
Although not included in scientific VED analysis, in some public organizations which are static
or inefficiently managed, there is a peculiar category of U items which can be grouped as
unnecessary. These unnecessary items get purchased due to the following reasons.
a) Thoughtless continuation of previous purchase.
b)
c)
Fear of change
d)
e)
The vital items are stocked in abundance; essential items are stocked in medium amounts,
and desirable items we stocked in small amounts.
By stocking the items in order of priority, vital and essential items are always in stock which
means a minimum disruption in the services offered to the people
FSN Analysis
Fast moving
Slow moving
Non- moving
Obsolete
The last date of receipt of the items or the last date of the issue of items, whichever is
later, is taken into account.
The time period is usually calculated in terms of months or number of days and it pertains
to the time elapsed seems the last movement was recorded.
Items whose stocks at hand are higher as compared to their rates of consumption.
c)
JUST IN TIME
An inventory strategy companies employ to increase efficiency and decrease waste by receiving
goods only as they are needed in the production process, thereby reducing inventory costs.
This method requires that producers are able to accurately forecast demand. A good example
would be a car manufacturer that operates with very low inventory levels, relying on their supply
chain to deliver the parts they need to build cars. The parts needed to manufacture the cars do not
arrive before nor after they are needed, rather they arrive just as they are needed.
This inventory supply system represents a shift away from the older "just in case" strategy where
producers carried large inventories in case higher demand had to be met.
Just-in-time manufacturing was a concept introduced to the United States by the Ford motor
company. It works on a demand-pull basis, contrary to hitherto used techniques, which worked
on a production-push basis.
To elaborate further, under just-in-time manufacturing (colloquially referred to as JIT production
systems), actual orders dictate what should be manufactured, so that the exact quantity is
produced at the exact time that is required.
Just-in-time manufacturing goes hand in hand with concepts such as Kanban, continuous
improvement and total quality management (TQM).
Just-in-time production requires intricate planning in terms of procurement policies and the
manufacturing process if its implementation is to be a success.
Highly advanced technological support systems provide the necessary back-up that Just-in-time
manufacturing demands with production scheduling software and electronic data interchange
being the most sought after.
Advantages Just-In-Time Systems
Following are the advantages of Adopting Just-In-Time Manufacturing Systems:
Just-in-time manufacturing keeps stock holding costs to a bare minimum. The release of
storage space results in better utilization of space and thereby bears a favorable impact on
the rent paid and on any insurance premiums that would otherwise need to be made.
As under this technique, only essential stocks are obtained, less working capital is
required to finance procurement. Here, a minimum re-order level is set, and only once
that mark is reached, fresh stocks are ordered making this a boon to inventory
management too.
Due to the aforementioned low level of stocks held, the organizations return on
investment (referred to as ROI, in management parlance) would generally be high.
As just-in-time production works on a demand-pull basis, all goods made would be sold,
and thus it incorporates changes in demand with surprising ease. This makes it especially
appealing today, where the market demand is volatile and somewhat unpredictable.
Just-in-time manufacturing encourages the 'right first time' concept, so that inspection
costs and cost of rework is minimized.
High quality products and greater efficiency can be derived from following a just-in-time
production system.
Close relationships are fostered along the production chain under a just-in-time
manufacturing system.
Disadvantages:
Following are the disadvantages of Adopting Just-In-Time Manufacturing Systems:
There is a high reliance on suppliers, whose performance is generally outside the purview
of the manufacturer.
Due to there being no buffers for delays, production downtime and line idling can occur
which would bear a detrimental effect on finances and on the equilibrium of the
production process.
The organization would not be able to meet an unexpected increase in orders due to the
fact that there are no excess finish goods.
Just-in-time manufacturing may have certain detrimental effects on the environment due
to the frequent deliveries that would result in increased use of transportation, which in
turn would consume more fossil fuels.
Precautions:
Following are the things to Remember When Implementing a Just-In-Time Manufacturing
System:
Management buy-in and support at all levels of the organization are required; if a just-intime manufacturing system is to be successfully adopted.
Building a close, trusting relationship with reputed and time-tested suppliers will
minimize unexpected delays in the receipt of inventory.
The design flow process needs to be redesigned and layouts need to be re-formatted, so as
to incorporate just-in-time manufacturing.
Quality enhancement programs should be adopted, so that total quality control practices
can be adopted.
Motion waste should be minimized, so the incorporation of conveyor belts might prove to
be a good idea when implementing a just-in-time manufacturing system.
The just-in-time philosophy was also applied to other segments of the supply chain in several
types of industries. 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
service involve applying information systems and mobile hardware to deliver customer
information as needed, and reducing waste by video conferencing to cut travel time.[5]