Implementation of JIT Philosophy in Publishing Industry

Research Paper

By: Amit Divekar

Roll No: 115, PGDM

Guide: Dr. J. S. Lamba

Content:

1. Introduction

2. Literature Review

1) Just In Time Literature

a. Concept

b. Types of Wastes

c. Constraints

2) Production industry application of Just In Time

a. Practical implementations

b. Concept of SMED

c. Problems

3) Publication industry Concerns

4) Utility of the Findings

5) Areas which are focussed for improvements

3. Publication Industry

1) Types of books & strategy

2) Distribution Model

3) Waste Identification

4. Solutions to Reduce Wastes

5. Conclusion

6. References

1. INTRODUCTION

The objective of this paper is to discuss the implementation

of Just In Time (JIT) philosophy in publishing industry. The

main focus of this paper would be on ways to reduce the

inventory level in book stores and the overproduction of

copies by the publisher. Publishing industry is going through

transformation with the advent of digital technology. New

concepts as print on demand have the capability to radically

reduce the inventory level required to be held by the

publisher. Though there is raising trend towards e-books and

online publications, the popularity of the book format for

reading is undeterred. To cope up with the rising pressure on

cost management we will try to find out methods to apply Just

In Time (JIT) philosophy in publishing industry.

2. LITERATURE REVIEW

1) Just In Time Literature

a. Concept

During world war-2, flexibility was the key requirement and

this altered the manner in which operations management theory

and practice developed. One important philosophy of lean

management emerged as a result of the increasingly fierce

marketplace. It provides the organizational mechanism for

defining value & thereby creating value for customers. Lean

management is based on premise of identifying waste in any

system and try to continually reduce the waste to create a

value stream for any product or service.

Waste is defined according to lean management principles as

any process or set of activities that does not add value to

the product or service which the firm is producing or

delivering. (B Mahadevan, 2010)

Just in time (JIT) is a management strategy that strives to

improve a business' return on investments by reducing in-

process inventory and associated carrying costs. To meet JIT

objectives, the process relies on signals or Kanban between

different points, which are involved in the process, which

signal when & how much make to produce the next part. JIT

focuses on continuous improvement and can improve a

manufacturing organization's return on investments, quality,

and efficiency. To achieve continuous improvement key areas of

focus could be flow, employee involvement and quality.

JIT relies on other elements in the inventory chain & its

effective application cannot be independent of other key

components. Toyota model is studied widely as a practical

example for implementation of the philosophy (Y Sugimori, K

Kusunoki, F Cho, S Uchikawa, 1977).

The core logic of JIT is of waste elimination in manufacturing

using deliberate methods. It creates disturbances in the

system to uncover the problem areas. Once the problem areas

are exposed, the organization will work towards solving the

problem & restoring the smooth production rate. It mainly

focuses on three areas in the production process/service

delivery i.e. lot size reduction, JIT Production, Quality

control (Richard Schonberger, 1982).

b. Types of Wastes:

After years of work to eliminate waste, Toyota, the Japanese

automobile manufacturer, identified the following seven types

of waste as the most prominent one: Over production, Waiting

Time, Transportation, Over-processing, Inventory, Motion,

Product defect.

While the first six wastes increase the cost of the

goods/service provided to the customer, the last one i.e.

product defect not only increases the cost to the manufacturer

but customer dissatisfaction results in loss of future

business and market share. Continuous improvement in the

processes to eliminate these wastes, save the cost to the

manufacturer. This reduction in the cost can be transferred to

the customer as a benefit which also acts as the competitive

advantage over the competitors.

c. Constraints

In the paper ‘Just-in-Time Under Fire: The Five Major

Constraints Upon JIT Practices’, Dr. Tony Polito & Dr. Kevin

Watson (2006) discuss problems in applicability of the concept

in different situations. Out of the identified constraints

those which are relevant for the scope of study of this

research paper are:

1. Customer-driven: Increasing customization demand by

customers and high degree of competition in market is not

inline with the waste reduction philosophy and standardization

as intended in JIT.

