Just in time to search for competitive advantages

Toyota began development of the “Just in Time” system in the late 1930s and made substantial progress in its implementation in the 1950s and 1960s. During these years Toyota produced fewer automobiles than its main competitor, Nissan, and was less able to showcase a broad product line with cost effectiveness. The system devised by Ohno helped Toyota overcome the disadvantages inherent in its smaller size. Toyota's Taiichi Ohno is credited with developing the “Just in Time” (JIT) system in the 1950s and 1960s. Mr. Ohno writes: "The Toyota production system was born out of the need to develop a system to make cars of many different classes in small volumes with the same process."In the 1950s Toyota was looking for a way to produce larger varieties of cars without being stifled by rising costs.

The particular conditions of Japan in terms of its physical space, natural resources, and the enormous need to generate high-value products to be able to export and in such a way be able to acquire the resources to maintain its population and preserve the industry, made the Need to minimize waste a strategic issue. And the best way to eliminate waste was and continues to be, producing with the highest quality, at the lowest cost, using the shortest production cycle times, and limiting idle resources.

Improving the use of inputs, reducing financial needs, minimizing physical spaces could only be achieved through total quality and its continuous improvement.

The "Just in Time" was discovered in the West during the first years of the eighties. Even today many Western manufacturing companies are under siege. Many of them falter even under the heavy impact of Japanese competitors. The key to the survival of companies is in the management of production processes. Therefore, if Western companies want to survive, they should have as their first priority improving their management. And fundamentally in its personnel management.

Japanese companies chose Kaizen as their philosophy, which implies the continuous improvement of processes in order to achieve what they call the "dantotsu" which means "to be the best of the best". A clear vision of competitiveness, since they are not considering being the best of the mediocre, but the best of the best. Within this philosophy, the JIT is a system that defines the way in which the production system should be managed.

The "Just in Time" production system consists of producing and serving finished products just in time to be sold, producing parts just in time to be assembled and forming the finished products, producing semi-finished products just in time to be converted into parts or other semi-finished products, and buy raw materials just in time to be incorporated into the manufacturing process ”. It is therefore a matter of considering the production flow in the opposite direction to the traditional one. In the JIT, it is the demand that pulls the production process and it is the personnel involved in a certain process who have to go to the previous process to collect the necessary units in the right quantity and time.

The JIT has four essential objectives which are:

• Attack fundamental problems. JIT argues that it makes little sense to mask major issues such as capacity bottlenecks or poor quality providers. It is far better to solve these fundamental problems and avoid a “fire fighting” style of leadership. Eliminate waste (molts). Among the seven classic wastes listed by Ohno we have:
  1. Overproduction Excess inventories Unnecessary movements Internal transport Quality failures and reprocessing tasks and adjustments Waiting times Design failures in processes

The JIT stresses that these activities must be eliminated to improve the overall operation of the company.

• Look for simplicity. Any approach taken must be simple if it is to be effective. Previous approaches to manufacturing management relied on complex management for a complex manufacturing system. Instead, a “Just in Time” application simplifies the flow of materials and then overlays a simple control. Design effective problem identification systems. To solve the problems, they must be previously identified, in a timely manner. The JIT includes mechanisms that allow detecting such problems in time, being the SPC (Statistical Process Control) and the use of Kanban the best tools.

Among the kanban rules we have:

• Never exceed the kanban ceiling Check all material with kanbans Do not miss any known defects Follow the FIFO method (first in - first out) in the kanban queue Reduce the kanbans to discover problems The customer pulls the supplier's material Only active material in the workplace, everything has a place

Just in Time basics

The fundamental ideas around which Just in Time revolves as a production philosophy are:

• Flexibility at work, which in Japanese is called Shojinka, and which implies adapting the number and functions of workers or personnel to changes in demand. Promotion of innovative ideas (Soifuku) by personnel, for the purposes of achieve continuous improvement in production processes. And Jidoka, which involves self-control of defects by the production processes themselves to prevent the entry of defective units into production flows.

In other words, there are three fundamental concepts to always keep in mind:

• Shojinka that implies flexibility at work. Soifuku which means employee participation through innovative ideas and creativity. Jidoka that represents the self-control of production by the same staff.

The practical application of these concepts is achieved through the use of Kanban and the involvement of workers in the management of production processes.

