Just In Time (JIT) implementation

Saurabh Chandra
Just In Time: What’s your excuse for not
using?
Just In Time
• Gets the credit for much of Japan’s success
• Despite the publicity and interest, few companies adopted it.
• Early press focusses more on observable aspects of JIT, like inventory
reduction only
• Not much focus on how the technique can improve entire manufacturing
• JIT removes security blanket of high inventory and exposes many
problems
• Change to JIT is a big change in cultural as well as manufacturing
operations practices
Just In Time contd.
• Back up inventories now considered bad
• Large production batches no longer considered beneficial
• JIT forces the elimination of waste inherent in long setups
• Inflexibility in operations and misperceptions about JIT main reasons
for non-adoption
1. Problems with suppliers:
• Suppliers won’t deliver raw materials in small batches on a daily basis
• Wrong to expect this at the very beginning
• JIT not merely an inventory reduction technique but a problem solving
technique
• First needs to be implemented in own factory
• Starting from final assembly; control point for entire manufacturing
• Demand at final assembly needs to be smoothed out
• Suppliers find predictable demand for their parts
• Operating rates matched and buffer inventories removed between stages
• One supplier for each part in the long run
1. Problems with suppliers:
• Supplier development gradually by helping them deliver consistently
quality parts on time
• HP focussed on manufacturers of large components requiring a lot of
storage space
• Next target were suppliers with high value parts – distant unique
vendors
• Hard to implement JIT fully but frequent deliveries and in-house inspections
2. Late Production
• Excuse of always having back orders in the factory – constantly expediting
production
• JIT system would shut the line often and loss of production
• Long production cycles and large in-process inventories
• Proportionately large inventory waiting time
• A large factory needs an army of expediters to bypass queues
• A safe way to implement JIT is to attempt shortening of production cycle times
only
• while keeping materials planning cycle time as it is
• It will push inventory from shop floor to the stockroom
• This strategy will not reduce inventory but improve flow of material through the factory floor
3. Need for software
• Existing batch order materials planning systems won’t sustain JIT
• “Forcing a production process to fit a software system is a prescription
for disaster”
• The process needs to be designed first and tested thoroughly.
• Especially true for JIT
• A simple manual system may be initialized first:
• Simple forms to monitor the flow of materials on a piece-by-piece basis
• Kanban cards for parts requisitioning
• Finally once the process is stabilized software may be customized
4. Control of Inventory
• “Unable to track materials through the factory with work orders -
loose inventory control”
• In JIT little inventory is on the floor, the flow of materials is clear, and
the production cycle is short
• Much easier to track
• Most of inventory is of raw materials and finished goods; much easier to
control
• Calculations of safety stock and safety days no longer determine the
right inventory level
5. Low-volume operations
• No perceived benefit from JIT
• JIT principles as much applicable
• Emphasis on reducing set-up times, building products in smaller
batches, and demand pull-based production, as beneficial
• May find it easier to convert to JIT
• May be already making products in small batches using simple equipment
with short set-up times
• HPs computer systems division made tremendous gains
• Complex machines with many subassemblies and thousands of parts
6. Batch orientation
• “job-shop- so natural orientation towards batch production”
• For a job shop with unique orders with unpredictable patterns, JIT is not very
effective strategy.
• Reduced setup times still beneficial
• Job shops have much more repetitive business than they realize
• Scope of process improvement
• Job shops should separate their repetitive business from unique orders
• Develop special production method for repetitive business
• Equipment can be dedicated to reduce set ups
• JIT can be implemented to for these parts
• Use of group technology to make parts in small batches with short set-up times
7. Management Complacency
• “Already doing fine”
• Complacency reason for downfall of most of US companies
• Waste and confusion in factories harm both productivity and product
quality
• JIT excellent way to expose problems and improve operations
• Needs top management commitment to implement JIT
• Proactive approach to problem solving
8. Involving the work force
• Staff must have the time to implement JIT
• Preoccupation with existing work
• Solution is to appoint a project leader to champion implementation
• Responsible for setting up training, making a conversion schedule, and forming a
conversion team
• Common objective with common learning experience
• Training tailored to different levels in the organization
• Professional seminars
• Internal classes taught by experts
• Visiting another JIT factory
• Models/simulations/videos
JIT implementation
• JIT pilot project
• An entire production line for multiple products
• Between two operations in a single product line (preferably last two)
• Pilot allows inexpensive initial mistakes
• Enables people to experience JIT in real situation
• Enlist everyone in the improvement effort, especially the first-line people
• Plans need to be made to address the expected production problems
• Need to stay flexible by having extra process engineering available
• Positioning the organization for “continuous improvement”
• Encouraging the production people to contribute
• Top management encouragement
JIT is not just a way to reduce inventory in order to
get a better return on assets; rather, it is a means
of solving the problems that block the building of
an excellent manufacturing organization
General Electric- Thermocouple
manufacturing (A) case
Objective:
- To identify the prerequisites for successful JIT implementation
- To think about an implementation plan
• William P. Draper, manufacturing manager, returned back from a GE
program in Japan and proposes JIT implementation in thermocouple
division.
• Circulated a material on JIT and how it works in Japan
• January 15, 1982 initial meeting:
• Roger Hyatt – external consultant
• Sam Philips – manager of production planning
• David Hartwell – manager of planning for thermocouple area
• Bob Stone – production control supervisor
• Eric Neilson – first line supervisor
• Steve Henson – manager of advanced manufacturing systems
• Henry Malone – manager of shop operations
Inventory reduction identified as major goal
The GE impact program:

• Staffed by variety of consultants and educators specializing in manufacturing management

• Designed by GE to help improve quality and productivity of its operations
• 25 manufacturing executive attended each year
• First four days – class room work
• Overview of manufacturing strategy
• A review of major elements of operating system
• Contrast of US and Japanese management systems
• Remaining 10days in Japan visiting 3 Japanese companies
• Analysing the manufacturing and management practices and
• Discussing these findings as a group
• After completing trip reports each executive was expected to identify areas of opportunity
and propose a project in his/her own operations
• All participants met again after a week with proposals and implementations if any
• Participants went ahead with respective programs and can take help from program faculty
The thermocouple production area
The thermocouple production area
• One of the five products at the Aerospace Instruments and Electrical
Systems department
• Ranked second in total dollar volume
• 30 major types of thermocouple, 90 different models
• J-79 simplest of these – likely candidate of JIT as:
• Relatively easy to manufacture
• Used less fragile parts
• Enjoyed considerable business outlook
The production process for the J-79 thermocouple:
• 4 subassemblies: probes, segments, resistors, and a connector
• 5 segments, 6 probes, 12 resistors, and one connector
• Centerless grinding used for segments
• Setup time – 4 to 6 hrs.
• Run time – 22 seconds
• Batch size – 1000+ units
• Once 4 subassemblies were complete, combined in a building board
• Ensures all pieces welded in correct order
• Number of forming operations carried out alternate with welding
• Welders/formers alternately idle
• Various tests carried out and a small metal piece (stamp) placed over the top of the probe
box
• Final inspection of complete thermocouple
• Ready for shipment
Work force issues:

• Incentive wage system based on piece rates

• Workers had considerable autonomy in choosing the parts they make
• Focussed on those with loosest standards
• Excess supply of some parts and shortage of others
• Hard to push the requirements – union issues
• Welders:
• Most highly paid and senior-most
• Allegedly creating defective welds, as reworking was charged higher than
original
Order entry, purchasing and production
control:
• Orders from 3 groups:
• The military
• Willing to accept shipments anytime till the due date
• Remitted advanced payments
• Allowed some scheduling flexibility
• GE’s aircraft engine group (AEG):
• Unwilling to commit in advance to a pre-set schedule
• Preserve its ability to cater to last minute orders
• Distribution Warehousing Operations (DWO)
• DWO (50%) concerned with commercial customers
• Paid only on delivery
• Expected goods to be delivered on the contract date exactly
• Manufacturing completed 1 month prior
Order entry, purchasing and production
control:
• Manufacturing started to build only after a firm order received (BTO)
• DWO exception to this rule
• Earlier ordered on forecast
• Now cancellations remain an issue
• Suppliers:
• Primarily sole-source suppliers
• Mostly located far
• 12/21 items ordered from a nearby GE plant
• Production planned on a monthly basis:
• 4 weeks of WIP inventory
Inventory Management
• System – ICP (Inventory Control Package)
• Variant of MRP, exploded backwards to determine raw material needs
• Ordered from external consultant and not fully integrated into operations
• Modifications introduced without any documentation and people changed
• Material control relatively loose after leaving stockroom
• Shop floor nicknamed “no man’s land”
• System reinitialized every 2 months, but shop floor items not included
• For J-79 shop floor inventory estimated to be around $3.0 to $3.15 (100, 000s)
• 80-85% of total inventory on hand for that product line
• Loss factor (% of raw materials expected to end up as scrap) not been reviewed for years
• Losses varied from 6.3% to almost 50% (initially established)
• Correspondingly parts purchased, although yield improved drastically
Prerequisites for JIT:
A multitude of problems need to be addressed within the plant before even
thinking about JIT.
Product:
Requirement: A very stable product required with few ECOs
Situation: J-79 relatively stable, but with some “oddball parts”