2. Logistics: JIT carries with itself the inherent risk of

insufficient buffer stock. Though the inventory level is

reduced by addressing the problems at each level, any problem

in logistics, which is backbone of this system, may cause

serious damage to organization.

3. Small supplier difficulties: As small suppliers lack the

economies of scale, also they face higher order processing

cost which they transfer to the manufacturer if the supplier

himself is not implementing JIT. So the effort by manufacturer

put in internal control is nullified by the extra cost from

supplier

Other two constraints are regarding organization culture and

finance & accounting practices of the firm, which are not

considered in the scope of this paper.

2) Production industry application of Just In Time

a. Practical implementations

Study by Richard E. White, Divesh Ojha and Ching-Chung

Kuo(2010) investigated the holistic implementation of just-in-

time (JIT) manufacturing in US industries.

Hing Kai Chan, Shizao Yin and Felix T.S. Chan(2010), studied

implementation of Just In Time philosophy in reverse

logistics. The paper accumulated the collective knowledge of

literature to conclude that process model with JIT can have a

better control on cost and efficiency of reverse logistics

activities, and product life cycle management with JIT helps

to design the product that consider the reverse activities in

various process models. An information system can support both

process model and product life cycle management for JIT

reverse logistics.

b. Concept Of SMED

Single Minute Exchange of Dies, or SMED, is a process

developed by Shigeo Shingo, a consultant to Toyota and other

manufacturers for many years. SMED focuses on identifying

different make-ready tasks and classifying them into internal

or external operations. Internal operations are those tasks

that must be completed while the press is stationary and

external tasks are those that could be completed while the

press is still running. SMED also focuses on analysing all

tasks and figuring out ways to eliminate, reduce, or re-

engineer the task to shorten the time required to complete it

or complete it while the previous job is still running.

SMED principles were developed by Shingo over a period of time

while trying to achieve the goal of small lot production.

However, the die presses used to stamp car body parts required

long change-overs—often as much as four hours. The

difficulties faced weight of dies, tolerance and adjustments

required in set up. On structurally analysing the setup

process and identifying the necessary steps to they were able

to re-engineer the process over and over and eventually got

the same die change process down to less than 10 minutes from

original 4 hours. (Malcom Keif, 2009)

c. Problems

Important practical challenge pertains to the setup time

requirements. A recent line of work in the production

smoothing literature considers arbitrary setup time

requirements incurred when switching between end-products,

whereas these requirements are generally overlooked in earlier

work. Despite its importance in the JIT philosophy, reduction

of setup times may not be achieved in all industries.

Therefore, in manufacturing systems where significant, and

possibly sequence dependent, setup times are unavoidable, the

production smoothing problem remains a challenge, and, hence,

a key research direction for the broader dissemination of JIT

manufacturing (Yavuz & Akcali,2007).

3) Publication industry Concerns

The traditional publishing model is simply ‘Print book & then

try to sell it’. Traditional publishing mostly characterised

by offset printing of speculative inventory at levels based on

the best guess sales projections and the storage of the

inventory in the distribution centres.

Economy of scale is achieved by printing more copies & hence

getting it done at lower per unit cost. But as a result of it

publisher ends up carrying more inventory. This carries with

itself the capital & the risk of write off is high for the

unsold stock. Also the cost of logistics as well as reverse

logistics adds to the total costs.

On the other hand, print too little and the risk is of losing

sales i.e. opportunity cost which the publishing house will

have to incur.

Another issue that is daunting the industry is the quality.

If the print/reprint turns out to be wrong then there is lot

of inventory that the publisher can not sell.

4) Utility Of These Findings

The paper will try to focus on how the implementation of Just

In Time philosophy can be practiced to tackle these issues.

Just in Time philosophy is widely used in production processes

in various consumer goods sector and the associated

distribution of these products & services. The knowledge of

this philosophy can be leveraged to apply in area of

publication & distribution to optimize the inventory levels in

the loop, thereby saving the cost and the amount of financing

required for the industry.

