As with lean manufacturing philosophy, the Just-In-Time concept emerged as part of the Toyota Production System. Japanese companies pioneered this approach, and soon, Western companies began adopting it.
Hewlett-Packard
The famous Hewlett-Packard became one of the American pioneers in implementing “Just-In-Time.” Using JIT in its four subsidiaries (Greeley, Fort Collins, Computer Systems, Vancouver) increased labor productivity (by 100% in Greeley) and the amount of shipped products (by 20% in Vancouver) and reduced production cycle time (by 50% in Fort Collins).
History of JIT
Toyota was the first to use the “Just-In-Time” concept as part of its business model in the 1970s. It took over 15 years to perfect the methodology, which became a significant part of the company’s management, alongside lean manufacturing.
The prerequisites for using the Just-In-Time concept are rooted in the post-war period. Three factors influenced the development of this new production philosophy:
- Financial Crisis and Lack of Cash Flow: Made it impossible to finance large-scale inventory production methods (as was customary in the US).
- Lack of Space in Japan: There was not enough space to build large factories and warehouses for production and storage.
- High Unemployment: Meanwhile, Japanese workers’ wages were significantly lower than those of their American counterparts, and female labor was valued 40% less than male labor.
Toyota seemed to have perfected its mechanics over a couple of decades. However, for Just-In-Time to work perfectly, several conditions must be met:
- Stable production
- Highly skilled personnel
- No breakdowns at plants
- Reliable suppliers
- Fast setup and reconfiguration of machinery responsible for the final assembly of cars
The violation of one condition almost led to a complete collapse of the methodology in February 1997. A fire at a brake production plant significantly reduced the output capacity of P‑valves for Toyota cars.
The company was the sole supplier of these parts, and the plant closure for several weeks could have disrupted Toyota’s supply line. Because Toyota only sent orders for parts when it received new orders from customers, the stock of P‑valves ran out in one day. Production lines halted for two days until the supplier could resume assembling the necessary parts.
Other Toyota suppliers also had to stop work since the automaker did not need other parts due to production downtime. The fire at one plant cost the company about $15 billion in lost profits and 70,000 cars due to a two-day downtime.
In the West, the use of JIT was first learned about in 1977 thanks to two articles:
- A. Ashburn’s “The Famous ‘Ohno System’ of Toyota” (named after businessman Taiichi Ohno, considered the father of lean production)
- Y. Sugimori’s “Toyota Production System and Kanban: Materialization of Just-In-Time and Respect-for-Human Systems.”
From the 1980s, the basics of Just-In-Time began to be applied by companies in the US and other developed countries. Fujio Cho’s presentation (later President of Toyota Motor Corp.) at the International Headquarters of Ford in Detroit in 1980 greatly contributed to the theoretical integration of the concept into production. In it, he detailed the features of Toyota’s production system and emphasized the advantages of JIT and the Toyota Production System.
A notable and contagious example of the successful application of the “Just-In-Time” methodology at the time was Omark Systems (now Blount International, Inc). They created a modification of the concept called ZIPS (zero inventory production system), which increased productivity by about 35%.
Richard Schonberger in his book “World Class Manufacturing Casebook: Implementing JIT and TQC” uses a survey quote from a company employee as proof of the methodology’s effectiveness:
“Labor protection has become much better. Previously, we could work 24 hours a day, 7 days a week, followed by a long break. Too often, we worked on parts that weren’t needed. Now we’re more occupied with working on necessary parts”.
Further impetus for the study and use of Just-In-Time was given by Daniel Jones and Daniel Roos’ book “The Machine That Changed the World”
What is Just-In-Time and Why Does Your Company Need It?
“Just-In-Time” or JIT is a production system where only the items needed by consumers are produced exactly when needed and in the required quantity.
This approach is diametrically opposed to mass production. Two key differences are:
- Mass Production: Items are produced in large batches, stored, and delivered to consumers when an order is received.
JIT: Production occurs as orders come in. - Mass Production: Focuses on producing one type and specification of product in large batches.
JIT: Focuses on small batches of diverse products.
Dell
A notable example of Just-In-Time implementation is Dell. Michael Dell chose the path of direct sales, where PC assembly began only after an order was placed. This decision allowed the company to start installing Pentium 4 processors almost three months earlier than HP, as there were no large quantities of unsold previous-generation CPUs in stock!