To be able to operate within a factory that uses the JIT, a simple, fast and reliable information system is needed in that the workers are the ones who ultimately decide the quantity to be produced based on the following process and cannot waste time deciphering complex data lists or make mistakes as it would lead to increasing stocks. For this reason, a label system called Kanban is used. There are normally two types of Kanban, one for transport that indicates the quantity to be collected by the subsequent process, and another for production that indicates the quantity to be produced by the previous process.

As for the participation of workers, this constitutes a fundamental requirement in companies that practice “Just in Time”, and essentially in the production area.

It is absolutely impossible to implement a JIT program based on the paradigms traditionally applied by Western administrations in terms of human resource management, since JIT requires for its full development of total trust in the workers.

Eliminate waste

According to Fujio Cho of Toyota, waste is everything other than the minimum amount of equipment, material, parts, space, and worker time, which are absolutely essential to add value to the product.

It is very common to discover in Western companies that workers spend 5% of their time only on activities that add value to the product, while the remaining 95% only add cost. In the same way, it can be observed material and supplies that are found 95% of the time in the warehouses, or more than one machine generating unnecessary or defective items.

Therefore, for "Just in Time" waste is made up of anything that does not add value to the product. In traditional business operations, waste is often associated with disposal or reprocessing. While for "Just in Time" the definition extends to areas that are normally considered as administration costs. In addition, the concept of waste extends to suppliers, since the company and suppliers constitute an alliance of interests.

The fight against waste must be part of a systematic action plan aimed not only at detection and elimination, but also at prevention.

Phases for the implementation of Just in Time

• First phase: Put the system into operation. This stage includes awareness raising, preliminary education of senior managers, middle management and union members, cost-benefit analysis, formal commitment of senior management to support and give life / support to the system and philosophy "Just in Time", formation of the project team and selection of the pilot plant Second phase: Education. The JIT implies a major change in philosophy, which is why training is clearly essential. Third phase: Improvements in the process. Manufacturing processes are perfected in order to generate small batches in short periods of time. The improvement in the processes implies both the redesign of the layout, as well as the application of systems designed to reduce the times of changing tools or preparing the machines,implementation of a total productive maintenance, improvement in quality thanks to the application of TQM, formation of Quality Control Circles and suggestion systems. Fourth phase: Improvement of control. The simplified design of the factory requires a simple control, using for this the drag / Kanban system, which allows in a simple way to "drag" the work through the factory. The other system to implement is the Statistical Process Control. Fifth phase: Relations with supplier. This last phase allows for the expansion necessary for the JIT to encompass the entire system. Improving supplier relationships involves a gradual shift to a single high-volume supplier for each product; which must be done with extreme care to avoid falling into vulnerabilities.

An alternative implementation model comprises a total of seven phases, these being the following:

1. Awareness of senior management. Formation of the implementation team and training program. Initial implementation in the manufacturing line. Implementation of the total quality control program. Conversion of the production line to "Just in Time". Interrelation with suppliers.Evaluation of performance and standardization of processes.

Pitfalls to implementation

Among the potential pitfalls of implementing the system we have:

• Lack of genuine commitment from top management Inadequate and ineffective study program Inadequate external assistance Underestimating the work to be carried out Implementation times that are too long, causing a loss of enthusiasm, or too short, failing to achieve correct implementation Lack of fulfillment between process and control improvements Expedite too much and without due precautions the new alliances with suppliers Failure to give continuity to the system, since it requires continuous improvement (kaizen).

Ten fundamental rules

1. Start work with the “Just in Time” system as soon as possible. Do not wait for the company to reach a large volume of production. When that time comes, changes to the system are more difficult. Do not use the excuse of low volume to avoid the implementation of the JIT. The system works in any environment. It should not be forgotten that the ideal volume in the just-in-time production system is unity. Employ repetitive manufacturing, daily schedules, kanbans, and daily pull methods. Using them avoids the complexity of work orders and problems can be detected as soon as they occur. Senior managers must be involved immediately. Your support is essential to the success of the program. Begin training and training of middle managers, supervisors and workers as soon as possible.Senior managers need to be actively involved in relationships with major vendors - not start with a global program. Choose a sector or pilot area. If you try to do too much, the system will not operate properly and employees will become frustrated and lose interest. Develop “Just in Time” systems and procedures from the beginning, then review and improve them. Develop a set of objectives measurable for the purposes of evaluating the behavior of the system. When the goals are consistently achieved, new more demanding goals must be established.the system will not operate properly and employees will become frustrated and lose interest. Develop “Just in Time” systems and procedures from the beginning, then proceed to review and improve them. Develop a set of measurable objectives for the purposes of evaluating the behavior of the system.When the goals are achieved in a consistent way, it is necessary to proceed to establish new more demanding goals.the system will not operate properly and employees will become frustrated and lose interest. Develop “Just in Time” systems and procedures from the beginning, then proceed to review and improve them. Develop a set of measurable objectives for the purposes of evaluating the behavior of the system.When the goals are achieved in a consistent way, it is necessary to proceed to establish new more demanding goals.

