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Explain what is meant by Just-In-Time Management and provide a critical assessment

of the implementation of the technique.

Just-in-time, according to Greasley (2009 p.349) is “a philosophy originating from Japanese

auto maker Toyota where Taiichi Ohno developed the Toyota Production System (Ohno,

1988).” It is not a Western system, although Western manufacturers are trying to implement

the system as they see the benefits that the Japanese companies have gained. JIT looks to

reduce costs by eliminating any process which does not add value to the finished product of a

company. This is supported by Hill (2005 p.358), stating that “the idea is to produce and

deliver goods and services just-in-time to go into subassemblies, and purchased materials

just-in-time to be transformed into parts. The purpose is for all materials to be in active use

within the total process. In this way materials are always a productive element within the

operations system which avoids incurring costs without corresponding benefits,” and

Greasley (2009, p. 349) who writes “the basic idea behind JIT is to produce only what you

need, when you need it. This may seem a simple idea but to deliver it requires a number of

elements to be in place such as high quality and elimination of wasteful activities.”

The Japanese firm Toyota introduced JIT due to the 1973 oil embargo, which forced it to

increase its efficiency and to eliminate waste. The oil embargo, along with the lesser

availability of other natural resources led to Toyota looking at other methods of production in

order to maintain their profit margins (Cheng and Podolsky, 1993 p.2). JIT is broken down

into two different sections; the philosophy behind the idea which originated in Japan, and the

actual implementation of the ideas. “Three key issues identified by Harrison (1992) as the

core of JIT philosophy are: eliminate waste, involve everyone and continuous improvement,”

(Greasley 2009 p.349). Hill (2005 p.368) describes waste as “any activity that does not add

value. One of the cornerstones of the JIT philosophy is to identify and reduce, or where

possible, eliminate waste throughout the operations system.” It is possible to say that the

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elimination of waste is an obvious solution to the problem of a lack of resources which are

key in the production of Toyota’s automobiles. However, although other firms, including

Western ones, recognized the need to eliminate waste, none of them did so in such an

efficient way as Toyota did through JIT. This elimination of waste was more difficult for

Western industries because of the theory behind their manufacture; “Japanese industry

produces small quantities ‘just in time;’ Western industry produces massive quantities ‘just in

case,’” (Schonberger 1982).

The second element of the JIT philosophy is to increase staff involvement, particularly in

day-to-day elements of production such as maintenance, scheduling, quality conformance and

also the drive for continuous improvement (Hill 2005, p. 367). Members of staff are given

extra responsibility, which is not always a simple task in many organizations, as many do not

like change and do not accept extra responsibility without demanding extra remuneration.

Therefore, it is actually an even greater achievement that Toyota managed to implement the

philosophy when they did. Part of the implementation process involves training. “This

approach not only secures the contribution of all staff in areas such as continuous

improvement but also eliminates the ‘make inventory’ or ‘no work’ scenario. If there is no

direct work on hand, staff now have legitimate indirect tasks to undertake,” (Hill 2005, p.367)

It is possible to deduce that the benefits of giving staff extra legitimate tasks actually also

fulfills the first point of the JIT philosophy; the reduction of waste. This is achieved because

members of staff are no longer paid for times when they are idle and have nothing to do. The

implementation of JIT in the workforce starts from the top of the organization and moves

down the chain of command. The change is led by management, who must encourage any

innovation by staff (Cheng and Podolsky 1993, p. 184). This is done through a process of

training, and fits in with the final part of the triumvirate of the JIT philosophy, namely

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continuous improvement. Managers also face the difficulty of striking a balance between the

level of innovation staff are allowed to use, and autocracy. The need for the implementation

is described by Greasley (2009, p.350), writing “just-in-time aims to create a new culture in

which all employees are encouraged to contribute improvement efforts through generating

ideas for improvements and perform a range of functions. In order to undertake this level of

involvement the organization will provide training to staff in a wide range of areas.” This

statement indicates that in order to be successful, the training is not an option, but

compulsory if JIT is to succeed. Another benefit of increasing the demands on staff is that

solutions to problems are identified by those who actually undertake the manufacturing of the

product, and therefore understand best their own needs on the production line. Slack et. al

(2007, p467) describes how this work in relation to different stages in a production line, here

mentioning what would happen if a problem occurred at a fictional stage ‘A’; “one result of

this is that responsibility for solving the problem is no longer confined to the staff at stage A

but is shared by everyone.”

The third and final philosophical idea is continuous improvement. “Continuous improvement,

or Kaizen, the Japanese term, is a philosophy stating that it is possible to get to the ideals of

JIT by a continuous stream of improvements over time,” (Greasley 2009, p. 351). This is seen

as a philosophy because it is the implementation of a new culture into an organization. It also

links in very well with the other two philosophies. As seen above, the reduction of waste is an

incremental process. Also, the staff members of the organization are given greater

responsibility to improve their production methods, which is also a continuous process. It is

possible to see the relationship between continuous improvement and waste reduction from

Slack et. al (2007), who write “the lean approach to managing operations is founded on doing

the simple things well, on gradually doing them better and above all on squeezing out waste

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every step of the way.” This statement in fact links in each one of the three elements of the

philosophy.

