This article covers everything you need to know about Just In Time. It wasn’t so long ago that the companies were storing a ton of inventory in their warehouses often for hypothetical – just in case a customer demand appears – scenarios.
Yet, having a lot of inventory would automatically contribute to higher maintenance costs, additional space requirements, depreciation costs, higher workforce requirements, record-keeping costs and poor cash flow. So, in the middle of the 20th century, Toyota built the foundation of Lean manufacturing on the backbone of JIT.
They applied a simple principle i.e. you only produce if there is a demand for your production and that became the main pillar of the Toyota Production System – Just-in-time (JIT) production. It took years for Toyota to perfect the Just-in-time production management, which is now popular across various industries and applied by some of the most successful companies, such as Dell, Harley-Davidson, McDonald’s etc.
To truly understand JIT you must understand 3Ms. 3Ms stand for MURA, MURI, MUDA. Toyota discovered that if you want to produce things at the drumbeat of the customer, the greatest problem is unevennesses in the demand.
Mura means unevenness, non-uniformity, and irregularity. Mura is the reason for the existence of any of the seven wastes. In other words, Mura drives and leads Muda and Muri.
For example, in a manufacturing line, products need to pass through several workstations during the assembly process. When the capacity of one station is greater than the other stations, you will see an accumulation of waste in the form of overproduction, waiting, etc.
The goal of a Lean production system is to level out the workload so that there is no unevenness or waste accumulation and create a smooth laminar flow.
Heijunka or Levelling the type and quantity of production over a fixed period of time really helps. This enables production to efficiently meet customer demands while avoiding batching and results in minimum inventories, capital costs, manpower, and production lead time through the whole value stream.
Muri means overburden, beyond one’s power, excessiveness, impossible or unreasonableness. Muri can result from Mura and in some cases be caused by excessive removal of Muda (waste) from the process.
Muri also exists when machines or operators are utilized for more than 100% capability to complete a task or in an unsustainable way.
Muri over a period of time can result in employee absenteeism, illness, and breakdowns of machines. Standardising the work can help avoid Muri by designing the work processes to evenly distribute the workload and not overburden any particular employee or equipment.
Muda means wastefulness, uselessness and futility, which is contradicting value-addition. Value-added work is a process that adds value to the product or service that the customer is willing to pay for.
There are two types of Muda, Type 1 and Type 2.
Muda Type 1 includes non-value-added activities in the processes that are necessary for the end customer. For example, inspection and safety testing does not directly add value to the final product; however, they are necessary activities to ensure a safe product for customers.
Muda Type 2 includes non-value added activities in the processes, but these activities are unnecessary for the customer. As a result, Muda Type 2 should be eliminated.
There are eight categories of waste under Muda Type 2 that follow the abbreviation TIMWOODS. The eight wastes are (1) Transport i.e. excess movement of product, (2) Inventory i.e. stocks of goods and raw materials, (3) Motion i.e. excess movement of machines or people, (4) Waiting, (5) Overproduction, (6) Over-processing, and (7) Defects (8) Skills Unutilized
Mura can be avoided through the Just-In-Time ‘Kanban’ systems and other pull-based strategies that limit overproduction and excess inventory. The key concept of a Just-In-Time system is delivering and producing the right thing, at the right amount, and at the right time.
Lean begins by identifying what adds value and what doesn’t and then enhances value by reducing everything that doesn’t add value. Anything that doesn’t add to the utility or experience of the customers is termed as Waste or Non-Value Adding Activity.
All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the time line by reducing the non-value adding wastes.Taiichi Ohno
All processes have some value-adding activities and time and time periods and activities during which resources lie dormant or underutilised.
A large number of resources are wasted when inventory and goods are piled up in the store or in between processes (WIP inventory). Besides that, there’s a colossal waste of time and resources when arises a need for rework due to defects.
A Kanban is a card or similar visual aid signalling for replenishment of materials, parts, information etc.
KANBAN = KAN (Card) + BAN (Signal)
A Kanban can be:
- Empty bin or cart at a predetermined place.
- A visual indicator such as a label, tag or light.
- Marked open space on the production floor.
- Marked lines on a storage rack.
This was inspired by the supermarket systems of the United States. How something was not reordered until there were only a few left in a rack. And this was monitored so carefully and how customers pulled the value and governed which product gets more or less shelf space in the long run..
Time value charts
Time value charts give a visual breakdown of time in a given process and give a clear visual indication of Value-adding time (VAT), Non-Value-adding time (NVAT) and Wait times during an Operating Cycle.
Cycle time is the time frame between an order being placed and the client receiving its value while the processing time is the time actively spent working on the customer order.
Takt time is one of the most important concepts of Lean and JIT, Takt (from German, meaning: pulse or beat) time is the time rate at which you need to complete the production of one unit to meet customer demand. If you know your takt time you can truly produce at the drumbeat of the customer.
The Dell Example
Dell is one of the most famous examples of JIT’s triumph. The company revolutionized the way computers are built. Dell started to offer customized computers to customers in the 1990s, as the company never stocked raw materials needed to build a computer until an order is placed.
The company was able to order materials, build a machine with exact specifications, and deliver it faster than competitors who had pre-made computers in stock. This lowered Dell’s inventory costs and made them one of the most successful computer manufacturers.
Today JIT isn’t just for manufacturing giants. It’s for everyone, even small entrepreneurs can leverage these Lean philosophies by using tools and strategies such as affiliate marketing, dropshipping, print on demand, on-demand ordering etc. They make it even easier to reduce investments in inventory and maximise profits.