Category Archives: Just inTime Systems

Implementing JIT Production

In this section. our objective is to explain how to accomplish liT production. To structure our discussion we follow the steps given in Exhibit 14.10, expanding on some of the ideasQuality Circles Another interesting technique, with which many Americans are already familiar, is quality circles. The Japanese calJ them small group improvement activities  (SGIA). A quality circle is a group of volunteer employees who meet once a week on a scheduled basis to discuss their function and the problems they' re encountering, to try to devise solutions to those problems, and to propose those solutions to management. The group  may be led by a supervisor or a production worker. It usually includes people from a given discipline or a given production area. like Assembly Line A or the machining department. It  also can be multidisciplinary, consisting. for instance. of all the material handlers who deliver materials to a department and the industrial engineers who work in that department. It does hae to be led. though. by someone who is trained as a group leader. The trainers are facilitators, and each one may coordinate the activities of a number of quality circles. The quality circle really works because it's an open forum. It takes some skill to prevent  it from becoming a gripe session. but that's where the trained group leaders keep the membership target. Interestingly enough, only about one-third of the proposals generated turn out to be quality related. More than half are productivity oriented It's really amazing how many good ideas these motivated employees can contribute toward the profitability and the improved productivity of their companies. Quality circles are actually a manifestation of the consensus, bottom-round management approach but are limited to these -Ronald groups, .

JIT in the United States

JIT evolved in Japan in great part due to the unique characteristics of that country. Japan is a very small country in area. Distances between most of the major  are. therefore, relatively short. In addition, a large proportion of its  geographic area i” mountainous, Consequently, most of Japan’s population lives in a relatively “mall area.  space at a premium. In addition, the Japanese tend to have a strong paternalistic, family-oriented culture that extends
to the relationship between large and small companies. Consequently. the vast majority of Japanese suppliers to the major companies are usually located within a 25-mile radius of the major firms’ manufacturing facilities. In addition, ost of the sales of these small firms tend to be to a single large customer, thereby making  these small companies highly dependent.In contrast, the United States has a very large geographic area. Suppliers, t before, often are located thousands of miles away from production facilities. (As companies continue to extend their supply chains globally, their suppliers will become even more remotely located.) In addition, the paternalistic relationship between large companies and small does not exist to the same extent that it does in Japan. Finally, most U.S. firms have a much wider customer base, with anyone customer representing only a small percentage of its sales. For these and various other reasons, lIT is practiced differently in the United States than it is in Japan. “JIT in the United States often stands for lumbo nventory-Transfer,” said Peter Frasso, vice president and general manager of Varian Vacuum Products in Lexington, Massachusetts, at the April 1996 Annual Meeting of the Operations Management Association in Boston, Massachusetts. In other words, there are many large companies in the United States that. instead of working with suppliers to’ synchronize operations, will often try to force suppliers to maintain large stocks of inventory rather than keep these inventories at their own facilities. Thus, while the large firms practice lIT within their own facilities. their suppliers deliver raw material and components from buffer inventories that are frequently located nearby. With this approach, transferring the inventory from the manufacturer to the supplier improves the performance of the large firm at the expense of the smaller supplier, which absorbs all of the risks and costs associated with these inventories.  The large distances that often exist between suppliers and customers in the United States also preclude the ability to provide products in small lot sizes at short time intervals (that  is. several times a day. as is often the case in Japan). Nevertheless. other aspects or elements of ,\ such as (a) working with suppliers in a  partnership relationship, (b) reducing setup times, (c) encouraging worker participation, and d) reducing inventories and waste, are being adopted by the better companies, with recognizable benefits. A survey of U.S. manufacturers indicated that 86 percent of the  respondents acknowledged some benefits from implementing JIT.3
Because of these differences, many U.S. company  s, in addition to having a JIT system, have adopted an MRP system (as discussed later in Chapter 17) in working with their suppliers. The MRP system provides the suppliers with a forecast of the raw material and component requirements. Typically these requirements zse frozen for the immediate future, but can change the further out the requirements are. For example, the orders placed with a supplier might be fixed for the next six weeks, but the requirements may change beyond this six-week window. This approach allows suppliers to schedule work efficiently within their own facilities. As illustrated in the OM in Practice box, Saturn provides a good example of a growing number of U.S. firms that are successfully implementing many of the concepts of JIT.

Focused Factory Networks

The fir« decent is focused factory networks. Instead of building a large manufacturing plant that docs everything (i.e  a highly vertically integrated facility), the Japanese build small plants that are highly specialized. There are several reasons for doing this. First. it’s very difficult to manage a large installation: the bigger it gets. t e more bureaucratic it gets. The Japan-.e style of management does not lend itself to this kind of environment. Second. when a plant is specifically designed for one purpose. It can he .onstructed and operated very economically. Fewer   plants in Japan have a, man ,h 1.000 or more employees. The bulk of them. some AI 1.000 plants. have bet« can 31J and I.O()O workers and over IRO. have f. When we talk about the Japan approach to productivity and the impure-. I’ve thing’ they’re doing. we’re  primarily about  middle group. in which not of their model manufacturing plant, arc located. Two illustrative examples of  factories have been cured by the Ford Motor Company: The Escort automobile needed ” trans-axle. which a going to require a  300 million expansion at the Ford plant in But Ohio. Ford asked the Japanese . furan equivalent quotation and Tokyo-Kogyo offered I,) con-true: ” brand-new plum I uh the same rate of output at a competitive unit price for $100 million, a one-third ratio. A second example relates to Ford’s Valencia engine plant. which produces two engine per employee per day. and requires 900.000 quare feet of floor space. An almost identical engine is produced by the Toyota Motor Company in Japan. where they make nine engines per employee  per day in a plant that has only 300.000 quare feet of space. The issue is not only productivity per person but also a much lower capital investment to achieve this manufacturing capability.

