Just-in-Time (JIT)

just in time and JIT inventories

Toyota is one of the largest manufacturers in the world and a leader in the automotive sector. There's no doubt. Japanese factories stand out for their efficiency and applied methods. So much so that a method called "Toyota method”(Or TPS of Toyota Production System) that have been adopted by the rest of industries outside and within the motor sector. That gives a clear idea of ​​how efficient this working method can be.

This method has been called in a more generic way JIT (Just In Time) or just in time. And its name describes very well what it is for. As you can guess, it is based on how the delivery of the materials necessary for manufacturing is treated. It allows you to reduce costs, and always have what is necessary at your disposal so that production does not stop.

This method becomes so efficient that in some cases the parts or materials necessary for production are produced the same day they are installed and are already assembled in cars and other manufactured products. In fact, it is used as a test or benchmark of efficiency in the sector.

JIT history

El Toyota production system it had an origin that is worth remembering. It is attributed to the founder of the Japanese brand Sakichi Toyota, his son Kiichiro and the engineer Taiichi Ohno. They were the true architects to whom we owe this JIT or Just In Time system today. The success of Toyota has not only depended on him, but also on many other industries that have implemented it since its popularization from the 70s.

It all started with Kiichiro Toyota, who when he checked how they worked lAmerican industries and he wanted to develop a better model for his factories. It was based on the fact that the manufacturer could go to a warehouse with the necessary goods, take the ones it needs out of inventory, and the warehouse would be replenished in just the right amount to be able to replace the inventory.

I was not trying to have a high level of hold inventory, since that is inefficient from the economic point of view, having to make a greater investment. Try to have what is fair and necessary, and that it is on time to avoid delays. A very efficient paradigm of working to save production costs.

Taiichi Ohno founder of toyota and jit just in time

Taiichi Ohno was the engineer to make reality this philosophy within Toyota. And it was such a revolution that the rest of western businesses that saw the operation of the Toyota factories began to reduce their inventory levels and copy the method of the Japanese. Some of them didn't even understand the concept or the motivation, which led to their failure. They just saw that it worked for them. This history lesson also shows that it is not an easy thing to do and must be implemented well for it to work.

Introduction to Just-In-Time

just intime in factories, production processes

Just In Time or JIT is a method that it is not understood as detached from the economic. It must be seen as a policy beyond simple efficiency in the industry, and understood as a way of saving by reducing inventory to the minimum possible. In this paradigm, the suppliers of materials or parts deliver the right and necessary at the necessary time. In this way, the production process continues to be nourished without alterations.

This is how JIT logistics work in which any mistake can also be paid dearly. The entire chain must work efficiently, and be very well coupled. Poor organization can lead to failures, production suspensions, delays, etc. In other words, a failure in some part of the logistics chain will generate a chain effect.

Advantages

The JIT has large and advantages that make it worthwhile. Among them the following can be highlighted:

  • Reduce inventory levels to what is just and necessary. This philosophy is carried over to the entire production line. This has a positive economic impact, since it reduces inventory maintenance costs, reduces investments in purchases (and financing of these if necessary) and also reduces storage needs.
  • Minimize economic losses due to obsolete supplies. By not having a large inventory, in case of cessation of production of a model, you will not have a large number of parts that no longer serve.
  • Temporal efficiency. By being delivered just in time, delivery efficiency is also improved. If the chain doesn't fail, nothing is ever missing.
  • Closer relationship with supply providers. This not only brings greater integration, but also allows you to work more closely with them to improve the final product. You can even ensure that purchases are at tighter prices, which reduces the cost to the manufacturer and can obtain higher profit margins and offer more competitive prices than the competition.
  • More flexibility. It allows making changes in production much more quickly.

Not all industries and company sizes get the same benefits from implementing a JIT process, even if has been implemented correctly.

Disadvantages

Not all are advantages in the JIT, as it happens with the majority of systems. Just In Time also has associates Some disadvantages It should be noted to act on them and mitigate their effects or not to apply this philosophy in some cases where it would not be effective. For instance:

  • Fallas. When they do occur, a failure in the chain could generate a chain effect that results in delays, suspension of production, a negative impact on expenses, etc.
  • Supply prices. In some cases, reducing the purchase quantities of materials required can lead to higher purchase prices. This depends on the relationship with the provider, although it could be mitigated. It is especially pronounced in smaller industries, since a reduced inventory is not the same for a large company as for a small one. You are not offered the same offers when buying a pack of 10 pieces as for 1000, even if 1000 means a low inventory for a large company ... Therefore, this will depend a lot on the relationship with the supplier and the size of the company.
  • Increase in switching cost. That is, it can increase the cost when you switch providers. This phenomenon is well known in the field of microeconomics, strategic management and marketing when a customer changes suppliers.

With the advantages and disadvantages you can analyze and evaluate whether it pays to implement the JIT process or not. You should always look for the best compromise in each particular case, it may not work for all industries or, at least, not for all company sizes.

Keys to the Just-In-Time process

fluoj and just-in-time process keys

In JIT method Not only is it supplied what is necessary, it is also produced what is necessary to guarantee the stock but without falling into overproduction. In addition, it seeks to comply with the theory of the 5 zeros from the supplier's point of view: 0 defects, 0 breakdowns, 0 stock, 0 deadlines and 0 bureaucracy. All this must also have human support (operators) and large doses of mechanization / automation of production processes.