Losses are an element of the production process that increases costs and adds no value.
DRIFT Concept as an Extension of Just-In-Time Ideas
DRIFT stands for Do It Right the First Time. This concept emerged following JIT in the 1980s. It involves setting up processes and systems so that the sales department receives products from production only once, but without the slightest error.
DRIFT potentially reduces production costs by eliminating the need to redistribute excess inventory or manage consumer returns.
The essence of the concept is simple: Everything produced has zero error probability.
This means everything coming off the conveyor is done right the first time. Risks of reworking and corrections disappear, along with the loss of brand reputation.
To implement the DRIFT methodology, it is necessary to link systems, processes, and management levers into a single whole to reduce the risk of errors to zero on the first launch. Checklists can be very helpful in this.
Unfortunately, there are no studies on DRIFT in the CIS countries. Meanwhile, it is even applied in the US Army: Chief Warrant Officer Caleb Kitrell implements three DRIFT strategies in his division:
- Understand the high cost of making mistakes.
- Leaders constantly monitor and go to places where soldiers are less likely to make mistakes and waste time.
- Actively work on eliminating shortcomings and help command implement solutions.
Advantages and Disadvantages of JIT
Advantages:
- Maintaining Competitiveness: Better meet customer needs while reducing costs (particularly in storing finished goods).
- Flexible Response to Demand Changes: Production is geared for quick reconfiguration. No product accumulation means no obsolescence in warehouses.
- Shorter Production Cycle: Besides the obvious benefit of production speed, it ensures a quick return on investment in production.
- Resource Release: Can be directed towards producing other products or completing tasks previously lacking budget and time.
Disadvantages:
- High Dependency on Suppliers: Finding suppliers geographically close to your production facilities or capable of quickly supplying necessary materials is crucial.
- Possible Increase in Material Costs: Ordering small batches of parts increases their cost.
- Labor Vulnerability: Attempts to promptly react to supply and demand conditions lead to the spread of non-traditional labor regulation mechanisms (contracts, temporary/project work).
- Sometimes Cheaper to Store Goods: Particularly relevant for small businesses or production with suppliers in another region/country.
- Increased Transportation Costs: Goods are delivered as needed, not stored in a warehouse and issued from there.
- Higher Requirements for Project Management: Without an established workflow, worker downtime is likely. A personal task manager is indispensable!
- Increased Vulnerability to Economic Deteriorations: For example, fuel price spikes will significantly impact logistics costs, thus reducing production profitability.
TOP‑5 Useful Literature on JIT
Primarily, the Just-In-Time concept is considered an element of kanban or lean production.Here’s our top‑5 book list focusing on this system:
- “The Machine That Changed the World: The Story of Lean Production — Toyota’s Secret Weapon in the Global Car Wars That Is Now Revolutionizing World Industry” by James Womack: A bestseller that significantly boosted the study of lean production and Just-In-Time. First released in 1991, the latest edition was in 2007.
- “Just-in-Time for Operators”: A kind of “JIT for Dummies.” All elements of the Just-In-Time system are laid out, with structured information and numerous footnotes explaining terminology.
- “Kanban and Just-in-Time at Toyota: Management Begins at the Workplace” by Taiichi Ohno: Since it was prepared by Toyota specialists, this source can be trusted. The book consists of training materials prepared for Toyota Production System seminars in the 1970s.
- “Do It Right the First Time: A Short Guide to Learning From Your Most Memorable Errors, Mistakes, and Blunders” by Gerard I. Nierenberg: A guide to identifying and reducing the number of errors in work and life.
- “Just-in-Time: Making It Happen: Unleashing the Power of Continuous Improvement” by William A. Sandras: This book focuses on implementing Just-In-Time in production, covering supplier and consumer interaction, developing a functioning Kanban system, and integrating JIT with other tools in production.
Verdict
The Just-In-Time concept satisfies three consumer desires: high product quality, reasonable cost, and quick order delivery.Applying the Just-In-Time system is a powerful tool for eliminating production process losses.
It enhances company competitiveness by producing a wide range of products at low cost, good quality, and a short production cycle.