Making the concepts work.doc

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Ma&ing the %oncepts or&

- OP Wali

The Just-in-Time (JIT) concept was initially used by Toyota Japan to eliminatewaste at the workplace during the 1950s and 190s! JIT aims to eliminate wastethrough the e""icient use o" resources! #aste here means any acti$ity% material oroperation that does not add $alue! The concept soon became a success mantra "orToyota% and as usual% its #estern counterparts &uickly tried to emulate themethod! #hile doing so% they made a lot o" interpretations o" the original concept!This resulted in $aried e'periences (not o" the e'pected kinds) "or se$eralcompanies as is e$ident "rom the case! The JIT "ramework% as adopted by Toyota%was use"ul in a speci"ic conte't! $en Toyota could not deri$e the same bene"its"rom the JIT methodology in its a""iliatesunits in other countries!

The key elements o" the JIT philosophy are

*inding the root causes o" the problems and remo$ing them once and "or

all

+rocess simpli"ication

,educing manu"acturing throughput times% e""ecti$ely replacingtraditional batch production by as close as one can get to continuousprocessing through the use o" cell manu"acturing and set-up reductiontechni&ues

ynchronous supplier per"ormance matched to the production line

.onstant endea$or "or &uality impro$ement

Impro$ing labor "le'ibility through cross training% so that one can switch peoplebetween tasks to cope with the e$eryday ups and downs in demand!

To handle all these elements is a daunting task and needs abo$e a$eragecapability and strong commitment "rom the management and employees!

/perationally% waste elimination is at the core o" JIT application! arious areas o"

waste are de"ecti$e material% transportation waste% o$erproduction% waiting time%processing waste% in$entory% mo$ement waste etc! #aste elimination is achie$edthrough adopting a pull method to stretch e""iciency at $arious steps o" theproduction process! This procedure works in re$erse order! The method calledKanbanensures that only parts re&uired by the succeeding point are put in thebo' and pushed to the demanding point! There"ore% the bo' with a signal card actsas an in"ormation link as well as channel to enable "low o" material! The materials%parts% components are produced and deli$ered in the re&uired &uantity ust be"orethey are needed!

In addition% time and cost re&uired to change "rom the production o" one part toanother is reduced% thus cutting set up costs and promoting production in small
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lots! This system helps minimi2e in$entory! ,eduction in in$entory pre$entswastage o" space "or storing and also reduces in$entory carrying cost! 3y cuttingdown on waste o" machine hours% man-hours and material handling time are alsoreduced! 4ence% this becomes a classic case o" synchroni2ed in"ormation andmaterial "low across the operation "loors and other processes in$ol$ed!

3ut along with the appreciation o" this method% one needs to dare the risk o"getting prepared "or tightly coupled processes (in"ormation and material)! Insituations where material and in"ormation are closely inter-related% there remainsno scope "or ine""iciency! This is because small issues multiply mani"old and createmaor problems! +eople and procedures become $ital in any JIT implementationbecause the philosophy is much more than ust changing the productionmethodology! The working style% company culture% attitude to work and outputusers ha$e a lot o" bearing on the results o" JIT implementation! upta% 4olladayand 6ahoney ha$e mentioned "our components7 education and training program8de$elopment o" a cooperati$e en$ironment rewards and incenti$e programs% andopen communication and worker in$ol$ement as essential humanware critical tosuccess"ul JIT adoption! s one can see in the case% Toyota:s culture to assimilatethis methodology had e$ol$ed o$er time but the same was not true in the case o"Toyota adopting it "or units in other countries!

/ne cannot ha$e a common success mantra "or all the products and processeswhile adopting the JIT concept! The conte't plays an important role in deciding theoutcome o" such initiati$es! #hat applies to automobiles may not apply toprocessed "ood items or books or medicines! The set o" $ariables which are criticalto one set o" products are not same "or the other! *or products where demand"luctuations are $ery high or the supply is $ery uncertain% the conse&uences o"using a JIT system can be "atal at times! ame is true in the case o" processesalso because it is essentially people who carry out tasks and take decisions at$arious nodes o" a process! The work culture% habits and attitudes $ary acrossdi""erent industries% sectors and countries! There"ore% be"ore adopting themethodology% companies need to care"ully assess it "or suitability!

To assess the suitability one needs to look at the entire supply chain right "rom thelast tier suppliers to the end consumer! I" the JIT system brings e""ecti$eness atthe production le$el% there is a possibility that the problem has been shi"ted to thesupplier side! To ha$e prompt supply as and when demanded% the supplier needsto keep the in$entory ready accordingly! I" the concept is not stretched to the tailso" the supply chain% the waste which has been eliminated in some part o" the

supply chain mo$esaccumulates at other places o" the same chain! The cost o"this waste is ultimately borne by the end consumer! There"ore% to make theconcept e""ecti$e% especially on the global scale% the entire chain needssensiti2ation towards collaboration ad$antages through JIT!

JIT is a wonder"ul le$er but the le$erage can be e'plored only through moredisciplined management planning% understanding% collaboration and will "orcontinuous impro$ement! /rgani2ations implementing JIT necessarily need to"ocus on the entire supply chain spanning suppliers% partners and customers!

The author is professor, Indian Institute of Foreign Trade (IIFT), New Delhi.

; The I.*I


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*ocused "actory networks

.ellular layout

=uality at source

+ull production system


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basis o" ?"ree2e windows:% where the estimated demand is "ro2en and theproduction plan is based on this estimate! JIT systems cannotper setolerate demand "luctuations beyond 10A!

+ogistical issues*mall-lot production is an important "eature o" JIT!

*or e$ery single lot o" production% raw materials are sourced "romdi""erent points o" origin in small lots! This is achie$ed by hea$ycoordination throughout the supply network! 3ut% this could lead tologistical problems! /ne drawback is that companies cannot le$erage on

bulk transportation charges! econdly% the "re&uency o" orders goes up!.ollecti$ely% these two issues result in increased transportation costs! In"act% in Japan% it was "ound that with more and more companies adoptingJIT% the roads were getting congested with too many trucks mo$ing backand "orth!

.ehavioral pattern*JIT is all about empowering people! In "actories

with JIT system% workers are allowed to stop the production line usingtheAndonsystem under the principle o"Jidoka! /nce a de"ect isdetected% the production may be stalled "or a couple o" hours be"ore thecorrecti$e action is completed! uch a system will work only when theworkers are skilled enough to identi"y the errors and responsible enoughto call "or a stop o" production! n o$ereager worker or an under-skilledworker may cause unnecessary delay in the production schedule!

4a$ing said that implementing JIT e""ecti$ely and reaping its bene"its could bedi""icult indeed% one should also keep in mind that i" properly implemented% the

methodology can de"initely lead to $arious gains! /rgani2ations can hope to reapthe "ollowing bene"its7

.ost sa$ings due to reduced in$entory le$els

Impro$ed &uality due to close monitoring

pace sa$ing due to lower in$entories

,educed lead time due to better integration

Increased producti$ity and better "le'ibility!

The author is leturer in !perations "esearh, shool of o##uniations and#anage#ent studies ($%&$), %ohin.

,e"erence B 1C-0D-11-0C

; The I.*I

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Making the concepts work.doc