5) Areas which are focussed for improvements

Resource Sharing- Manufacturing companies have been expanding

their product mix to include a larger number of end products

each with several different variants. Hence, mixed-product

systems, where manufacturing resources are shared among a

family of multiple products each with possibly several

variants, have become more prevalent in manufacturing industry

and have been widely studied. (Yavuz & Akcali 2007).

On time Delivery- M.A. Karim, P. Samarnayake, A.J.R. Smith and

S.K. Halgamuge (2010) published paper on topic “An on-time

delivery improvement model for manufacturing Organizations”.

The purpose of this research was to develop an on-time

delivery (OTD) improvement model for make-to-order (MTO)

manufacturing organisations. The business process model, as

part of the overall model, was designed using event-driven

process chain (EPC) methodology and incorporated both capacity

and material requirements planning functionalities for

estimating on-time delivery dates and times. The database

associated with the model defines all the data including both

basic and transaction data; and links with required functions

from sales to service and field return. These functions

integrate through the database, using basic data and generate

various transaction data including sales orders with an

accurate promised date, based not only on the available stock

but also on procurement and distribution times of any raw

materials from external sources. The proposed model was then

implemented in a selected manufacturing organisation. A

systematic investigation was carried out to find the major

causes of OTD problems of that manufacturer, with a view to

implementing and validating the proposed model. After

implementing the model average OTD was increased from 10% to

65% in about 12 months.

2. PUBLICATION INDUSTRY

1) Types Of Books & Strategy

Publishing industry as a whole is segmented in to:

General commercial, magazines, newspaper, books,

financial/legal, screen printing, business forms, label

wrapper, tag/tickets, greeting cards, packaging etc. in this

vast industry, every segment requires different production as

well as distribution & retail channels. In this research paper

we will be focussing on the book publishing industry.

The existing book publishing according to type & utility of

the books can be classified as:

Book Publishing Classification

Book publishing can be divided in three parts as Fiction, Non-

fiction & Academic books. Fiction & non fiction type books

Book Publishing

Fiction Non Fiction

Push Type Strategy For Selling

Academic

School College Professional Courses

Pull Type Strategy for SalesHigh volume sales, School/college-Change

with Regionprofessional Cources- Regional/International

publishers

require marketing efforts as to reach out to the maximum

number of customers within the short period of time. The sales

pattern for most of these books is same only the volume of

sales changes. The sales figure from book launch activity

starts moderately and reaches to maximum as the popularity

rises. The growth phase continues for some time and after that

the declining phase of sales along with popularity starts

which continues till the point that further sales is now very

low or it does not sell at all. Thus aim of the publishers is

to capitalise on the sales of fiction/non-fiction books is to

get maximum returns in the growth phase.

The same trend does not apply to only few bestsellers who

continue to generate demand over a period of time. These books

some times need reprint also to cater to the demand of

customers. But the percentage of such books is very low.

On the other hand academic books publishing have seasonal

demand i.e. demand is high during particular season of the

year which is driven by individual as well as institutional

demand and for the rest of the year the residual demand by

individual customers.

As a reference we are showing here sales data through

operating & net margin data of Navneet Publication ltd., which

has acquired around 80% of the academic market in Maharashtra

& Gujarat region. (Crisil Research, accessed Dec/2010)

In academic book segment, books for school & undergraduate

colleges are mostly published by the local publishers, while

the books for college level & professional courses are from

international publishers.

2) Distribution Model

Writing & Editorial-Writer has an idea for a book. He writes

it and edits it into a manuscript & sends to agent. Publisher

is approached by agents to negotiate the manuscript’s sale.

Managing Editorial plans the project’s workflow and schedule.

Editor works with author to achieve the desired structure and

tone for the book.

Pre- Publishing & Production- Production team gets the

finished manuscript from the editorial. It then undergoes the

copyediting & design process. Along with this work for

formatting work files for digital conversion takes place

according to e-readers available & vendor specifications.

