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Just-In-Time Manufacturing

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
Abstract of orders. Manufacturers would produce parts, assemblies, and
finished goods in large quantities to attain economies of scale and
Overview reduce the number of machine setups. Retailers would then buy
in quantities sufficient to meet expected consumer demand over
Applications
weeks and even months.
Discourse Just-in-time manufacturing (JIT) turns this traditional supply
Conclusion chain on its head. It has its roots in a very simple idea, espoused
succinctly by Henry Ford, "If transportation were perfect and an
Terms and Concepts even flow of materials could be assured, it would not be necessary
to carry any stock whatsoever." Why does it matter? In one phrase
Bibliography —cost reduction.
Suggested Reading 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,
Abstract picking, and transporting. Add to that the equipment and systems
needed to support these processes. Lastly, one must consider the
An introduction to just-in-time manufacturing (JIT), this article
opportunity cost of money that is tied up in inventory that is not
covers the history of JIT from the Ford Motor Company to the
being used immediately.
Toyota Production System (TPS) and beyond, and explores the
eight wastes identified in TPS and many of the JIT practices and The Development of JIT Manufacturing. While Ford
methods (Focused Factory, Small Lot Production, SMED and understood the value and concept of JIT, it was in the 1950s that
Quick Changeover, Group Technology, Kanban, 5S, and more). Toyota first fully implemented the concept and expanded it with
Key success factors are explored, including the importance of a the total quality management system (TQM) to create the Toyota
culture of quality. Applications of JIT in multiple industries are Production System (TPS), also know more generically as "lean
discussed, as well as the impact of globalization. manufacturing." The founder of Toyota, Toyoda Kiichiro, after
observing that American automobile factories were nine times
Overview more productive than Toyota, challenged his chief engineer,
Taiichi Ohno, to catch up with American automakers in three
Manufacturing is the process of combining raw materials or years. Ohno not only did that but also created a system that was
assemblies for the creation of new products, which may be to be an enduring model for efficient manufacturing the whole
consumer-ready or which may be used in other manufacturing world over.
processes. Simple in theory, the manufacturing process is
Ohno identified eight wastes that account for up to 95 percent of
obviously complex in practice. One of the most studied areas
all costs in traditional manufacturing:
is the efficient and cost-effective flow of materials through the
supply chain. • Overproduction — Producing more than a customer
needs, which incurs heavy warehousing, equipment, and
JIT and the Traditional Supply Chain. The supply chain refers
labor costs.
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

