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.