Marketing, Publicity & Sales- Through advertising &

promotional projects, appropriate customer segment is

targeted. Based on the responses to these activities or the

recommendations publishers approaches & sells book to

distributor/ retailer.

Production & Distribution- Based on the demand from retailer

or according to the expectation of publishers regarding sales

volume book printing is carried out. Printed books are

distributed to retailers where sales to end customer happens.

Distribution Model for Publishing Industry

Reprint Demand/ Return- According to the requirement for the

book from end customers, retailers may ask for further supply

of the same title or if not being sold over a period of time

retailer returns the books to the supplier. In case of returns

reverse logistics arrangement comes into the picture.

Information Flow- With advent of technology, some retailers

are using techniques like barcode system for real tracking of

Writer Editorial Production

Sales

Marketing

RetailersDistributors

sales data according to the title & publisher. This

information is shared with publisher for better production

planning & control. But the adoption of this technology is

picking up slowly and is available with few retailers.

Over Production Excess Inventory Excess Transportation

Reverse LogisticsCapital

3) Waste Identification

Having reviewed the literature on seven wastes earlier, we

need to apply the concept in publishing industry in order to

effectively implement JIT philosophy. After identification of

the waste & its reason/source we can continuously improve

processes to reduce waste.

a) Over production

Overproduction is the most common waste in publishing

industry. Due to overproduction excess inventory gets piled up

at the distributor/ retail level. It also holds the capital

invested in production of these items which could have been

invested in other opportunities. Also the paper inventory at

production floor as well as at supplier level gets

accumulated. Unsold items are returned back from the retail

stores while replenishing with new stock, when the reverse

logistics cost gets incurred & un-sellable inventory gets

piled up.

Overproduction is often done to avoid risk of unmet demand as

the frequent production run with small batches is considered

uneconomical due to set up time. Thus while JIT implementation

focus should be on lot size reduction.

b) Waiting TimeWaiting Time Idle Machine

The set up time required in any production changeover is

waiting time. This time needs to be reduced as the machines

are idle in this period and can not produce sellable items.

This waiting time can be reduced by using SMED concept in

changeover processes of printing.

c) Transportation

Transportation increases the lead time for delivery of raw

material to printing as well as produced books to retail

space. To overcome this lead time gap, publishers mostly

overproduce & prefer storing inventory at production as well

as retail level. Transportation cost is even higher in case of

international publishers carrying out printing at single

location. The cost of reverse logistics of unsold inventory is

also needs to be eliminated.

d) Over-processing

Over-processing is generally working on those product

attributes which customers do not demand from the

product/service. Though this can not be directly related to

the publishing industry, one major concern in publishing is

the amount of spoilage. Printing spoilage rate is around 3%.

Reducing this spoilage over a period of time is required.

e) Inventory

As discussed earlier at each level of publishing industry

distribution system inventory gets piled up with higher batch

size. To reduce this inventory, publishers need to adopt

different production strategy according to book

classification. In case of academic books which experience

demand only during particular season of the year. Overproduced

books turn out to be waste as the edition changes and

individual buyers as well as institutional buyers prefer only

latest edition. So there is lot of scope for improvement in

inventory management using Print on Demand method in

publication industry.

4. Solutions to Reduce Wastes

1. Batch size reduction

To reduce overprinting and follow the pull type printing for

books i.e. print on demand, we need to reduce the batch size

of production. The reason why batch size reduction is

considered uneconomical is the changeover time required in set

up. The aim of JIT philosophy is to reduce this set up time to

achieve batch size reduction. The concept of SMED can be

applied in printing process to reduce the set up time. Some

ways in which changeover time can be reduced are:

Identify internal and external setup processes and try to

find out adjustments which can be carried out online

also.

Analyse, minimize, and standardize all setup tools and

fasteners. Colour coding bolts and wrenches can be useful

to identify correct use of fasteners and wrenches, rather

than wasting time in swapping wrenches.