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• Waiting — Any machine or human in a wait state, no people needed to manage the inventory in those warehouses.
matter what they are waiting for, represents lost money Second, it eliminates the need to predict far in advance how much
and opportunity. material will be needed, thereby reducing wasted materials. And
it enables the manufacturer to respond to customer requests in a
• Transportation — Materials that are transported from
fraction of the time previously required. In a world of aggressive
the supplier to any location (e.g. warehouse) other than
cost competition, JIT enables a highly cost-effective way to
the point-of-use creates unnecessary transportation costs
manufacture if it is well implemented.
in time and money.
• Non-Value-Added Processing — Quality control One can imagine, however, just how tricky this process can
(traditional processes of inspecting completed products be. Materials planning must be highly accurate and efficient;
and fixing defects after production is complete) suppliers must able to efficiently, quickly, and cost-effectively
is unnecessary in a manufacturing environment produce small lots of materials; and effective contingency plans
where products are produced without defects (quality must be in place to counter disruptions in the supply chain,
assurance). such as natural disasters, accidents, or union strikes. Thus, there
is considerable risk, and that risk has a demonstrated inverse
• Excess Inventory — Carrying more inventory than is relation to profitability. Yet, even so, companies utilizing the JIT
needed, from raw materials to finished goods, incurs model are generally more profitable than those that are not, even
expensive warehouse space and labor. adjusting for the increased risk involved.
• Defects — Product defects incur labor, space, equipment, Implementation of JIT Systems. JIT manufacturing
and time costs. implementation is typically made up of a group of programs, each
• Excess Motion — Incurring more motion than is contributing specific methods for achieving a JIT model. Some
necessary to carry out a task wastes time and labor. of the common programs implemented are as follows:
• Underutilized People — Failure to leverage the skills, The Focused Factory. The focused factory, a term coined by
creativity, time, and other attributes of people results Wickham Skinner in a 1974 article for the Harvard Business
in wasted opportunities for organizational, team, and Review, is the philosophy of allowing a factory (or self-contained
individual efficiency improvements. production unit within a physical plant) a limited product
TPS was developed to address each of these wastes and is mix for a particular market. Rather than expanding a factory's
centered on a set of fourteen guiding principles that must be capabilities when adding new products and markets, the focused
adopted in order for specific methods and techniques to succeed. factory model dictates the creation of new factories. At the
Indeed, many implementations of JIT practices have failed due core of this model, Skinner (1974) says, is the philosophy
to a failure to adopt organization-wide policies and practices that that "simplicity, repetition, experience, and homogeneity of
support JIT. tasks breed competence" (p. 115). Manufacturers that have
implemented this model have consistently shown reduced cycle
The Spread of JIT/TQM Manufacturing. After Toyota's times and improved on-time deliveries.
outstanding success with TPS in meeting and exceeding
American manufacturing production at significantly lower costs, Small Lots. Small lots production refers to the proactive
manufacturers around the globe rapidly adopted and emulated reduction of batch sizes to the smallest lot possible. This reduces
TPS-based practices throughout the 1980s, 1990s, and beyond. inventory carrying costs and facilitates reduced lead and cycle
A 2006 survey of US manufacturers by IndustryWeek and times, which enables faster turn-around time for customers.
the Manufacturing Performance Institute for the 2006 Census Reduced setup times (the elapsed time between production runs
of Manufacturers showed that just-in-time supplier deliveries used to change over machines) aid the JIT process by making it
were at the top of the list of most commonly used methods more feasible for manufacturers to produce small lots. The longer
for managing inventories, with over 43 percent of respondents the setup time, the costlier it is to produce small lots of product.
reporting its use in their operations. In the JIT world is the Single Minute Exchange of Dies (SMED)
JIT has enabled a different world. Today's supply chain method, also often referred to as "quick changeover." This was
increasingly moves small amounts of product at a time, delivered introduced in TPS and was applied to the changeover of dies but
directly onto the factory floor or retail shelves, rather than today has much wider applications. Simplistically, SMED is the
into warehouses. Manufacturing has been revolutionized with practice of completing as many steps in the changeover process
investments that focus on improved flexibility in volume, as possible while a production run is still in process, and reducing
product, and delivery; increased production speed; and waste and improving the efficiency of the steps that must be completed
reduction. All this has worked to provide faster product to market during the changeover.
rates at reduced costs. Group Technology. Group technology involves grouping
Importance of JIT Systems. Thus, it becomes clear why a JIT parts that have physical similarities or are used for similar
system is important to manufacturers. First, and most obvious, manufacturing processes to reduce work-in-progress and lead
it saves the cost of warehouses, related equipment, and the times. Instead of the traditional factory layout with similar
machines grouped together and work-in-progress moving from

