7.7 Special topic: just-in-time and lean systems

Just-in-time (JIT) is a management philosophy that originated in the 1970s. Taiichi Ohno is credited with developing JIT and perfected it for Toyota’s manufacturing plants in Japan. The main goal of JIT is to eliminate anything that does not add value from the customer’s perspective. Non-value-added activities are referred to as “waste” in JIT. Examples of waste include:

• overproduction beyond what is needed to satisfy immediate demand
• waiting time (work-in-process, customer waiting)
• unnecessary transportation (material handling, customer travel through a facility, etc.)
• processing waste (yield rates, start-up costs)
• inventory storage waste (space, deterioration, obsolescence, etc.)
• unnecessary motion and activity (waste in work techniques, etc.)
• waste from product and service defects (rework, scrap, warranty, etc.)

There are three essential elements that contribute to the successful practice of JIT:

• JIT manufacturing principles
• Total Quality Management (TQM)
• employee empowerment

Jit manufacturing principles

In a manufacturing setting, there are six major ways to pursue JIT goals: inventory reduction to expose waste, use of a “demand-pull” production system, quick setups to reduce lot sizes, uniform plant loading, flexible resources, and cellular flow layouts.

Inventory reduction to expose waste

Inventory covers up a lot of wasteful practices (poor equipment, weak vendors, bad quality, long setup times, etc.). By gradually lowering inventory, the weaknesses of the production system can be revealed and addressed one by one. Machines can be replaced or better maintained, vendors quality and delivery can be improved, machine setup procedures can be streamlined, quality practices can be implemented, and labor and equipment can be laid out more efficiently. These improvements permit the organization to operate with less inventory, less costs, and faster response times in meeting customer needs.

Demand-pull production system

The traditional approach to manufacturing management promotes a strong focus on machine and labor utilization. The view was that if managers make sure that workers and machines are always busy, then surely the factory will be productive and efficient. This approach is called the “push” system of manufacturing, where raw material and work-in-process is continuously pushed through the factory in the pursuit of high utilization. The problem with this approach is that it usually produces high levels of inventories, long lead times, overtime costs, high levels of potential rework, and workers who are competing with one another rather than working cooperatively.