Put tools and supplies close by and in an organized

manner and within reach during changeover. The

implementation of 5S workplace management process turns

out to be helpful in achieving this.

Advantages of achieving batch size reduction:

Reduction in inventory level and associated carrying

costs.

Chances of wastage & reverse logistics costs in case of

revision in print content or defect in content is

drastically reduced.

2. Collaboration with regional publishers

In case of printing books at a single location by the

publisher has the inherent cost of distribution of these books

at retail stores. The problem of distribution cost & lead time

from production location to retial shelf is aggravated in case

of international publisher intending to publish the book in

multiple countries. The solution to this problem can be

regional collaboration with publishers for production &

distribution.

Advantages of regional collaboration are:

Saving in distribution & reverse logistics cost

The existing network of regional publisher for production

& distribution can be used

Local low cost raw material can be used keeping quality

intact.

Benefits in savings can be passed on to customers in form

of price

3. Forecasting through lifecycle analysis according to genre

As we progress in lot size reduction, there is inherent risk

of opportunity loss.

The way through which lot size reduction can be achieved

without losing the opportunity of sales is better forecasting

method. In traditional method of bulk printing method

sufficient amount of books are printed which are sold over a

period of time. The loss is more severe in fiction & non

fiction type books which do not have cyclic demand and need to

use push type strategy for sales.

In such cases books can initially be produced in more lot

sizes only sufficient considering the early & growth phase of

demand. By analysing the sales data the lot of production

should be changed. As the book demand gets declining the

publisher can now resort to print on demand keeping only

minimum required stock at retail level stores. Thus proper

forecasting considering the life cycle of the books can help

in reducing the inventory level & production planning for

printing.

Requirements:

Information sharing network with distributors/retailers

Past sales data according to timeline, genre & author of

the book

4. Print on Demand for Academic Books

Having identified wastes associated with academic book

publishing, there is need to adopt print on demand technique.

Only reference books which have lower frequency of changing

edition such as dictionaries, quote books, case laws, medical

manuals great literary works should be produced in batches and

with hardcover. All other school/college as well as

professional books should be produced with paperback &

according to demand.

5. Quality of print- Avoid bad print risk

Much time is spent during making the batch ready for printing

in adjusting the ink & impression. The goal of the JIT

philosophy is to reduce the time required in set up which is

taken away from sellable printing. The solution to this

problem is using offline ink proofing QC system. Thus

considerable amount of time can as well as paper can be saved

in the process.

6. Ebooks

Publishing E-books is an excellent option available for

publishers. With the advancement of technology, especially

broadband and handheld devices, there are far more options

available to publishers to monetize their long tail.

Inventory reduction- Advantage of ebooks for publishers is

that they no longer need to maintain an inventory of these

books, and take care of their returns. Also, paper inventory

required for production process gets eliminated.

Lead time reduction- The lead time for production &distribution of the books gets eliminated.

Scalability- The scalability of this business is also veryhigh. The only cost which publishers require is the fixed costfor setting up IT infrastructure. The variable cost incurredin paper book publishing drastically reduces.

The business model also promises to generate extra revenuefrom multiple customers through limited period access rights.All these benefits can be passed on to customers throughcompetitive pricing, though people are ready to pay a premiumfor the user experience and ubiquitous access. (SandeepMalhotra, 2008)

Focus Required- While in 2009, e-books accounted for a mere

2.7%share of total consumer book sales, by 2012, e-books had

grown to 14.9 % of the global book market according to

PricewaterhouseCoopers. (Patricia de Hamricourt, 2013)

5. CONCLUSION

As articles studied show how implementation of JIT philosophy

has improved business performance, its implementation will

definitely help in improving the performance of publishing

industry by addressing issues discussed in paper on continuous

basis. Identification of waste in publishing will help

publishers in focussing on one problem at a time. Suggestions

provided may not be applicable exactly for each element in the

industry but work in similar direction will have positive

impact on inventory control.

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