JUST-IN-TIME (JIT) PRODUCTION

Just-in-time (JIT) is defined in the APICS dictionary as “a philosophy of manufacturing

based on planned elimination of all waste and on continuous improvement of
productivity”.  It also has been described as an approach with the objective of producing the
right part in the right place at the right time (in other words, “just in time”).  Waste results
from any activity that adds cost without adding value, such as the unnecessary moving of
materials, the accumulation of excess inventory, or the use of faulty production methods that
create products requiring subsequent rework.  JIT (also known as lean
production or stockless production) should improve profits and return on investment by
reducing inventory levels (increasing the inventory turnover rate), reducing variability,
improving product quality, reducing production and delivery lead times, and reducing other
costs (such as those associated with machine setup and equipment breakdown).  In a JIT
system, underutilized (excess) capacity is used instead of buffer inventories to hedge against
problems that may arise.

JIT applies primarily to repetitive manufacturing processes in which the same products and
components are produced over and over again.  The general idea is to establish flow processes (even
when the facility uses a jobbing or batch process layout) by linking work centers so that there is an
even, balanced flow of materials throughout the entire production process, similar to that found in
an assembly line.  To accomplish this, an attempt is made to reach the goals of driving all inventory
buffers toward zero and achieving the ideal lot size of one unit.

The basic elements of JIT were developed by Toyota in the 1950's, and became known as the
Toyota Production System (TPS).  JIT was well-established in many Japanese factories by
the early 1970's.  JIT began to be adopted in the U.S. in the 1980's (General Electric was an
early adopter), and the JIT/lean concepts are now widely accepted and used.
 Some Key Elements of JIT
1. Stabilize and level the MPS with uniform plant loading (heijunka in Japanese): create a
uniform load on all work centers through constant daily production (establish freeze
windows to prevent changes in the production plan for some period of time) and mixed model
assembly (produce roughly the same mix of products each day, using a repeating sequence if
several products are produced on the same line).  Meet demand fluctuations through end-item
inventory rather than through fluctuations in production level.  Use of a stable production
schedule also permits the use of backflushing to manage inventory: an end item’s bill of
materials is periodically exploded to calculate the usage quantities of the various components
that were used to make the item, eliminating the need to collect detailed usage information on
the shop floor.

2. Reduce or eliminate setup times: aim for single digit setup times (less than 10 minutes) or
"one-touch" setup -- this can be done through better planning, process redesign, and product
redesign.  A good example of the potential for improved setup times can be found in auto
racing, where a NASCAR pit crew can change all four tires and put gas in the tank in under
20 seconds.  (How long would it take you to change just one tire on your car?)  The pit
crew’s efficiency is the result of a team effort using specialized equipment and a coordinated,
well-rehearsed process.

3. Reduce lot sizes (manufacturing and purchase): reducing setup times allows economical
production of smaller lots; close cooperation with suppliers is necessary to achieve reductions
in order lot sizes for purchased items, since this will require more frequent deliveries.

4. Reduce lead times (production and delivery): production lead times can be reduced by
moving work stations closer together, applying group technology and cellular manufacturing
concepts, reducing queue length (reducing the number of jobs waiting to be processed at a
given machine), and improving the coordination and cooperation between successive
processes; delivery lead times can be reduced through close cooperation with suppliers,
possibly by inducing suppliers to locate closer to the factory.

5. Preventive maintenance: use machine and worker idle time to maintain

equipment and prevent breakdowns.

6. Flexible work force: workers should be trained to operate several machines, to perform
maintenance tasks, and to perform quality inspections.  In general, JIT requires teams of
competent, empowered employees who have more responsibility for their own work.  The
Toyota Production System concept of “respect for people” contributes to a good relationship
between workers and management.

7. Require supplier quality assurance and implement a zero defects quality program: errors
leading to defective items must be eliminated, since there are no buffers of excess
parts.  A quality at the source (jidoka) program must be implemented to give workers the
personal responsibility for the quality of the work they do, and the authority to stop
production when something goes wrong.  Techniques such as "JIT lights" (to indicate line
slowdowns or stoppages) and "tally boards" (to record and analyze causes of production
stoppages and slowdowns to facilitate correcting them later) may be used.
8. Small-lot (single unit) conveyance: use a control system such as a kanban (card) system
(or other signaling system) to convey parts between work stations in small quantities (ideally,
one unit at a time).  In its largest sense, JIT is notthe same thing as a kanban system, and a
kanban system is not required to implement JIT (some companies have instituted a JIT
program along with a MRP system), although JIT is required to implement a kanban system
and the two concepts are frequently equated with one another.