Only in this way is guaranteed attack the fundamental problems of industries, eliminate waste, seek greater simplicity, and establish systems to identify potential problems.

Just In Time Phases

For the JIT process to be implemented in an industry, the various phases well defined:

  1. Get the system up and running. The decisions of this first phase will be key for the JIT system to work or not.
  2. Professional development . Industry personnel will need training to be able to work according to JIT as it will require some changes. This process can be light and not involve too much investment of resources and time.
  3. Improve processes. Not only does the staff need changes, the workflow also needs to be adapted to the JIT.
  4. Control improvements. Control over the manufacturing system must also be improved. That happens to control the levels of the products, manufacturing deadlines, customer services, etc.
  5. Supplier / customer relations. Establishing links is essential to work more closely and to be able to reach agreements on the prices of supplies.

All these phases can be carried in parallel to reduce implementation time. But the success of each of these phases will also depend on the final result of how JIT can affect the company.

Fundamental changes imposed by the JIT

Finally, there are a number of JIT (Just In Time) fundamentals that you must recognize to recognize whether or not they can be adapted to your company or industry:

  • Flexibility in resources: Toyota engineer Ohno observed that the cycles of the production machines and the operators were very different. In many cases the employee had to wait while the machine finished. At that time the idea arose that a single operator could operate on several machines (multi-service operator) placed in parallel or in an L-shape to finally place them in a U-shape so that the beginning and end of the line are at the operator's hand. The machines themselves were also modified and reduced in terms of employee travel (all by hand).
  • Cell distribution: all parts that are made in a similar way or have identical requirements are grouped into machine cells. This is what makes up the U mentioned in the previous point so that the same employee can handle them and move from one to another and improve the simultaneous production of products. For example, in this way in each cell different parts could be produced with a very low and fast level of adaptation of the machines.
  • Pull System: is the JIT response to certain problems of coordination or delivery of materials during production. In this way, each workstation is ending and you do not have to push the work to the next stage of production, but it is the next one that goes back to remove the work done from the end of the previous stage. This may seem like a stupid and unnecessary change, but in this way, if the workers at a station see that the work has not been withdrawn they can stop to avoid overproduction.
  • Minimize lead time: the completion time is integrated by the sum of the movement time (reduced by using some fast means of transport between processes or by bringing the machines closer together), waiting time (improved with better programming and more capacity), adaptation time of machines (reducing bottlenecks by having to adapt machines for very different processes), and processing time (improved by reducing the size of the batches produced and improving machinery / operators). For example, in the semiconductor industry, APM (Automated Precision Manufacturer) systems are used, with SECS / GEM communication interface systems. By means of software, certain freight transports from one stage to another can be automated with AGV (Automated Guided Vehicle) vehicles.
  • Low stock and supply efficiency: this requires that good relationship with suppliers and subcontractors, otherwise good efficiency and reducing logistics costs would not be possible. Other beneficial things that can be done to improve efficiency is to locate close to suppliers or suppliers close to the customer. Also, it would be better to use trucks or light vehicles for logistics, as they are faster.
  • Zero error tolerance: a failure can generate chain problems as I have already commented. In addition, each mistake made will have an impact at the production level and at the economic level to correct it. Therefore, other methods must be implemented to ensure failure-free production.
  • 5S Organization: aims to improve work environments with greater order, cleanliness and safety. 5S corresponds to the five Japanese words that begin with S: seiri (classify), seiton (order), seiso (cleanliness), seiketsu (standardize) and shitsuke (discipline).
  • 0 technical stops: on this same website we have talked about various methods or procedures to reduce failures in the industry. Breakdowns can generate downtime that is paid in time and money lost. Improving this point goes through better maintenance and failure prevention procedures.
  • Quality: it is necessary to achieve zero defects, that is, a very high level of quality that the JIT system itself promotes. The Japanese call it jidoka, meaning that quality inspectors and the operators themselves could stop production if they detect problems with the parts. It also implies keeping an inventory of problems that arise in order to improve processes (continuous improvement system).
  • SMED (Single Minute Exchange of Dies): it is a system of short preparation times to provide competitive improvements. This happens by having everything at hand and the machines ready to start, as well as with a good organization that can come from previous points (5S), etc.
  • Total Productive Maintenance (TPM): is a western method to which the Japanese added the T (Total). That is, the production staff must also be involved in equipment maintenance, preparation, quality control, etc. This was traditionally separated and not done in such a centralized way.
  • clock: it is the time or rhythm of market sales that is carefully analyzed to know the rhythm of real demand that they need to maintain in the production plant. It is calculated by dividing the daily working hours by the number of orders for daily vehicles (or other products).
  • Uniformity- A uniform production flow must be maintained in every JIT system to eliminate waste. This can be improved by the pull system, kaizen (the basis of standardization), and also through Kanban. That is to say, from the Japanese “kan” (visual) and “ban” (card), which is a term used in the manufacturing industry in which identification cards are used in the products as witnesses of the production. This improves the production flow. They are usually made up of 3 columns: "To do", "In process" and "Done", although it may have alphanumeric codes, bars, etc. Used well, it can be a good source of information during the workflow to keep it uninterrupted and eliminate bottlenecks. In other words, it would be a method of communication between production phases or processes.

Meet each of these points or fundamentals are key to ensure that a JIT implementation works correctly in different industries.