Just in Time (JIT) Manufacturing
An introduction to Just-in-Time Manufacturing (JIT), this article covers the history of JIT from the Ford Motor Company to the Toyota Production System (TPS) and beyond, and explores the eight wastes identified in TPS and many of the JIT practices and methods (e.g. Focused Factory, Small Lot Production, SMED and Quick Changeover, Group Technology, Kanban, 5S, and more). Key success factors are explored, including the importance of a culture of quality. Applications of JIT in multiple industries are discussed, as well as the impact of globalization.
Keywords 5S; Cell Manufacturing; Focused Factory; Group Technology; Just-in-Time Manufacturing (JIT); Kanban; Lean Manufacturing; Multifunctional Employee; Quality Assurance; Quality Cycle; Quality Control; Quick Changeover; Single Minute Exchange of Dies; Small Lots; Supply Chain; Total Productive Maintenance (TPM); Total Quality Management (TQM); Toyota Production System (TPS); Supply Chain Management; Uniform Plant Loading; Visual Controls
Manufacturing: Just-in-Time Manufacturing
Manufacturing is the process of combining raw materials or assemblies for the creation of new products which may be consumer-ready, or which may be used in other manufacturing processes. Simple in theory, the manufacturing process is obviously complex in practice. One of the most studied areas is the efficient and cost-effective flow of materials through the supply chain.
The supply chain refers to the process of bringing an end product to market, from the production of raw materials to the consumer. Historically, this was a long path with materials, parts and products stockpiled in warehouses and other storage facilities and drawn upon as needed by each entity in the chain. Producers of raw materials would keep producing and filling up their warehouses in anticipation of orders. Manufacturers would produce parts, assemblies and finished goods in large quantities to attain economies of scale and reduce the number of machine setups. Retailers would then buy in quantities sufficient to meet expected consumer demand over weeks and even months.
Just-in-time manufacturing (JIT) turns this traditional supply chain on its head. It has its roots in a very simple idea, espoused succinctly by Henry Ford; "If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever." Why does it matter? In one phrase — cost reduction.
Beyond the obvious costs of the warehouse itself (lease or mortgage, utilities and property taxes), are the labor costs involved with managing the inventory — receiving, storing, picking and transporting. Add to that the equipment and systems needed to support these processes. Lastly, one must consider the opportunity cost of money that is tied up in inventory that is not being used immediately.
The Development of JIT Manufacturing
While Ford understood the value and concept of JIT, it was in the 1950s that Toyota first fully implemented the concept, and expanded it with the total quality management system (TQM) to create the Toyota Production System (TPS), also know more generically as "lean manufacturing." The founder of Toyota, Toyoda Kiichiro, after observing that American automobile factories were nine times more productive than Toyota, challenged his chief engineer, Taiichi Ohno, to catch up with America in three years. Ohno not only did that, but also created a system that was to be an enduring and living model for efficient manufacturing the whole world over.
Ohno identified eight wastes that account for up to 95% of all costs in traditional manufacturing:
- Overproduction — Producing more than a customer needs, incurs heavy warehousing, equipment and labor costs.
- Waiting — Any machine or human in a wait state, no matter what they are waiting for, represents lost money and opportunity.
- Transportation — Materials that are transported from the supplier to any location (e.g. warehouse) other than the point-of-use; creates unnecessary transportation costs in time and money.
- Non-Value-Added Processing — Quality control (traditional processes of inspecting completed products and fixing defects after production is complete) is unnecessary in a manufacturing environment where products are produced without defects (quality assurance).
- Excess Inventory — Carrying more inventory than is needed, from raw materials to finished goods, incurs expensive warehouse space and labor.
- Defects — Product defects incur labor, space, equipment and time costs.
- Excess Motion — Incurring more motion than is necessary to carry out a task wastes time and labor.
- Underutilized People — Failure to leverage the skills, creativity, time and other attributes of people results in wasted opportunities for organizational, team and individual efficiency improvements.
TPS was developed to address each of these wastes and is centered on a set of 14 guiding principles that must be adopted in order for specific methods and techniques to succeed. Indeed, many implementations of JIT practices have failed due to a failure to adopt organization-wide policies and practices that support JIT.