Kanban Production Control System

A kanban or “pull” production control system uses simple, visual signals to control the
movement of materials between work centers as well as the production of new materials to
replenish those sent downstream to the next work center.  Originally, the
name kanban (translated as “signboard” or “visible record”) referred to a Japanese shop sign
that communicated the type of product sold at the shop through the visual image on the sign
(for example, using circles of various colors to indicate a shop that sells paint).  As
implemented in the Toyota Production System, a kanban is a card that is attached to a
storage and transport container.  It identifies the part number and container capacity, along
with other information, and is used to provide an easily understood, visual signal that a
specific activity is required.

In Toyota’s dual-card kanban system, there are two main types of kanban:

1. Production Kanban: signals the need to produce more parts

2. Withdrawal Kanban (also called a "move" or a "conveyance” kanban): signals the need to

withdraw parts from one work center and deliver them to the next work center.

In some pull systems, other signaling approaches are used in place of kanban cards.  For example, an
empty container alone (with appropriate identification on the container) could serve as a signal for
replenishment.  Similarly, a labeled, pallet-sized square painted on the shop floor, if uncovered and
visible, could indicate the need to go get another pallet of materials from its point of production and
move it on top of the empty square at its point of use.

A kanban system is referred to as a pull-system, because the kanban is used to pull parts to
the next production stage only when they are needed.  In contrast, an MRP system (or any
schedule-based system) is a push system, in which a detailed production schedule for each
part is used to push parts to the next production stage when scheduled.  Thus, in a pull
system, material movement occurs only when the work station needing more material asks
for it to be sent, while in a push system the station producing the material initiates its
movement to the receiving station, assuming that it is needed because it was scheduled for
production.  The weakness of a push system (MRP) is that customer demand must be forecast
and production lead times must be estimated.  Bad guesses (forecasts or estimates) result in
excess inventory and the longer the lead time, the more room for error.  The weakness of a
pull system (kanban) is that following the JIT production philosophy is essential, especially
concerning the elements of short setup times and small lot sizes, because each station in the
process must be able to respond quickly to requests for more materials.
Dual-card Kanban Rules:

1. No parts are made unless there is a production kanban to authorize production.  If no

production kanban are in the “in box” at a work center, the process remains idle, and
workers perform other assigned activities.  This rule enforces the “pull” nature of the
process control.
2. There is exactly one kanban per container.
3. Containers for each specific part are standardized, and they are always filled with the same
(ideally, small) quantity.  (Think of an egg carton, always filled with exactly one dozen eggs.)

Decisions regarding the number of kanban (and containers) at each stage of the process are carefully
considered, because this number sets an upper bound on the work-in-process inventory at that
stage. For example, if 10 containers holding 12 units each are used to move materials between two
work centers, the maximum inventory possible is 120 units, occurring only when all 10 containers
are full.  At this point, all kanban will be attached to full containers, so no additional units will be
produced (because there are no unattached production kanban to authorize production).  This
feature of a dual-card kanban system enables systematic productivity improvement to take
place.  By deliberately removing one or more kanban (and containers) from the system, a manager
will also reduce the maximum level of work-in-process (buffer) inventory.  This reduction can be
done until a shortage of materials occurs.  This shortage is an indication of problems (accidents,
machine breakdowns, production delays, defective products) that were previously hidden by
excessive inventory.  Once the problem is observed and a solution is identified, corrective action is
taken so that the system can function at the lower level of buffer inventory.   This simple, systematic
method of inventory reduction is a key benefit of a dual card kanban system. 

JIT Implementation Design

Based on a diagram modeled after the one used by Hewlett-Packard’s Boise plant to accomplish its
JIT program.

