Just in Time or JIT is part of what we now call lean manufacturing, a philosophy that has developed out of the Toyota Production System (TPS). The idea of Just In Time is very simple, it is producing exactly what the customer wants when they want it, not more than the customer wants and not long before they want it. Then ensuring that it is not delayed or caught up in inventory.
It is not just in case manufacturing, building products and putting them into stock as a forecast says that we will get customers one day so it is ok for us to use our cash and capacity now to make them. It is not just too late manufacturing, delivering today what the customer wanted yesterday because we were too busy making what the customer might want next month!
Just in Time has developed from the observation that the greatest waste in manufacturing is that of inventory because of overproduction. In the post war days when Toyota was developing its business they realized with the scarcity of resources available to them and their suppliers they could not afford to produce products that the customer was not going to want straight away. If they were to ensure their survival they needed to make what the customer was actually ordering.
Just in Time is about reducing the time line for manufacture, enabling us to produce what the customer wants in an efficient manner without waste or delay. It is time elimination not waste elimination from the process, we are compressing the time required from order to delivery.
Traditional manufacturing is one in which product is made in large batches in functional “buckets”, for instance a factory producing furniture would have a functional area which cut the raw materials, this would cut batches of table tops, batches of panels, and other components, these batches would then be passed to the next area where they would be have holes drilled before being passed to the next functional area and so on.
The batches would be as large as possible to ensure that the machinery was used efficiently, minimizing the amount of time setting it up compared to the amount of time actually producing product. The resulting batch is often many weeks of required production, using up much needed cash and utilizing capacity on the process for product that could be produced that is wanted today.
These large batches would also ensure that if there were any breakdowns in the process or quality problems then subsequent processes would not be starved of product and could continue. The batches insulated the processes from all manner of potential problems, supplier delays, absenteeism, and all of the other issues that frequently occur. It would not matter if there were problems as the factory could still continue to work.
These batches would then have to be moved from this process to the next, often using fork trucks or other vehicles due to the physical size and weight of the batch. The next process often being some distance from the next as the machines for doing the next operation would all be organized in functional groups with the all of the workers with the required skills together. This process would continue through the factory until the required batches reach the assembly area where all of the batches of components would be assembled together, assuming that all of the components were processed!
The assembled product would then be placed into the final goods stock, the company would satisfy any immediate demand, customers who placed orders some weeks ago for product as often as not, and keep the remainder in stock to satisfy orders over the coming few months while other products were manufactured.
But what does this actually mean for the factory? The business cash is tied up in large amounts of work in progress (WIP) and in finished goods, preventing the company from using it to invest in anything else. The time taken for product to flow through the factory is many weeks as each process must complete the entire batch before it is passed to the next process. The complexity of the planning is huge, someone must plan what individual components are made on a variety of different processes in the hope that they are all ready for assembly at the same time (more often than not this will fail). The volume of inventory in the system masks all of the other problems so they are not tackled, out of sight, out of mind as they say!
Imagine a new scenario, a new paradigm, one in which we only produce what the customer wants when they want it! Imagine if we received a call from our customer saying he wanted some product for delivery early next week, we put in the request to our factory and a few days later there were our products ready to be shipped. Nothing else, just those products, no delays, no problems, no headaches!
If you are living in the traditional manufacturing world you would probably tell me that I don’t know what I am talking about. That I don’t understand the reality of your industry. That you would have to invest in more machinery and more people to achieve this, and even then it would be impossible. Open your eyes! Why can Dell computers hold only 5 days of component stocks and build to order where HP holds 90 days of stocks and supplies from stock? Which company suffers if the market changes and a new processor becomes available? Which company is the first to produce product with the new processor? Which is the company that can give the consumer exactly what they want rather than a best fit compromise?
Yes there are problems that need to be overcome, I never said that Just in Time is something that you can just turn up in the morning and wave a magic wand to achieve. JIT is an aim, you have to work towards it. Imagine what the competitive advantage would be if you could halve your lead time, imagine how much more cash would be available if you could reduce your stocks and WIP by half, imagine how much simpler your life would be if your products did not require complex planning processes and expensive computer systems to control them. Then imagine what would happen to your business if your main competitor does this before you!
It is learning how to implement Just In Time manufacturing (JIT) that is more important to the business than the focus on waste reduction that most lean manufacturing practitioners promote. It is this ability to produce the value the customer wants when they want it without delays and in the least wasteful manner that gives you lean. That and respecting and involving all of your staff in achieving these aims and continual improvement in all that you do, that is how to implement lean manufacturing.