The Spread of JIT/TQM Manufacturing
After Toyota's outstanding success with TPS in meeting and exceeding American manufacturing production at significantly lower costs, manufacturers around the globe rapidly adopted and emulated TPS-based practices throughout the 1980s, 1990s and beyond. A 2006 survey of US manufacturers by IndustryWeek and the Manufacturing Performance Institute for the 2006 Census of Manufacturers showed that just-in-time supplier deliveries were at the top of the list of most commonly used methods for managing inventories, with over 43% of respondents reporting its use in their operations.
JIT has enabled a different world. Today's supply chain increasingly moves small amounts of product at a time, delivered directly onto the factory floor or retail shelves, rather than into warehouses. Manufacturing has been revolutionized with investments that focus on improved flexibility in volume, product and delivery; increased production speed, and; waste reduction. All this has worked to provide faster product to market rates at reduced costs.
Importance of JIT Systems
Thus, it becomes clear why a JIT system is important to manufacturers. First, and most obviously, it saves the cost of warehouses, related equipment and the people needed to manage the inventory in those warehouses. Second, it eliminates the need to predict far in advance how much material will be needed, thereby reducing wasted materials. And it enables the manufacturer to respond to customer requests in a fraction of the time previously required. In a world of aggressive cost competition, JIT enables a highly cost-effective way to manufacture if it is well implemented.
One can imagine, however, just how tricky this process can be. Materials planning must be highly accurate and efficient, suppliers must able to efficiently, quickly and cost-effectively produce small lots of materials, and effective contingency plans must be in place to counter disruptions in the supply chain, such as natural disasters, accidents, union strikes. Thus, there is considerable risk, and that risk has a demonstrated inverse relation to profitability. Yet, even so, companies utilizing the JIT model are more profitable than those that are not, even adjusting for the increased risk involved.
Implementation of JIT Systems
JIT manufacturing implementation is typically made up of a group of programs, each contributing specific methods for achieving a JIT model. Some of the common programs implemented are as follows:
The Focused Factory
The focused factory, a term coined by Wickham Skinner in a 1974 Harvard Business Review, is the philosophy of allowing a factory (or self-contained production unit within a physical plant) a limited product mix for a particular market. Rather than expanding a factory's capabilities when adding new products and markets, the focused factory model dictates the creation of new factories. At the core of this model, Skinner (1974) says, is the philosophy that "simplicity, repetition, experience, and homogeneity of tasks breed competence" (p. 115). Manufacturers that have implemented this model have consistently shown reduced cycle times and improved on-time deliveries.
Small lots production refers to the proactive reduction of batch sizes to the smallest lot possible. This reduces inventory carrying costs, and facilitates reduced lead and cycle times which enables faster turn-around time for customers.
Reduced set-up times (the elapsed time between production runs used to change over machines) aid the JIT process by making it more feasible for manufacturers to produce small lots. The longer the setup time, the costlier it is to produce small lots of product. In the JIT world is the Single Minute Exchange of Dies (SMED) method, also often referred to as "quick changeover." This was introduced in TPS and was applied to the changeover of dies, but today has much wider applications. Simplistically, SMED is the practice of completing as many steps in the changeover process as possible while a production run is still in process, and reducing and improving the efficiency of the steps that must be completed during the changeover.
Group technology involves grouping parts that have physical similarities or are used for similar manufacturing processes to reduce work-in-progress and lead times. Instead of the traditional factory layout with similar machines grouped together and work-in-progress moving from area to area, individual factory cells (cell manufacturing) are created with all the machines necessary to complete the production of a particular product or group of products.
Kanban is a Japanese word meaning sign, and refers to a signaling system that is in wide use in JIT manufacturing to ensure the just-in-time delivery of parts and materials, as they are needed. Kanban is a "pull" system — when a product or material is needed, a signal is sent to replenish the product or material. This flows all the way up the supply chain, with each entity in the chain sending a signal up the chain for its own replenishment after responding to a signal further down in the chain.
On the factory...
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