The Japanese Approach to Productivity

To fully appreciate the elements of Big JIT. it is useful to re, view the history and philosophy of its application in Japan. The ability of Japanese manufacturers to  in high quality. low-co t production. which  publicized in the 70~ and e.irl, 1980s . . till holds despite their current economic problem” Indeed. the Japanese ,till retain the market dominance in televisions, VCRs. cameras, watches, motorcycles. and <shipbuilding
that they established over 20 years ago-in large part due to.

Many people believe these accomplishments are attributable to cultural differences. They envision the Japanese dedicating their lives to their companies and working long hours for substandard wages. which would be unthinkable in America. The evidence. however. is contrary to these distorted notions. Consider the following: In 1977. a Japanese company named Mat shite purchased a televise iron plant in Chicago from a U.S. company. In the purchase contract. Matsushita agreed that all the hourly personnel would be retrained. Two years later. they still had essentially the same 1.000 hourly employees and had managed to reduce the indirect staff by 50 percent (see Exhibit 1-1-.2).Yet. during that period, daily production had doubled. The quality. as measured by the number of defects per 100  TV sets built, improved .fO-fold. Outside quality indicators also improved. Where the U.S.company (Motorola) had spent an average amount of 5 16 million a year on warranty costs. Matsu hits expenditures were 52 million. (That’s for twice as many TV sets. so it’s really a 16-to-1 ratio.) These are big differences-differences achieved here in the L’nited States with American  workers. The  sue is. how d.i the Japanese accomplish cane  learn from them?A!>a starting point. it’s important to understand that the Japan-,e. as .l nation. have had one fundamental economic goal -since 19.f5: full employment through industrialization. The strategy employed to achieve this goal called fur obtaining market domin.mce 111 verve select product areas. They very carefully selected those induce-series in believed they could become dominant and concentrated on them. rather than diluting their effort, over a broader spectrum. The tactics of the Japanese were threefold: ((/) They imported their technology. (The entire Japanese semiconductor industry was built around a $25.000 purchase from Texas Instruments for the rights to the basic semiconductor process.) Instead of reinventing the wheel, they avoided major R&D expenditures and the associated risks. then negotiated license agreements to make successful. workable new products. (h) They concentrated their ingenuity on the factory to achieve high productivity and low unit cost. The best engineering talent available was directed to the shop floor. instead of the product design department. (c) Finally, they embarked on a drive to improve product quality and reliability to the highest potable levels, to give their customers product reliability that competitors were not able to supply. The implementation of these tactics by the Japanese was governed by two fundamental concepts (most of us agree with these concepts in principle. but the difference is the
degree to which the Japanese  practice them 1:

I. They are firm believers that in every  ay, shape, and form you must eliminate waste.
2. They have a great respect for people

Elimination of Waste

When the Japanese talk about waste. the definition given by Fujio Cho. from the Toyota Motor Company. probably states it as well as anyone. He calls it “anything other than the minimum amount of equipment, materials. parts. and workers (working time) which are absolutely essential to production.” That means no surplus. no safety stock. That means nothing is banked for future use. If you can’t use it now, you don’t make it now because that is considered waste. There are seven basic elements under this concept

I. Focused factory networks.

2. Group technology

3.    Jidoka’-quality at the source.

4.    Just-in-time production.

5.    Uniform plant loading.

6. Kanban production control system.

7. Minimized setup times.

JIT Logic

JIT (just-in-time) is an integrated et of activities designed to achieve high-volume production using minimal inventories of raw materials. work in prices. and finished goods. Parts arrive at a subsequent workstation “just in time” are completed and move through the operation quickly. Just-in-time is also based on the logic that nothing will be produced until it is needed. Exhibit 14.1  this process s. Need is created by the product being pulled toward the user. When an item is sold. in theory. the market pulls a replacement from the last position in the system-final assembly in this case. This trigger an order to  he factory production line where a worker then pulls another unit from an upstream station in the flow to replace the unit taken. This upstream station then pulls from the next station further upstream and so on back to the release of the raw materials and components needed to make the product. To enable this pull process to work smoothly. JIT demands high levels of quality at each stage of the process. strong vendor relation , and a fairly predictable demand for the end product. JIT can be viewed colloquially as “big HI” and “little  (often termed Jean production I) is the philosophy of operations management that seeks to eliminate  waste in all aspects of a firm’ s production activities: human relations. supplier relations. technology, and the management of materials and inventories, Little HT focuses more narrow Iy on scheduling good inventories and providing service resources where and when needed. For example, companies such as Manpower Temporary  services and Pizza Hut essentially use  signals to fill orders for replacement workers or Sicilian pizzas, respectively. However, they do not integrate operations around other aspects of the J IT philosophy.