1) F Design Flow Process

- F Redesign/relayout for flow

- L Reduce lot sizes
- O Link operations
- W Balance workstation capacity
- M Preventive maintenance
- S Reduce Setup Times
 2) Q Total quality control

- C worker compliance
- I Automatic inspection
- M quality measures
- M fail-safe methods
- W Worker participation

3) S Stabilize Schedule

- S Level Schedule
- W establish freeze windows
- UC Underutilize Capacity

4) K Kanban Pull System

- D Demand pull
- B Backflush
- L Reduce lot sizes

5) V Work with vendors

- L Reduce lead time

- D Frequent deliveries
- U Project usage requirements
- Q Quality Expectations

6) I Further reduce inventory in other areas

S Stores
- T Transit
- C Implement Carroussel to reduce motion
waste
- C Implement Conveyor belts to reduce motion
waste

7) P Improve Product Design

- P Standard Production Configuration

- P Standardize and reduce the number of
parts
- P Process design with product design
- Q Quality Expectations

Benefits
Main benefits of JIT include:
 Reduced setup time. Cutting setup time allows the company to reduce or eliminate inventory
for "changeover" time. The tool used here is SMED (single-minute exchange of dies).
 The flow of goods from warehouse to shelves improves. Small or individual piece lot sizes
reduce lot delay inventories, which simplifies inventory flow and its management.
 Employees with multiple skills are used more efficiently. Having employees trained to work on
different parts of the process allows companies to move workers where they are needed.
 Production scheduling and work hour consistency synchronized with demand. If there is no
demand for a product at the time, it is not made. This saves the company money, either by not
having to pay workers overtime or by having them focus on other work or participate in training.
 Increased emphasis on supplier relationships. A company without inventory does not want a
supply system problem that creates a part shortage. This makes supplier relationships extremely
important.
 Supplies come in at regular intervals throughout the production day. Supply is synchronized
with production demand and the optimal amount of inventory is on hand at any time. When parts
move directly from the truck to the point of assembly, the need for storage facilities is reduced.

Problems
Within a JIT system
Just-in-time operation leaves suppliers and downstream consumers open to supply shocks and large
supply or demand changes. For internal reasons, Ohno saw this as a feature rather than a bug. He
used an analogy of lowering the water level in a river to expose the rocks to explain how removing
inventory showed where production flow was interrupted. Once barriers were exposed, they could be
removed. Since one of the main barriers was rework, lowering inventory forced each shop to improve
its own quality or cause a holdup downstream. A key tool to manage this weakness is production
levelling to remove these variations. Just-in-time is a means to improving performance of the system,
not an end.

Very low stock levels means shipments of the same part can come in several times per day. This
means Toyota is especially susceptible to flow interruption. For that reason, Toyota uses two
suppliers for most assemblies. As noted in Liker (2003), there was an exception to this rule that put
the entire company at risk because of the 1997 Aisin fire. However, since Toyota also makes a point
of maintaining high quality relations with its entire supplier network, several other suppliers
immediately took up production of the Aisin-built parts by using existing capability and documentation.
Thus, a strong, long-term relationship with a few suppliers is better than short-term, price-based
relationships with many competing suppliers. Toyota uses this long-term relationship to send Toyota
staff to help suppliers improve their processes. These interventions have been going on for twenty
years and have created a more reliable supply chain, improved margins for Toyota and suppliers, and
lowered prices for customers. Toyota encourages their suppliers to use JIT with their own suppliers.

Within a raw material stream

As noted by Liker (2003) and Womack and Jones (2003), it ultimately would be desirable to introduce
synchronised flow and link JIT through the entire supply stream. However, none followed this in detail
all the way back through the processes to the raw materials. With present technology, for example, an
ear of corn cannot be grown and delivered to order. The same is true of most raw materials, which
must be discovered and/or grown through natural processes that require time and must account for
natural variability in weather and discovery. The part of this currently viewed as impossible is
the synchronised part of flow and the linked part of JIT. It is for the reasons stated raw materials
companies decouple their supply chain from their clients' demand by carrying large 'finished goods'
stocks. Both flow and JIT can be implemented in isolated process islands within the raw materials
stream. The challenge becomes to achieve that isolation by some means other than carrying huge
stocks, as most do today.

Because of this, almost all value chains are split into a part made-to-forecast and a part that could, by
using JIT, become make-to-order. Historically, the make-to-order part has often been within the
retailer portion of the value chain. Toyota took Piggly Wiggly's supermarket replenishment system and
drove it at least half way through their automobile factories. Their challenge today is to drive it all the
way back to their goods-inwards dock. Of course, the mining of iron and making of steel is still not
connected to an order for a particular car. Recognising JIT could be driven back up the supply chain
has reaped Toyota huge benefits and a dominant position in the auto industry.