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area to area, individual factory cells (cell manufacturing) Key Success Factors. In order to successfully implement JIT,
are created with all the machines necessary to complete the operations must be highly integrated and synchronized, with
production of a particular product or group of products. empowered workers who can resolve problems on the spot to
keep production moving and who are enabled to influence the
Kanban. Kanban is a Japanese word meaning sign and refers to
production process to eliminate waste and improve productivity.
a signaling system that is in wide use in JIT manufacturing to
This foundation is typically provided in a TQM environment,
ensure the just-in-time delivery of parts and materials, as they are
discussed further later in this article.
needed. Kanban is a "pull" system—when a product or material
is needed, a signal is sent to replenish the product or material. Also critical to success is the readiness and willingness of
This flows all the way up the supply chain, with each entity in one's suppliers to work with the JIT system. It is no good to
the chain sending a signal up the chain for its own replenishment implement JIT when your suppliers and/or their suppliers cannot
after responding to a signal further down in the chain. accommodate it. When a company along the supply chain is
unable or unwilling to implement JIT policies and practices,
On the factory floor, this has historically been done with cards—
inventory must be stored somewhere. Either the supplier will
when a cart or bin is empty, the card at the bottom is used to signal
stockpile it and pass the cost on to the manufacturer implicitly
for more material. A good analogy is a checkbook. The kanban
or explicitly or the manufacturer will store the inventory. Either
would be the ticket slipped in at the point where replenishments
way, the manufacturer has lost the key benefit of JIT—reduced
should be ordered.
inventory and subsequently lower costs.
Many systems, especially those spanning companies or plants,
The Marriage of JIT and Quality. American quality guru W.
now use electronic kanban. A good example is in retail, where the
Edwards Deming introduced quality management to Japan in
checkout system creates the signal to suppliers when an inventory
the 1950s, which formed the foundation for their TPS. Total
item reaches the reorder point.
Quality Management (TQM) was well implemented before the
5S. 5S is a methodology for eliminating wasted time by having introduction of JIT and provided an environment in which
an organized workplace where everything is in its place. The five JIT could thrive. When US manufacturing companies began
"S"s are: implementing JIT in the 1980s, TQM had not yet taken hold,
and JIT met with mixed success. Once these companies realized
• "Seiri" (or separating): Storing or discarding any
the importance of TQM in the success of JIT, a TQM revolution
materials or tools not needed for the task at hand.
began that continues in virtually every industry.
• "Seiton" (or sorting): Having tools and materials
TQM is a management philosophy and practice that continuously
arranged for efficient workflow.
improves the quality of products and processes in order to
• "Seiso"(or cleaning): Keeping the workplace clean and achieve customer satisfaction. TQM operates at all levels of
neat. the organization—everyone in the company has responsibility
• "Seiketsu" (or standardizing): Doing the same tasks in for quality. Because TQM has broader application in the
the same way every time. organization and because it unifies the organizational entities
by providing a cross-departmental philosophy for quality and
• "Shitsuki" (or sustaining): Maintaining the standards process improvement, it lays a foundation upon which JIT
and practices developed with the first four "S"s. programs can succeed.
Total Productive Maintenance (TPM). TPM focuses on
keeping all equipment in top condition to avoid breakdowns and Applications
delays in the manufacturing process.
Successful Integrations of JIT Systems. There have been some
Visual control is based on the premise that information presented
notable successes, small and large, with implementations of JIT
visually is comprehended far faster than words.
in the United States. Through implementation of JIT, and with
Multifunctional employee is related to Cell Manufacturing, some pro bono consulting support from Toyota, the Louisville,
where employees are trained in multiple facets of the cell's Kentucky–based American Printing House for the Blind Inc. was
technologies. Even outside of cell manufacturing, employees able to produce an IRS publication in one week with five people
with multiple skill sets create organizational adaptability. that had previously required twelve people and three weeks to
produce.
Uniform plant loading is a method of planning production so
that the manufacturing processes throughout the factory are fully After implementing JIT, Austin, Texas–based Factory Logic
utilized, avoiding idling and overloads. Software increased its production volume of fastener systems to
300,000 units annually with slightly more than 50 backorders
A quality circle is a TQM method used to minimize or eliminate
per month. Prior to its implementation, it was producing about
rework due to defects. Comprised of a team of workers, its
200,000 units with an average of 800 backorders per month
purpose is to identify improvements to processes that will reduce
(Krizner, 2008).
errors.

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JIT, of course, has applications from production of raw materials adversely impact the supply chain. Generally speaking,
all the way to the consumer markets. Wal-Mart brought JIT to its the riskier the logistics, the more inventory the company
retail stores to create one of the most cost-efficient retail supply should keep on hand.
chains in the world, requiring its suppliers to provide just-in- • Third, organizational culture and conditions can affect
time inventory to its shelves, and going even further to Vendor JIT practices. It goes without saying that a culture
Managed Inventory (VMI), which puts the responsibility of its with poor worker and/or supplier relationships or with
inventory management in the hands of its suppliers. practices that are contrary to the worker empowerment
The principles of JIT are also being applied to other areas, as model needed to support JIT must resolve these issues
well. In a survey conducted in 2005, Mohammad Z. Meybodi, prior to implementing JIT.
associate professor of operations management in the School of • The fourth constraint is intractable accounting and
Business at Indiana University Kokomo, found that organizations finance practices. Traditional companies typically focus
that applied JIT principles (empowered teams and quality on improvement of measures—inventory turns, sales,
practices, specifically) to New Product Development (NPD) machine efficiency, etc.—rather than improvement of
developed significantly better quality products in a much shorter processes, which is at the core of JIT. Without a
time span and with significantly less cost. willingness and ability to change this, companies will be
But even beyond the supply chain, JIT principles have unsuccessful with JIT.
been applied to a host of other applications. "Just-in-time • The fifth and last constraint is small supplier difficulties.
learning" technologies have been introduced to provide the right Small suppliers generally lack the customers their high-
information at the right time for a host of applications—from volume counterparts possess. They must purchase in
figuring out how to fix a leaky faucet to making the best diagnosis smaller quantities and lack the clout with their own
in a complex medical case. The most effective technologies focus suppliers to push JIT practices.
on the immediate need (just like in manufacturing), zeroing in on
Implications of Globalization. In 2004, Goldman Sachs coined
the right information based on the specific problem at hand.
the acronym BRIC to refer to four countries—Brazil, Russia,
India, and China—that they predicted would comprise four of the
Discourse new "G6" (six largest economies) by 2050; the other two were
Risks of JIT Manufacturing. One of the key risks with JIT is the United States and Japan. In their 2005 year-end update report,
that the world is not a perfect place. It is easy to get caught up in they reported that each of those countries grew more strongly than
the frenzy of JIT, believing that it is the now de facto accepted predicted, with more countries emerging behind them.
standard for manufacturing. But it is not without its risks and is With rising freight rates, infrastructure disrepair, and the new
not necessarily for every business application. The success of JIT cost of security in both time and money, JIT manufacturing
depends on the ability of the supplier to avoid disruptions to its has become much more complicated. Mark Crone, director,
production, correctly predict demand, and achieve reliable, fast supply chain planning and analysis at Limited Brands Inc.
transportation. All manner of events can disrupt the supply of identified risks to lead time (more potential constraints that
materials, from natural disasters to union strikes, which can have can slow shipments) and cost (fuel cost fluctuations, forced
devastating effects on production if the company is not properly changes in transportation modes to meet production schedules).
equipped to adjust or has little control over its supply chain. He predicted that JIT manufacturing would take a severe hit as
JIT Constraints. Dr. Tony Polito of East Carolina University globalization increases and companies find they need to increase
and Dr. Kevin Watson of the University of New Orleans stock to hedge against these risks.
identified five major constraints on JIT practices that should be An analysis conducted in the 1990s by Vinod Singhal of the
considered before a company decides to pursue JIT. Georgia Institute of Technology and Kevin Hendricks of the
• The first is customer-driven and economic conditions. University of Western Ontario supported this contention and
Successful JIT requires a relatively stable pricing model identified a severe level of fragility in supply chains due to the
for supplies, reasonably level customer demand, and extension of outsourcing. Combined with the practice of JIT,
a reliable supply of material. When materials pricing where inventories are lean, the researchers found there was very
and consumer demand fluctuate significantly or scarcity little room for error and likened disruptions that occurred to "heart
issues are common, traditional manufacturing processes attacks." In such a situation, close management of the supply
perform better. chain and good communication and relationships with suppliers
are the keys to success.
• The second constraint is logistics. There must be a reliable
means for getting the materials from the supplier to the Nevertheless, retail giant Wal-Mart unabashedly abandoned
manufacturer. Transportation strikes, natural disasters, or its former "Made in America" philosophy to embrace global
remote locations with unreliable transportation can all suppliers and put the same constraints on them as on its domestic
suppliers. The question is whether these suppliers will be able to
meet those demands cost-effectively.

