Just-In-Time Manufacturing
A lean, mean manufacturing system means less inventory—and,
often, more cash in your pocket.
By Jane Applegate
The words "just-in-time manufacturing" might evoke images of vast
automotive assembly lines, but the principles that revolutionized largescale American manufacturing in the 1970s and '80s are being applied
on a smaller scale all over this country.
One small business that has recently switched to the just-in-time
system is Gamblin Artist's Oil Colors, a small oil-paint manufacturer in
Portland, Oregon, owned and operated by husband-and-wife team
Martha and Robert Gamblin.
Robert Gamblin is a painter who began making and selling oil paint
more than 20 years ago, not long after graduating from the San
Francisco Art Institute. "It's a rare and fortunate individual who is able
to make a living by selling art," says Robert. "There was a need for
someone in this business to make paint with the artist in mind."
From a modest start in Robert's garage, producing just three colors of
paint, Gamblin Artist's Oil Colors now sells 87 colors of oil paint all
over the United States and abroad, has 20 employees, and owns its
own manufacturing facility. The paints cost between $7 and $20 a
tube. The Gamblins declined to state the company's gross revenue.
As the company has grown, Martha, co-owner and general manager,
has taken steps to solve the problem of managing the increase in paint
production. "We started talking about making bigger and bigger
batches of paint," she says. "A 100-milliliter tube of titanium white
weighs one pound. Add that up, and it's a [hefty] weight. When
someone started talking about putting 400 pounds of paint on a rail
above our heads, I knew I needed to talk to an engineer."
Martha found that manufacturing consultants charge about $200 an
hour-a fee that a small business like Gamblin just couldn't afford. After
talking to the Portland Development Commission, Martha found Charlie
Martin, a manufacturing consultant for the Oregon Manufacturing
Extension Partnership (OMEP). Martin guided the Gamblins through
their transition from a traditional manufacturing system to the newer,
leaner, just-in-time model.
Martin's fee was just $65 an hour, a rate that is subsidized, in roughly
equal parts, by local, state and federal funding. "If I were doing this
privately, I couldn't afford to work with most of them," says Martin,
who advises about six different small businesses at a time.
OMEP is part of the Manufacturing Extension Partnership (MEP), a
national network of not-for-profit centers organized in 1986 by the
National Institute for Standards and Technology. The program has
more than 400 centers around the country, at least one in every state
and territory, and it helps more than 20,000 small manufacturing
businesses a year. Most of these businesses, like the Gamblins', have
50 or fewer employees. Eligibility for participation in MEP varies by
region. (Call 800-637-4634 for more information.)
The Gamblins used to make colors in batches of 1,200 tubes
at a time, which would remain on the shelves as inventory for
six months. "Old-style American manufacturing works on
system," notes Martha. "The whole system is about putting a
python-one huge bite that moves through the shop."
of paint
three to
a push
pig in a
Now the Gamblins make colors in smaller batches-about 500 tubesand they focus on producing a single type of color at a time, like
different kinds of red all made on the same day. "Many small
businesses don't realize that we need a manufacturing philosophy,"
says Martha. "We increase creativity and flexibility by reducing
variation."
After implementing new manufacturing strategies, the Gamblins cut
their inventory in half and freed up about $200,000 in cash, which
they'll use to invest in capital growth and launch their first advertising
campaign.
The equation is simple: less inventory means more cash-and cash flow
is king for any small business. "Each color turns twice as fast. We're
not putting three months of product on the shelf," says Martha. "Now
it's down to six weeks, so our cash returns twice as fast."
The inventory change is just one of many the Gamblins have made
since they started working with Martin and the OMEP more than a year
ago. Quality control has also improved. "In each station, we ask the
question, ‘Am I making good stuff?' " says Martha. "If the answer is
no, the production process stops. The manager is called, and there's
20 minutes to make a decision. Adjust and fix, or pull. The decision
gets made right at the station."
Every week, the 10-person production crew aims to solve one process
problem as a team. Everyone is involved-from staff meetings to
conversations and problem-solving on the floor. "This engages
workers," says Martha. "They're not checking their minds at the door.
We have better jobs, better teams, better management, and a better
environment for personal growth."
Although Martha has experience in business and management, she
says she still found the lean manufacturing system counter-intuitive at
first. "We're well-educated people with good common sense," she
says, "and we couldn't have done this without help."
Martin's guidance and the OMEP's help have made it easier for the
Gamblins to implement new procedures, but the changes have not
been easy for everyone to accept. "We start looking at the shop floor
as a system, and our goal is to improve the function of the whole
system. Instead of being hierarchical, it's more of a team process,"
says Martin. "But not everyone works in this environment well. You do
lose a small percentage. The shop-floor folks prefer it. The people who
get threatened tend to be first- and second-level managers-people
who have struggled their way up."
In fact, during the transition, the Gamblins lost two employees-a
supervisor and a key operator-who were not comfortable with the
changes. "It's traumatic," says Martha, "but it's the price of change."