The actual implementation of JIT in an organization can be difficult for many reasons,

generally relating back to the installation of the aforementioned philosophies of JIT into the

culture of the company. Also, as mentioned, this must be ‘top-down,’ beginning with the

organization’s management. This idea is supported by Cheng and Podolsky (1993, p.184),

writing that “prior to embarking upon JIT implementation, an organization should assess its

readiness. The best strategy in the world will not ensure success unless management is

prepared to undergo changes first itself.” The organization must therefore assess and evaluate

the internal and external environments of the business (Cheng and Podolsky 1993, p.149) in

order to understand whether JIT implementation would be viable and successful.

The name of the system itself implies how it works; “the JIT system requires a continuous

stream of small batch supplies to ensure that inventory is minimized within the organization.

To achieve this, close long-term relationships are formed with a small number of suppliers,

forming supplier networks. It is necessary for JIT suppliers to practice JIT supply themselves

or to avoid inventory being ‘pushed’ back to them,” (Greasley 2009, p. 354). This relates

back to the assessment of the internal and external environment when implementing JIT,

because if an organization attempts this whilst suppliers are not willing to increase the

frequency of deliveries, it will not work. Also, a mid-point has to be found between the

amount of deliveries that can be made and the cost associated with each delivery, compared

to the cost of having inventory stock. Schonberger (1982. P. 19) states that “there is an

economically correct lot size – not so big as to incur an excessive carrying cost, not so small

as to incur an excessive setup cost.” It is vital that this economic lot size if established

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correctly and promptly in order to prevent the company from building up inventory, which

incurs costs which are seen as a waste. This is measured against the costs that are incurred

each time an order is placed. These costs are described by Slack et. al (2007, p373), who

write “every time that an order is placed to replenish stock, a number of transactions is

needed which incurs costs to the company. These include clerical tasks of preparing the order

and all the documentation associated with it, arranging to pay the supplier for the delivery

and the general costs of keeping all the information which allows us to do this.” If an order

has to be placed too often, the benefits of producing just-in-time are outweighed by the costs

of having to pay the supplier for each delivery. This, along with the costs associated with

holding inventory, which are on the other end of the production scale, means that it is vital to

reach the economically correct lot size.

Implementation can be made difficult when attempting to instill a new culture on the staff of

a company. Cheng and Podolsky (1993, p.190) describe the problem; “the most relevant and

significant fundamental cause of implementation difficulties rests with employee resistance to

the change. Managers must realize employees are the most valuable organizational asset, for

it is through them the goals and continuation of the company will be realized ultimately.” The

potential resistance to the change must be measured when the management does its initial

internal analysis, and any problems must be recognized. This tends generally to be a problem

in Western companies compared to Japanese ones. “When Japanese managers refer to the

approach embodied in the term ‘just-in-time,’ they prefer to speak of the JIT philosophy

embodied in the Toyota production system that spawned the development of the JIT system,”

(Hill 2005, p. 376). This indicates that the philosophy is generally well accepted in Japan,

because management looks on the philosophy and holds it in high regard. On the other hand,

Hill (2005, p.376) continues that “although displaying the characteristics of high volume and

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stable product mix, Western companies have introduced JIT without creating the environment

for this to be developed in its optimum form.” This again relates back to the internal analysis

that a company must do before implementing JIT. This would actually lead to greater costs as

a company would begin increasing its numbers of orders, for example, without producing

just-in-time and therefore actually both increasing inventory held, and the costs incurred by

having higher order numbers.

From the above analysis, it is possible to conclude that all aspects of JIT have to be

implemented together efficiently but progressively, otherwise the benefits of the philosophy

would not be realized. It is possible to deduce that all three parts of the initial philosophy are

mutually dependent; continuous improvement leads to a reduction in waste, increasing team

involvement leads to continuous improvement and a reduction in waste leads to greater team

involvement when they undertake other tasks. In regards to implementation, it is essential

that an organization assesses whether it is both internally and externally viable to implement

JIT before it undertakes the process, otherwise it would actually make a loss. If done

correctly, JIT allows for reduced costs due to the removal of all inventory costs.

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Word Count – 1,901

Bibliography

Cheng, T.C.E & Podolsky, S., 1993. Just-in-Time Manufacturing – An Introduction. London:
Chapman & Hall

Greasley, A., 2009. Operations Management. 2nd ed. Chichester: John Wiley & Sons Ltd

Hill, T., 2005. Operations Management. 2nd ed. Basingstoke: Palgrave Macmillan

Schonberger, R.J., 1982. Japanese Manufacturing Techniques. New York: Macmillan

Publishing

Slack, N. Chambers, S & Johnston, R., 2007. Operations Management. 5th ed. Harlow:
Pearson Education Ltd