Guest blogger "OU Professor ('Doman On Lean' Blog)"
Who Makes Just-in-Time Production Work?
Just-in-Time [JIT] Production depends on trained, involved employees who know that they are working in a process. They know that there are people ahead of them in the process who supply them with products and/or information that they need to get their job done and make the process work. These employees know there are people beyond them in the process that they must supply with the required product and/or information if the process will produce value for the ultimate customer.
In other words, they know how the business runs and, more importantly, they know when it is not running right. Most importantly, though, when they see it’s not running right, they know how to fix it and they want to fix it.
Employees trained in lean know that they cannot succeed individually, but only as part of a team of employees working on a process. It sounds simple, but many employees in many companies don’t know what is happening around them and couldn’t care less. They just want to do their job and go home.
JIT Production is the ideal. It is accomplished through a pull system where kanbans are used by trained employees who know what they should be doing in the process as well as what other employees should be doing.
JIT Production won’t work unless employees feel they are on a team and believe their success depends on their co-workers who are working with them in the process.
It’s ironic that we absolutely understand the importance of teamwork when it comes to sports, but we stop thinking that way when we walk through the door to work on Monday morning.
What is Just-in-Time Production?
JIT Production is producing the right item at the right time in the right quantity. JIT starts with the customer and looks at the production flow in reverse. It doesn’t start with “what can we make” or machine capacity or line speed; it starts with what does the customer need and works backwards.
As the slide below shows, JIT follows a few basic principles:
JIT is the antithesis of the push system, which makes things based on individual machine schedules in big batches with high WIP. JIT starts with customer orders, sets the schedule in final assembly and then “pulls” what it needs from the upstream sub-processes.
Companies often shy away from JIT Production because it involves eliminating the “safety net” of buffers and WIP and finished goods inventory. And that can be scary. But it doesn’t have to be done in one fell swoop. We can manage the risk by planning and executing a gradual reduction in inventories as our processes are improved and become more reliable… and our employees become more trained in lean. If our finished goods inventory is two weeks, we can work as a team to plan a reduction to one week. We stabilize the process, and agree on when to move it down to four days, then two days, etc., until we are eventually producing exactly what the customer needs exactly when he needs it, and no more.
Companies also shy away from JIT Production because it is contrary to the old conventional wisdom that the best way to run a business is to run as many parts as possible in a single run to maximize machine utilization and reduce the number of changeovers – but this ignores the customer and often resulted in wasted piles of defective or obsolete product that no customer needed or wanted.
The potential benefits from JIT Production are significant. I recently spoke with a Ford Motor Company Plant Manager who described how amazed they were at the amount of floor space that was opened up when inventories were reduced, allowing them to bring in additional production in the same facility. Safety improved because people weren’t tripping over piles of WIP and visibility improved. Obsolescence costs almost disappeared. And when a quality issue was discovered, there were no longer mountains of WIP and finished inventory that needed to be re-worked, and this also saved money and time. When the safety net is removed, or at least reduced significantly, the entire workforce gets much more focused on meeting the customer needs and doing things right the first time.
JIT uses a simple mechanism called kanbans to communicate what needs to be pulled through the system. Kanbans connect and synchronize all the sub-processes in the JIT process.
Kanbans are normally just pieces of brightly-colored paper or cards in plastic or other types of signals that are highly visual, contain precise information (about the supplier, the customer, the part number etc.) and notify employees in the process of what they need to do. Once the kanban system is set up, it is amazingly simple. It greatly reduces the need for managers, schedulers and expeditors running around. Employees know exactly what to do when they see the kanban card and they do it.
Here is a simple example of a kanban that most of us can relate to. Let’s say you order checks for your checking account and they come in a box with five packets of 50 checks each. When you pull out the final packet of fifty checks, there is a re-order form right on the top of it. You fill it out indicating the design of the check and the quantity you need, you send it back to the supplier, and by the time you finish the packet and need more checks they have been delivered to your door in exactly the quantity and design you desired.
Implementing kanban in the workplace is very similar. A simple, understandable signal is sent up the chain to pull material as it is needed by the downstream customer, in exactly the quantity and specifications desired.
JIT Production -> Pull System -> Kanbans goes a long way toward avoiding overproduction and waste, and that reduces cost and improves quality.
JIT Production makes the process highly visible…especially the problems. It doesn’t hide problems with big piles of WIP by every machine or safety stock tucked away “just in case”. JIT forces workers to react quickly to fix the problem fast.
All these pieces of lean—JIT, Pull, Kanbans—fit together and combined with teams of trained, committed employees provide the highest quality, lowest cost products and services for their customers.