Process:
Requirement: standardized process flow with some excess capacity
Situation: J-79 line currently a black box
- Centerless grinder seems like bottleneck with large setup times
- long waiting times for the product in shop floor
Prerequisites for JIT:
Shop floor control:
Requirement: A tightly controlled
process flow with reliable process
and equipment
Situation: J-79 far from JIT ready:
• welders rule the line
• no inventory control
• lost knowledge in using ICP
system
• No tracking of WIP inventory
• process and equipment reliability–
welding defects/no sign of
preventive maintenance
Inventory:
Requirement: objective is to reduce
inventory to expose the rocks
Situation: the whole operation could
come to a screeching halt
• inventory levels unknown
• material disappear without a trace
• workers draw materials from
stockroom at will
• No WIP tracking
• Material orders based on out-of-
date yield factors
• Welders build whatever parts
make them most money
Prerequisites for JIT:
Set-ups:
Requirement: to run in small
lot sizes, operation must be
flexible and set-ups must be
shortened
Situation:
• Lot sizes of 1000+ due to long
setup time (4 hrs.) and short
processing time (14 sec)
• Welding & forming can be
done in parallel instead of
serially
Quality:
Requirement: TQC goes hand in
hand with JIT
Situation: far from ready
• Loss factor on scrap not been
reviewed
• In process yields vary from 15-
60% in some of the initial steps
• Weld defects running at 22%
• No concept on continual
improvements
• No apparent procedure for
problem solving and learning
Prerequisites for JIT: Schedule:
Requirement: Production
Vendors:
schedule must be levelled and
Requirement: close working stabilized
relationship with nearby locations
Situation:
Situation:
• Small %age of suppliers • 3 customers with different
business demand
• DWO – on time deliveries
• Quality problems
• AEG – quick turnaround or
• 3 out of 4 suppliers GE flexibility
companies-less responsive to • Military – allows for some
internal customers levelling
• Heavy reliance on West Lynn • Plant holds 1 month of FG
(12 out of 21 parts)
inventory
Prerequisites for JIT:
Work force:
Requirement: flexible and
cooperative work force
Situation:
• Large number of job
classifications
• Idle time
• Employees unwilling to do
other work
• Promotion based on seniority
• Employees feel unsecured
about their jobs
Compensation:
Incompatible with JIT
• Damaging piecework incentive
system
• Discourage flexibility,
teamwork, job standardization
and smooth flow
• Encourages to work fast and
produce as many parts, without
downstream requirements
• High rate for reworking than
for right first time
• Employees paid the same
regardless of workmanship
Other issues:
• Measurement
• Meeting production requirement is most important
• No advantage of improving quality or reducing inventory
• Managers and supervisors on the shop floor counter to JIT
• Cross-functional involvement:
• Needs involvement from quality, engineering, purchasing, and HR
• None of these functions invited in the meeting
• Culture of finger-pointing
• Management style:
• Top down autocratic approach
• No feeling of participation
• Believe in theory X
• “Malone notes that productivity drops by 2-3 % if manager is not out on the shop floor”
Ideal pilot project:
• Relatively high probability for success
• Fairly representative of the rest of the operation
• Aids in early learning by all departments
• J-79:
• Relatively easy to manufacture
• Less fragile materials
• Relatively stable business outlook
• Area isolated from the rest of the plant (3rd floor)
• Accounts for 5% of sales – risk is less
• Similar to other areas in terms of inventory level
Action plan:
• Prioritize problems:
• Focus on root cause(s), not on symptoms
• Before going to the suppliers need to clean the house
• Choosing between major turnaround or incremental improvement
• Despite the problems, no indication of concern from CE, so less of a crisis
• Allows him to develop a comprehensive plan with contingencies
• To move relatively slowly on introducing change, avoiding significant resistance
• Initial focus may be on improving quality or reducing setup times rather than
reducing inventory
• Prerequisites for JIT and workers do not resist change
• Videotaping the entire process and let workers brainstorm for improvements
Action plan:
• Access plants readiness to change
• No one willing a change currently – finger pointing
• May consider developing a measurement and rewards system
• Identify levers and constraints:
• Plant closure as major lever for the work force
• Understanding the motives of each party and tailoring an action plan to encourage
cooperation
• Most of the constraints are external and it seems they cannot do much
• Form project team and identify champion
• Create ownership for the pilot (tasks and responsibilities)
• Full time team with enough clout
• Project champion for JIT - someone actively involved in operations
Action plan:
• Manage up:
• Support from above is both critical and potential source of leverage
• Must show some internal improvements before trying to get the BE suppliers
influenced
• Ask for some “Honeymoon period”
Thanks !