Manufacturing Strategy
 - Part 5: Just in time (3)

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Introduction

In many cases JIT is seen as simply requiring, rather than asking your supplier to deliver smaller lots more often. If JIT were this simple it would all be easier, we would just pass the burden back up the line until it reached GO - a sort of VAT type of approach to production.

Supplier development

JIT provides a unique opportunity to integrate with and develop in partnership with your suppliers. This provides room for:

The purchasing department needs to examine the core functions of negotiating agreements, finding new suppliers and ensuring value for money purchasing. The typical purchasing department spends most of its time expediting materials and processing orders and has difficulty coming to grips with typical JIT approaches such as:

Single sourcing: Some buyers feel that single sourcing gives too much leverage to suppliers during negotiations and can open them up to potential up-stream production or labour problems. The truth is that the risk of single sourcing is low because of the mutual commitment between the buyer and supplier. The supplier is assured of a certain level of business and the buyer is assured of the supplier's commitment. The adversarial element of the relationship decreases and co-operation / partnership increases.

Small lots delivered frequently: Buyers tend to look at increased freight costs and the possibility that suppliers might produce in larger quantities and charge for holding costs. In practice the concept of consignment stock and working with the supplier to reduce (or eliminate) Economic Batch Quantities can remove these concerns. Suppliers might also be willing to absorb higher costs on the basis of a guaranteed level of business.

Elimination of raw material / parts inventories: With no buffer inventory, a late delivery or a defective lot could stop production. However, by identifying critical parts and materials, and ensuring that there is always an adequate supply of these on hand, this potential problem can also be defused. JIT consistently treats inventory as an evil that should be reduced. There is a tendency to overdo this approach and I would strongly recommend the approach of Professor Cohn New who talks about; 'The Return of the JEDI' here the JEDI is 'Just Enough Desirable Inventory'.

Building supplier relationships requires a great deal of perseverance and time and is an ongoing activity. A programme should be adopted to build the relationship over a period of time.

The rewards and activities from developing supplier relationships are immense. Some of these are:

Wastes and non-value activities

Waste is the expenditure of resources that do not add value to the product at least equal to the cost of the resources expended. JIT focuses attention on the areas of waste and Non-Value Activities. The top 7 wastes are:

Reducing any of these will lead to more effective production and a better JIT environment.

Figure 1 gives some typical activities and their classification in terms of real and waste value:

Figure 1: Adding value or adding cost?

It has been estimated that in many firms the material in the manufacturing system only has real value added for less than 1% of the total time spent in the system. The rest of the time it is inventory and JIT sees inventory as a liability rather than an asset despite what accountants say.

Culture change

JIT requires a radical culture and organisational change within a company. This affects the structure and systems and is vital to achieving the promised and real benefits of JIT. JIT never fails, only the implementation fails.

JIT is not something that is designed and followed as a set of rules. It must be developed from a set of working principles. Everyone needs to be involved and made aware of his or her accountability for his or her operations. If they understand the principles (rather than the rules) under which they are operating then they will be more committed and open to innovation.

Commitment needs to be maintained and nurtured by frequent recognition of achievements. The evolution of the system through innovation needs to be encouraged. Publicise success.

In many ways, JIT involves a culture change that is based on a series of 'motherhood and apple pie' statements we all agree with but which are rarely implemented. JIT forces the issue. Areas that become vital are:

Despite this wide range of changes JIT offers enormous benefits in terms of stock turns, defect reduction, lead time reduction and return on investment improvement. The end result is worth the pain.

For and against JIT

For

Against

Summary

After these pages on JIT you probably find that it involves more than you first thought it did. JIT is well suited to the window industry in that it makes simple control possible and can have a dramatic effect on the throughput of your factory. It is easy to try it out by letting your work in progress go down and then only making things as they are necessary. Fabricators who have carried out this simple experiment often find the results amazing.

"The Manufacturing Strategy" Series

"The Manufacturing Strategy" series is designed to give production managers and their staff some insights into new manufacturing methods and to prompt the industry into considering the benefits of alternative approaches to manufacturing. The series is:

Part 1: Setting the strategy

Part 2: The systems and MRP II

Part 3: Just in time (1) 

Part 4: Just in time (2) 

Part 5: Just in time (3) (This section)

Part 6: Optimised Production Technology (OPT)

Part 7: A fundamental quality

Part 8: Quality management techniques & tools

Part 9: ‘There's no accounting for manufacturing strategy’

Part 10: Performance measurement

Part 11: Changing roles and things to do NOW!

 

Last edited: 11/03/10

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