At its core, Just In Time (JIT) production is a management philosophy and not a technique (University of Cambridge). The core idea of JIT is to align production with demand. As its phrase depicts - all parts or inputs toward next stage of production are produced and delivered just in time for the launch of each particular next stage, ready to be fitted on, or machined, for instance. No more is delivered until the production process is ready to launch the next stage in the process. This limits quantity of raw materials, parts, or finished goods in held in stores - saving on costs related to this.
The entire JIT process, is thus earmarked to reduce, and, ideally, completely eliminate production and delivery lead times, to improve flow - remove bottle necks in the flow of the production process, with the overall goal being to achieve optimal efficiency in the production process, and so on (The Intact One).
In order for it to work, JIT, is thus usually married together with other lean production and Total Quality Management tools like Kanban, and Six Sigma. The first for ensuring the removal of bottle necks and the second, that minimum acceptable levels of quality are adhered to, which in turn will ensure the overall quality, its consistency and repeatability thereof, on finished goods, making it easier to promise both quality and timely delivery to the end user.
Just In Time (JIT) production, being a manufacturing strategy designed to increase efficiency and reduce waste by producing goods only as needed, can be envisaged as a force that churns the gears of production like clock work. Every little gear has its role, and is just as important. All has to work well and turn on demand for the overall process to work continuously.
The historical roots of JIT can be traced back to post-World War II Japan, a country that had limited resources and needed to optimize production processes (Global Trade Mag), but we will leave this topic for now and dedicate a separate article towards it later.
So if one is after sustainable production, with ability to guarantee completion of production according to expectation and KPIs (key performance indicators), then one of the best ways to achieve these goals is through JIT manufacturing, a Lean thinking philosophy that focuses on demand-based production (6 Sigma). JIT manufacturing involves not only producing goods only as needed, with the goal of minimizing inventory but also has a mega focus on reducing waste (Inbound Logistics).
At this point we'd like to bring in a company function, that would seem very unlikely to be involved in or have anything to do with JIT, just to illustrate how the principles of JIT have become so interwoven with every aspect of a producing company, or indeed one which sells products or is a supplier of sorts. The marketing function.
According to Philip Kotler (Marketing Management - Analysis, Planning, Implementation, & Control, Book by Philip Kotler), suppliers are business firms or individuals who provide resources needed by the company and its competitors to produce goods and services. Kotler goes onto to give the illustration of a candy manufacturing company, in our case we will replace this with Toyota.
Toyota must obtain tires, paint, bolts and nuts to make its cars. In addition, it must obtain labor, production line equipment like robotic arms, fuel, electricity, computers, software technology and other factors for production.
Toyota purchasing department must decide which resources to make and which to buy outside. For the 'buy' decisions engineers will appreciate that Toyota's purchasing agents must develop specifications, search for suppliers, qualify them, and choose those who offers the best mix of quality, delivery reliability, credit warranties, and low cost.
Developments in the 'suppliers' environment can have a substantial effect on the company's marketing operations. Marketing managers need to watch price trends of their key inputs.
Rising cost of inputs, may force Toyota to raise its prices, or change the car models it can produce, in turn probably hurting its sales. Marketing managers are equally concerned with supply availability. Supply shortages, labor strikes, and other events which can prevent fulfilling delivery promises. This could lead to loss of sales in the short run and damage customer good will in the long run.
To strategize against this, many companies prefer to buy from multiple sources, avoid dependence on one supplier who might raise prices or limit supply. In times of shortage, purchasing agents find they have to 'market' their company to suppliers in order to get preferential supply.
Thus supply planning has become a cornerstone - more important and also sophisticated. To the extent that companies can lower their supply costs and/or increase their product quality, gaining them competitive advantage.
So following, some companies are integrating going back upstream of their production process so that they can make and control some of their key supplies. Others are requiring their suppliers to move closer to their plants and practice 'just-in-time production' - produce as supplies are needed rather than for inventory.