Note that the advent of the mini mill steelmaking facility is starting to challenge how far back JIT can
be implemented, as the electric arc furnaces at the heart of many mini-mills can be started and
stopped quickly, and steel grades changed rapidly.

Oil
It has been frequently charged that the oil industry has been influenced by JIT. [6][7][8]
The argument is presented as follows:

The number of refineries in the United States has fallen from 279 in 1975 to 205 in 1990 and
further to 149 in 2004. As a result, the industry is susceptible to supply shocks, which cause
spikes in prices and subsequently reduction in domestic manufacturing output. The effects of
hurricanes Katrina and Rita are given as an example: in 2005, Katrina caused the shutdown
of 9 refineries in Louisiana and 6 more in Mississippi, and a large number of oil production
and transfer facilities, resulting in the loss of 20% of the US domestic refinery output. Rita
subsequently shut down refineries in Texas, further reducing output. The GDP figures for the
third and fourth quarters showed a slowdown from 3.5% to 1.2% growth. Similar arguments
were made in earlier crises.

Beside the obvious point that prices went up because of the reduction in supply and not for
anything to do with the practice of JIT, JIT students and even oil & gas industry analysts
question whether JIT as it has been developed by Ohno, Goldratt, and others is used by the
petroleum industry. Companies routinely shut down facilities for reasons other than the
application of JIT. One of those reasons may be economic rationalization: when the benefits of
operating no longer outweigh the costs, including opportunity costs, the plant may be
economically inefficient. JIT has never subscribed to such considerations directly; following
Waddel and Bodek (2005), this ROI-based thinking conforms more to Brown-style accounting
and Sloan management. Further, and more significantly, JIT calls for a reduction in inventory
capacity, not production capacity. From 1975 to 1990 to 2005, the annual average stocks of
gasoline have fallen by only 8.5% from 228,331 to 222,903 bbls to 208,986 (Energy Information
Administration data). Stocks fluctuate seasonally by as much as 20,000 bbls. During the 2005
hurricane season, stocks never fell below 194,000,000 bbl (30,800,000 m3), while the low for the
period 1990 to 2006 was 187,017,000 bbl (29,733,300 m3) in 1997. This shows that while
industry storage capacity has decreased in the last 30 years, it hasn't been drastically reduced
as JIT practitioners would prefer.

Finally, as shown in a pair of articles in the Oil & Gas Journal, JIT does not seem to have been a
goal of the industry. In Waguespack and Cantor (1996), the authors point out that JIT would
require a significant change in the supplier/refiner relationship, but the changes in inventories in
the oil industry exhibit none of those tendencies. Specifically, the relationships remain cost-
driven among many competing suppliers rather than quality-based among a select few long-term
relationships. They find that a large part of the shift came about because of the availability of
short-haul crudes from Latin America. In the follow-up editorial, the Oil & Gas Journal claimed
that "casually adopting popular business terminology that doesn't apply" had provided a
"rhetorical bogey" to industry critics.
"Just-in-Time" means making only "what is needed, when it is needed, and in the amount
needed." To efficiently produce a large number of products such as automobiles, which are
comprised of some 30,000 parts, it is necessary to create a detailed production plan that includes
parts procurement, for example.
Supplying "what is needed, when it is needed, and in the amount needed" according to this
production plan can eliminate waste, inconsistencies, and unreasonable requirements, resulting
in improved productivity.

In the TPS, a unique production control method called the "kanban system" plays an important
role. The kanban system has also been called the "Supermarket method" because the idea
behind it was borrowed from supermarkets. Supermarkets and mass merchandizing stores use
product control cards on which product-related information, such as product name, product code,
and storage location, is entered. Because Toyota employed kanban signs in place of the cards
for use in production processes, the method came to be called the "kanban system." At Toyota,
when a process goes to the preceding process to retrieve parts, it uses a kanban to
communicate what parts have been used.

- Why use a supermarket concept?

A supermarket stocks the items needed by customers when they are needed in the quantity
needed, and has all of these items available for sale at any time.
Taiichi Ohno (a former Toyota vice president), who promoted the idea of Just-in-Time, applied
this concept, equating the supermarket and the customer with the preceding process and the
next process, respectively. By having the next process (the customer) go to the preceding
process (the supermarket) to retrieve the necessary parts when they are needed and in the
amount needed, it was possible to improve upon the existing inefficient production system in
which the preceding processes were making excess parts and delivering them to the next
process.