Whilst we may think today that Japan has harmonious industrial relations with management and work- ers working together for the common good, the fact is that, in the past, this has not been true. In the immediate post Second World War period, for example, Japan had one of the worst strike records in the world. In 1953, the car maker Nissan suffered a four month strike - involving a lockout and barbed wire barricades to prevent workers returning to work. That dispute ended with the formation of a company backed union, formed initially by members of the Nissan accounting department. Striking workers who joined this new union received payment for the time spent on strike, a powerful financial incentive to leave their old union during such a long dispute. The slogan of this new union was ‘Those who truly love their union love their company’.
8.1.1 ADAPTATION TO NEW PRODUCTION ENVIRONMENT
In order to help the workforce to adapt to what was a very different production environment Ohno introduced the analogy of teamwork in a baton relay race. As you are probably aware typically in such races four runners pass a baton between themselves and the winning team is the one that crosses the finishing line first carrying the baton and having made valid baton exchanges between runners. Within the newly rearranged factory floor workers were encouraged to think of themselves as members of a team - passing the baton (processed items) between themselves with the goal of reaching the finishing line appropriately. If one worker flagged (e.g. had an off day) then the other workers could help him, perhaps setting a machine up for him so that the team output was unaffected.
8.1.2 THE KANBAN CONTROL
In order to have a method of controlling production (the flow of items) in this new environment Toyota introduced the kanban. The kanban is essentially information as to what has to be done. Within Toyota the most common form of kanban was a rectangular piece of paper within a transparent vinyl envelope.
The information listed on the paper basically tells a worker what to do - which items to collect or which items to produce. In Toyota two types of kanban are distinguished for controlling the flow of items:
• A withdrawal kanban. Which details the items that should be withdrawn from the preced- ing step in the process.
• A production ordering kanban. Which details the items to be produced.
All movement throughout the factory is controlled by these kanbans—in addition since the kanbans specify item quantities precisely no defects can be tolerated—e.g. if a defective component is found when processing a production ordering kanban then obviously the quantity specified on the kanban cannot be produced. Hence, the importance of autonomation (as referred to above) the system must detect and highlight defective items so that the problem that caused the defect can be resolved.
Another aspect of the Toyota Production System is the reduction of setup time. Machines and processes must be re-engineered so as to reduce the setup time required before processing of a new item can start.
In the Western world, JIT only began to impact on manufacturing in the late 1970’s and early 1980’s. Even then it went under a variety of names—e.g. Hewlett Packard called it ‘stockless produc- tion’. Such adaptation by Western industry was based on informal analysis of the systems being used in Japanese companies. Books by Japanese authors (such as Ohno himself) detailing the development of JIT in Japan were not published in the West until the late 1980’s.
8.1.3 JIT TODAY
Just-In-Time (JIT) is a very popular term these days among the managers of various industries. No conference on Operations Management is seen complete unless some topics or papers are included in the deliberation. It is seen in various ways by the practitioners in manufacturing, services and adminis- trative sectors. JIT is a system, a concept, a philosophy, a set of tools, a way of life and so on. No two JIT are same—they vary according to the places and conditions in which they are being applied.
JIT is both a philosophy and a set of methods for manufacturing. JIT emphasizes waste reduc- tion, total quality control, and devotion to the customer. It strives to eliminate sources of manufacturing waste by producing the right part in the right place at the right time. Waste results from any activity that adds cost without adding value, such as moving and storing of an item. It tries to provide the right part at the right place and at the right time.
JIT is also known as lean production or stockless production system. It should improve profits and return on investment by reducing inventory levels (or increasing the inventory turnover rate), im- proving product quality, reducing production and delivery lead times, and reducing other costs (such as those associated with machine setup and equipment breakdown). In a JIT system, underutilized (or excess) capacity is used instead of buffer inventories to hedge against problems that may arise. JIT applies primarily to repetitive manufacturing processes in which the same products and components are produced over and over again. The general idea is to establish flow processes (even when the facility uses a jobbing or batch process layout) by linking work centers so that there is an even, bal- anced flow of materials throughout the entire production process, similar to that found in an assembly line. To accomplish this, an attempt is made to reach the goals of driving all queues toward zero and achieving the ideal lot size of one unit.
JIT is a manufacturing system whose goal is to optimize processes and procedures by continu- ously pursuing waste reduction.
8.1.4 JIT APPLICATION PROFILE
Just-In-Time (JIT) has assumed a kind of mystique of an oriental philosophy. Much of it is plain com- mon sense-as more American and European companies are discovering to their benefit. General Mo- tors, IBM, Hewlett-Packard, General Electric, and Black and Decker are among the big US companies that have adopted JIT production methods. European companies are joining them, Britain’s state owned Rover Group is the latest recruit. Its car division has announced that ‘preferred suppliers’ will get long- term contracts to prove the bids which make up more than half of its production costs.
One misconception of JIT is that it is limited to the flow line/large-batch environment of the automotive industry. Once the automotive company has started along the JIT route, there seems to be no area which does not benefit from JIT principles like the elimination of waste. JIT applies very well to the tool-room (job-shop) as it does to the assembly line. Techniques for eliminating waste can be applied to good effect outside manufacturing as well, such as in sales and distribution.
The following Figure 8.1 illustrates the suitability of JIT for a range of process choice environ- ments [Alan Harrison]. Those at the center of the diagram are prime candidates for JIT manufacturing.
Those at the top left or bottom right will be suitable for selected applications. In the case of job-shops, such applications may include total quality, workforce flexibility, and the promotion of flow in manu- facture.