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Crone made three recommendations for easing the lead time Quality Control: The practice of identifying defects in products
and costs associated with global supply chains. First, he after they are produced, such as inspections.
recommended reducing transport content. That is, moving to
Quick Changeover: A more generic term for the practice of
more regional and coastal distribution centers and moving to a
minimizing setup time between production runs.
direct-to-destination delivery model where possible to minimize
handling and reduce overall distance traveled. Second, and Single Minute Exchange of Dies (SMED): A philosophy and
supporting his predicted hit to JIT, is doing larger shipments to methodology for decreasing the amount of setup time between
gain cost efficiencies. Last, he suggested considering carefully production runs.
before deciding to source overseas. The risks might well
Small Lots: The philosophy and practice of manufacturing items
outweigh the benefits.
in small lots to decrease lead times.

Conclusion Supply Chain: All entities involved in the delivery of goods from
raw materials to finished goods and onto the retail shelf.
JIT has clearly had a radical impact on manufacturing paradigms
Total Productive Maintenance (TPM): A practice of placing
the world over and Toyota continues to lead the charge, practicing
high importance on preventative maintenance of equipment to
its TPS and achieving continued success and profitability in the
avoid costly downtime and disruptions to the JIT supply.
auto industry. More and more manufacturers are implementing
JIT and, if they are careful about how they are applying it and Total Quality Management (TQM): A formalized philosophy
embedding organization-wide philosophies, are succeeding with and practice developed by Toyota for TPS that focuses on
it. However, today's pace of globalization is putting increasing continuous improvements in processes and product.
strain on JIT, and it is yet unclear how JIT will transform to meet
Uniform Plant Loading: A planning philosophy and
the new world order. Undoubtedly, the world will continue to
methodology aimed at eliminating idling or overload in any
watch companies such as Toyota and Wal-Mart to get the answer
manufacturing unit.
to that question.
Visual Controls: A philosophy and practice of using visual cues
Terms and Concepts to convey information to improve speed of communication within
the plant.
5S: A methodology for organizing the workplace for maximum
efficiency.
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Wilson, D., & Purushothaman, R. (2003, October Essay by Joyce Gubata, MBA
1). Global economics paper no: 99, dreaming
with BRICs: The path to 2050. Goldman Sachs Joyce Gubata is a freelance business writer and consultant with
Global Economic Website. Retrieved from http:// over 20 years experience in business operations, marketing and
www2.goldmansachs.com/insight/research/ sales, information technology, and consulting for companies of
reports/99.pdf. all sizes in multiple industries.

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