The suppliers must deliver to the required quality, and if Six sigma is being employed, then if more than the acceptable percentage are bad quality the entire batch is returned to the supplier - The principle of working towards the achievement of zero defects.
This has led company and supplier to work more closely together on quality assurance programs taking place at the supplier's site.
We see this in the heavy manufacturing space - power generation, gas turbine engine production.
Here the customer company is involved deeply even with the tooling development at supplier's end, and their production process fine tuning and qualification of trial parts till they get to the acceptable quality levels. Sometimes even lending specialist labor like specialist welders for instance in supporting the development of the production process' consistency of quality and repeatability of it before mass production is allowed.
Tools/or processes such as DFMEA - Design failure mode and effect analysis - are used to help engineers understand the impact of potential risks associated with a design. These are conducted with the supplier prior to their embarking on making the customer's designed part. Introducing FMEA in the design phase is a best practice that helps answer questions like: What might go wrong with a design? (Ansys).
Simply put, companies are looking for suppliers whose quality, reliability, and efficiency they can trust. The success of JIT revolves around this.
The JIT Inventory System
The JIT inventory system is a management strategy that aligns raw-material orders from suppliers directly with production schedules (Investopedia). With a JIT model, the goal is to physically stock zero inventory until a customer places an order (NetSuite). You can see how this would lower the cost of storage, or having to stock products which no one will buy in the end, nevertheless one cannot ignore the level of sophistication and complexity such a production process demands.
APICS/ASCM defines Just-in-Time as: "A philosophy of manufacturing based on planned elimination of all wastes and on continuous improvement of productivity" (KU ScholarWorks). This definition highlights the focus of JIT on eliminating waste and continually improving processes. One has to set critical success factors as well as key performance indicators at the onset of such a process, then commission a feedback loop system - each result given needs to be fed back into the system, allowing for fine tuning of the process, and its improvement. Continuously.
JIT - Logistics and Costs
In practice, JIT manufacturing involves working closely with suppliers so that raw materials arrive as production is scheduled to begin (NetSuite). This approach requires a high degree of coordination and communication with suppliers.
The principles of JIT logistics include on-demand production, inventory minimization, and continuous improvement (ASTRA). These principles shape the way companies manage their supply chains and production processes.
At its root, JIT manufacturing is a business-centric approach focused on efficiency, with an emphasis on lowering costs and reducing lag times (RFGEN). Lean manufacturing, on the other hand, emphasizes customer desires.
Analysis of mathematical models of JIT systems has shown precisely how JIT can lead to improvements in cost, cycle time, inventory, and quality (ScienceDirect). These improvements are driven by the focus of JIT on eliminating waste and continually improving processes.
The origin of JIT can also be traced back to Henry Ford's production line, in which he was keenly aware of the burdens of inventory (Quality and Innovation). This kind of awareness laid the groundwork for the development of JIT as a manufacturing philosophy.
In a JIT model, the manufacturer has complete control over the manufacturing process, which works on a demand-pull basis (Zoho Inventory). This allows companies to respond quickly to changes in demand.
The central belief of the JIT philosophy is the elimination of waste, but there are other beliefs that help define JIT, including a broad view of operations, simplicity, visibility, and flexibility (O'Reilly). These beliefs guide the implementation of JIT in practice.
Summation on the Principles of JIT
Overall, the principles and theories underlying just-in-time production provide a powerful framework for improving efficiency and reducing waste in manufacturing processes.
By aligning production with demand, minimizing inventory, and continually improving processes, companies can achieve significant gains through the application of JIT principles.
Stay tuned for our next article - a deep dive into the History, case studies and the implementation of JIT.
This article has been written by guest consultant, Dr. R. Apergi CEng MIMechE, for Alphacron Ltd. Alphacron provides consultancy services for multiple industrial sectors including Power Generation, Gas Turbine and heavy manufacturing. Learn more about our services here.