High
Medium
Low
Part of JIT
Unsuitable, application of selected techniques
JIT suitable for part of plant
JIT suitable for all of plant
JIT suitable for manufacture
Much of JIT in place, application of selected techniques
Jobbing/project
Batch manufacture
Line manufacture
Process manufacture
Low Medium High
Variety
Volume Figure 8.1. JIT and Choice of Process.
Most successful JIT applications have been in repetitive manufacturing, where batches of stand- ard products are produced at high speeds and high volumes. Smaller, less complex job shops have used JIT, but operations have been changed so that they behave somewhat like repetitive manufacturing [Jack Byrd et al].
JIT concepts, which started in manufacture, have spread to all functions of a business. In Japan, JIT has developed into a total management system from marketing to delivery. It has diffused through suppliers and distributors. It has provided Japanese companies with a formidable competitive advan- tage over their Western rivals. If we are competing against a Japanese company, we are competing against JIT.
Putting this concept into practice means a reversal of the traditional thinking process. In con- ventional production processes, units are transported to the next production stage as soon as they are ready. In JIT, each stage is required to go back to the previous stage to pick up the exact number of units needed [Marc L. Songini].
A close relationship with suppliers-often called co-manufacturing-is one of about 40 JIT tech- niques, not all of which are made-in-Japan. Marks and Spencer, a successful British retailing group, has been closely tied to its suppliers since the 1920s, when it recognized that mass manufacturing and mass retailing had somehow to be linked together.
Toyota is accredited with systematizing JIT. The Japanese carmaker defines it as the ‘reduction of cost through the elimination of waste’. It spreads throughout Japan in the 1970s as a logical way to manage a large flow of materials. Materials do not increase in value unless they are being processed. So profits are increased when inventory and safety stocks are reduced or replaced by small, frequent deliv- eries.
Unlike automation, JIT is not capital intensive. Prof. Voss of UK observes that the average manufacturing company put 75% of its effort into reducing labor costs, which often represent about 10
% of its total costs, instead of concentrating on material which can represent more than half its costs.
The volume of materials flowing through a factory is reduced by JIT, making bottlenecks and other problems more visible. A favorite analogy is with water in a river. When the level of water falls, rocks start to appear. The rocks can then be removed rather than hit. It can, for instance, become plain that it is pointless automating a warehouse because the warehouse itself is unnecessary.
We apply JIT concept in many of our routine activities even without feeling about it. We get the newspapers delivered to our doorsteps on JIT basis everyday because we want to read them when the news items are fresh and current. We won’t accept the newspapers if they are two days old - after all who wants to read them as history. Even the nature likes many things the JIT way. We are supplied oxygen by nature on JIT basis. We don’t store them normally. Many consumers prefer to have their food items (chapati or flat bread, pizzas, burger, tea, coffee, etc.) supplied on JIT basis right at the time of need - not before or after. This means there is an inbuilt desire to have the JIT implemented in our day to day life but it is because of our mindset that we don’t do so in industries.
The results of just-in-time inventory management are apparent: cost reduction, increased speed to market and identification of bottlenecks in the workflow. Effective implementation, however, re- quires a different way of thinking about relationships with suppliers, bringing them into a cooperative endeavor with the recognition of mutual goals.
Corporate culture must promote an inquiring attitude and an interest in finding better ways to do things through communication and cooperation. The Ford and Toyota examples illustrate a final impor- tant point for knowledge management: Some of the best ideas for process improvement can come from tapping the brains of those closest to the situation.
Generally JIT manufacturing system is:
• To have only required inventory when needed,
• To improve quality to zero defects,
• To reduce lead times by reducing setup times,
• To incrementally revise operations themselves,
• To accomplish these things at a minimum cost.
It is insufficient for firms just to be high-quality and low-cost producers. Today, they must also be first in getting products and services to customer fast. To compete in this new environment, order-to- delivery cycle must be drastically reduced. JIT is weapon of choice today to reduce elapsed time of this cycle.
Customer Places
Order
Order Entry
Engi- neering
Design
Schedul- ing
Manufacturing Lead Times Purchasing Lead Times
Distribution and Customer
Service Manufacturing
Cumulative Lead Time
Order-to-Delivery Cycle
Figure 8.2. Order-to-Delivery Cycle.
A JIT company adds value with every activity where JIT has been introduced; there have been dramatic increases in the proportion of the actual value-adding time to the total cycle time, often more than 70%. Since non-JIT companies usually report about 15%, JIT improves operating efficiency sig- nificantly [John Y. Lee et al]. By eliminating non-value added costs, such as defective materials, in- process inventories, and delays; JIT simplifies the entire manufacturing system and improves long- term productivity.
Recently, the business strategy commonly refereed to as just-in-time has become more and more dominant in many aspects of business. Many corporations have begun to use the system to improve efficiency and customer service. Although the system has been criticized as a lofty idea or a theory rather than an attainable business practice, the company that have implemented the idea have profited from it [Padraic Gurdon].
JIT has been found to be so effective that it increases productivity, work performance and prod- uct quality, while saving costs and it helps companies spotlight those areas that are falling behind and need improvement [John Y. Lee et al]. It also slashes inventory, free up space on the factory floor and shine a blinding spotlight on the delivery and quality performance of parts suppliers. Therefore, the result of JIT was smaller inventories of both parts and final products with smaller inventories, billions of dollars were freed up for investment purposes [Mike Whittenberg]. This protects companies during the lean years when demand may exceed production.