The Just-in-Time (JIT) concept was initially used by Toyota Japan to eliminate waste at the workplace during the 1950s and 1960s. JIT aims to eliminate waste through the efficient use of resources. Waste here means any activity, material or operation that does not add value. The concept soon became a success mantra for Toyota, and as usual, its Western counterparts quickly tried to emulate the method.The Japanese approach to productivity emphasizes on two factors: elimination of waste and respect for people. Elimination of waste is done by using a combination of the following techniques/practices:
- Focused factory networks
- Cellular layout
- Quality at source
- Pull production system
- Uniform plant loading
- Kanban production control system
- Minimized set-up times
- Small-lot production
- Total productive maintenance
- Supplier network coordination.
An interesting thing about JIT is that it does not necessarily require heavy investments in equipments or systems. Some of the techniques like Kanban are very simple, making use of different types of cards to signal movement of goods. Minimized set up times are achieved not necessarily by costly technologies, but by doing things differently and utilizing people and machines in an optimal manner. The cellular layout is a good example, where the workstations are U-shaped and machines are positioned in such a way that one operator can simultaneously operate more than one machine.
Any company can emulate all the above techniques/practices. However, the second element, namely the respect for people has to be further investigated to understand the concept’s applicability in the global scenario. To compare the Japanese and global business environments vis-à-vis the concept of JIT, the following points are worth considering:
- Loyalty of workers: Japan has always stressed on lifetime employment for their employees. Unlike India, where job security is the main reason behind the lethargy found in public sector employees, the Japanese ethos is very different. Job security makes Japanese employees more flexible and loyal towards their organizations. They go over-the-board to improve productivity. It would be difficult to find such an attitude in countries like the US, where `hire-and-fire’ is the order of the day.
- Subcontractor network: Japanese industries work on long-term supplier-customer relationships. It is common to find specialized suppliers supplying parts to a few selected customers. On the other hand, certain companies maintain single suppliers providing a variety of components for a single customer. It would be difficult to develop such a supplier network in countries, where the economy thrives on cut-throat competition.
- Bottom-round management: The Japanese style of management is more of consensus than compromise and of collaboration than confrontation. Decisions are taken after involving all the parties concerned and decisions often come from the lowest levels. The upper management concentrates on strategic decisions and operational decisions are left to the lower levels. In most of the developed countries, it would be difficult to find such a decision-making system. This is because, there, the upper management likes to have a hold even over operational decisions. This in turn is due to the fact that the management is more about confrontation and compromise.
- Logistical issues: To make the JIT system a success, Japanese companies developed a system of focused factories and supplier networks, where there are no large integrated plants. Instead, there are specialized plants supplying to the next level in the supply change. The Japanese were able to drastically reduce the lead time, mainly because factories were located in more or less the same geographical area. It would be difficult to achieve such reduced lead times elsewhereand especially in regions where companies depend on global sources for raw materials.
- In addition to the above problem areas, organizations trying to implement JIT can face certain other practical difficulties:
- Fluctuations in demand: JIT system can work efficiently only on the basis of `freeze windows’, where the estimated demand is frozen and the production plan is based on this estimate. JIT systems cannot per se tolerate demand fluctuations beyond 10%.
- Logistical issues: Small-lot production is an important feature of JIT. For every single lot of production, raw materials are sourced from different points of origin in small lots. This is achieved by heavy coordination throughout the supply network. But, this could lead to logistical problems. One drawback is that companies cannot leverage on bulk transportation charges. Secondly, the frequency of orders goes up. Collectively, these two issues result in increased transportation costs. In fact, in Japan, it was found that with more and more companies adopting JIT, the roads were getting congested with too many trucks moving back and forth.
- Behavioral pattern: JIT is all about empowering people. In factories with JIT system, workers are allowed to stop the production line using the Andon system under the principle of Jidoka. Once a defect is detected, the production may be stalled for a couple of hours before the corrective action is completed. Such a system will work only when the workers are skilled enough to identify the errors and responsible enough to call for a stop of production. An overeager worker or an under-skilled worker may cause unnecessary delay in the production schedule.
Having said that implementing JIT effectively and reaping its benefits could be difficult indeed, one should also keep in mind that if properly implemented, the methodology can definitely lead to various gains. Organizations can hope to reap the following benefits:
Cost savings due to reduced inventory levels
Improved quality due to close monitoring
Space saving due to lower inventories
Reduced lead time due to better integration
Increased productivity and better flexibility
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