Just in Time Manufacturing
Just in Time Manufacturing (JIT) refers to a system of manufacturing in
which products are not built until the product is ordered and paid for. Some
companies that have successfully implemented JIT include Toyota, Dell and
Harley Davidson.
Toyota
Toyota is considered by many to be the poster child for JIT success. The
Toyota production strategy is highlighted by the fact that raw materials are
not brought to the production floor until an order is received and this product
is ready to be built. No parts are allowed at a node unless they are required
for the next node, or they are part of an assembly for the next node. This
philosophy has allowed Toyota to keep a minimum amount of inventory
which means lower costs. This also means that Toyota can adapt quickly to
changes in demand without having to worry about disposing of expensive
inventory.
Important factors to Toyota success:
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Small amounts of raw material inventory must be kept at each node in
production, so that production can take place for any product. These
parts are then replenished when they are used.
Accuracy of forecasting is important so the correct amount of raw
materials can be stocked.
Dell
Dell has also leveraged JIT principles to make its manufacturing process a
success. Dell’s approach to JIT is different in that they leverage their
suppliers to achieve the JIT goal. They are also unique in that Dell is able to
provide exceptionally short lead times to their customers, by forcing their
suppliers to carry inventory instead of carrying it themselves and then
demanding (and receiving) short lead times on components so that products
can be simply assembled by Dell quickly and then shipped to the customer.
Important factors to Dell’s success:
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Dependable suppliers with the ability to meet Dell’s demanding lead
time requirements.
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A seamless system that allows Dell to transmit its component
requirements so that they will arrive at Dell in time to fulfill its lead
times.
A willingness of suppliers to keep inventory on hand allowing Dell to
be free of this responsibility.
Harley Davidson
Harley Davidson’s use of JIT is mostly characterized by its transformation in
the late World War 2 era from an inefficient manufacturer that solved all of
its problems with extra inventory to a nimble manufacturer able to meet
demand and provide short lead times.
Results of Harley Davidson’s JIT implementation:
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Inventory levels decreased 75%.
Increased productivity.
Harley Davidson’s success with the implementation of JIT had a lot to do
with the fact that when JIT was put into practice, process problems could no
longer be hidden by costly inventory that helped to meet ship dates. The
inefficiencies in the processes were quickly identified and solved.
Origins of Just In Time Management Strategy
Although the history of JIT traces back to Henry Ford
who applied Just in Time principles to manage inventory in the Ford
Automobile Company during the early part of the 20th Century, the origins
of the JIT as a management strategy traces to Taiichi Onho of the Toyota
Manufacturing Company. He developed Just in Time strategy as a means of
competitive advantage during the post World War II period in Japan.
The post-World War II Japanese automobile industry faced a crisis of
existence, and companies such as Toyota looked to benchmark their thriving
American counterparts. The productivity of an American car worker was
nine times that of a Japanese car worker at that time, and Taiichi Onho
sought ways to reach such levels.
Two pressing challenges however prevented Toyota from adopting the
American way:
1. American car manufacturers made “lots” or a “batch” of a model or a
component before switching over to a new model or component. This
system was not suited to the Japanese conditions where a small
market required manufacturing in small quantities.
2. The car pricing policy of US manufacturers was to charge a mark-up
on the cost price. The low demand in Japan led to price resistance.
The need of the hour was thus to reduce manufacturing costs to
increase profits.
To overcome these two challenges, Taiichi Onho identified waste as the
primary evil. The categories of waste identified included
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overproduction
inventory or waste associated with keeping dead stock
time spent by workers waiting for materials to appear in the assembly
line
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time spend on transportation or movement
workers spending more time than necessary processing an item
waste associated with defective items
Taiichi Onho then sought to eliminate waste through the just-in-time
philosophy, where items moved through the production system only as and
when needed
How Toyota Implemented Just in Time: Kanban
Toyota JIT manufacturing strategy centered on changing factory layout to
eliminate transporting items back and forth to different machines and instead
arranging machines to ensure the items flow smoothly from one machine to
another.
To control the flow of items in the new environment, Toyota introduced
kanban, or information on what to do that controlled all movements
throughout the factory.
The two types of kanban in Toyota are:
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withdrawal kanban that details the items marked for withdrawal from
the preceding step in the process
production ordering kanban that details the items to be produced
A part disappearing from an assembly station was the sign to produce or
order a new part.
Toyota started work on the Just in Time system in 1952, and established
kanbans throughout the organization by 1962.
TOYOTA AND JIT MANUFACTURING
Just in Time (JIT) is a management philosophy aimed at eliminating waste
and continuously improving quality. Credit for developing JIT as a
management strategy goes to Toyota. Toyota JIT manufacturing started in
the aftermath of World War II.
How Toyota Implemented Just in Time: Autonomation
The origin of kanban effected precise specifications of item quantities,
leaving no room for defects. The success of this initiative therefore depends
on no defective components entering the assembly line. To ensure this,
Toyota introduced autonomation, or automating the production system and
reducing human intervention only on detection of defects. The system
detects defect automatically and will not proceed until human intervention
fix the problem.
The implementation of autonomation meant stoppage of the entire
production line, and in the first week, line stops occurred almost hourly. It
took six months for line stops to fall to few-a-week and have no economic
impact.
How Toyota Implemented Just in Time: SMED
A major initiative of the Just in Time was re-engineering machines and
processes to reduce the setup time required before processing of a new item.
Toyota JIT manufacturing identified changing stamping dies used for body
parts as the critical retooling operation.
The traditional re-tooling way entailed installation of die-tools one at a time,
and adjustment by hand, with crowbars and wrenches. Installing large die
sets took several days, during which time the production line remained shut.
Toyota launched "The Single Minute Exchange of Die" (SMED) that
substituted measurements for adjustments, controlling the quality of
stampings through a written recipe. This reduced the die change times
dramatically to about a half an hour, and facilitated economic lot sizes of
even one vehicle,
How Toyota Implemented Just in Time: Challenges Faced and Results
The major challenges faced by Toyota in implementing JIT included
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Multi-skilling the workforce to operate multiple machines based on
work-flow patterns
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Redesigning every part of the vehicle to eliminate or widen tolerance
since assembly lines did not have a choice of which parts to use and
every part had to fit perfectly
Testing and training suppliers of parts to assure quality and delivery in
time on demand
The implementation of JIT met with remarkable success at Toyota. The sale
of in-process inventory generated surplus cash, response time fell to about a
day, product quality increased improving customer satisfaction, and vehicles
built to order eliminating the risk of vehicles remaining unsold, improving
the company's return on equity.
The success of Just in Time made Toyota the envy of the industrialized
world. Several organizations have emulated Toyota’s Just in Time Strategy.
The next landmark in JIT history is when it spread to America by the late
1970's and early 1980's. Today, many organizations such as Hewlett
Packard, Dell, McDonalds, and others owe their success to the Just in Time
Management strategy