Annex 1 - Types of waste - examples

Among the various types of waste we can list the following:

1. Waste on the production line

• Reprocessing Poor quality of work Low performance Safety inventories Line stops due to machinery and equipment failures Absenteeism Very long downtime Line stops due to missing materials Engineering area changes Additional labor in assembly due to poorly designed products Lack of adequate tools Unclear assembly instructions Poor Training Poor plant layout Long machine startup times Poor quality raw materials Excess documentation Waste Work idle time

2. Waste in the materials department

• Safety inventories Excess materials Obsolete materials Inspections of materials at the entrance Excessive freight costs Loss in inventory Excessive number of suppliers Too many purchase orders Early or late shipments Large inventory storage facilities Travel Telephone accounts Discrepancies between receiving count and purchase orders Poor protection against impact of boxes or plans Poor protection against impact of boxes Hauling Missing costs Poor forecasting and material planning Too much haggling with suppliers Switching suppliers Documentation Poor forecasts from the Sales Department

3. Waste involving suppliers

• Poor quality parts Late or early shipments Large shipments Discrepancies in shipment counts Reprocessing Poor process performance High cost of sales Express shipments Discrepancies in billing Wrong freights Poor product specifications Excessive product specification Excessive sales commissions Bad protection against impacts on boxes or pallets Bad production prediction and changes in schedule

4. Waste in Design Engineering

• Poor documentation Marginal design Too many parts in design Too many suppliers for parts in design Complex design for assembly Complex design for testing Tolerance on parts too lax or too narrow Requires complex manufacturing process Poor testing before release to manufacturing Late departure Unused parts and suppliers in Previous designs Use of unreliable components High cost of materials Too many configurations in the product Too many changes in the area of ​​engineering and rework Too many schedules and levels in materials Product not designed for a foolproof assembly Poor reliability design Use of low quality parts Design includes features that customers They do not need

Annex 2 - Advantages of small lot sizes

When learning to economically manufacture "one less at a time," smaller batches will allow the company to:

• Improve costs due to:
  • Increased return on inventory assets Increased return on total asset base Reduction in our exposure to rework Need for lower volumes to break even.

• Improve quality levels by:
  • Faster feedback on quality issues An acceleration in the introduction of technical changes.

• Increase agility in deliveries due to:
  • Reduction of manufacturing times Increased frequency of access to equipment Increased flexibility of product composition.

Annex 3 - Results of the reduction in setup times - examples

Company	Machine	Before	After
Toyota	Bolting machine	8 hours	58 seconds
Mitsubishi	Six Axis Drill	24 hours	2.7 minutes
Arakawa	500 tn press.	27 minutes	4.5 minutes
Toyoda	Cold forging	32 minutes	7.5 minutes
Hitachi	Matrixer	75 minutes	3 minutes
Hp	CI Inserter	30 minutes	3 minutes
Omark	Press	120 minutes	3 minutes

Annex 4 - Characteristics of a Just in Time provider

• Regarding quality:
  • Ship the correct quantity. No inspection required. Have good process control and communicate design changes to the customer. Practice full quality control so that the root causes of problems can be eliminated. Offer full service.

• Regarding deliveries
  • Must meet stipulated deadlines Packaging is consistent with what is required at the point of use Provider deadlines are short and stable

• In relation to cost
  • The supplier's prices are fair. There is long-term interest and agreement between customers and suppliers.

Bibliography

• Just in Time - William Sandras - Ediciones S - 1989Justo a Tiempo Manufacturing - Hernández - CECSA - 1992 The Just in Time System and the flexibility of production - Bañegil - Pirámide - 1993

Finally, and as a complement to this text, we suggest the videos below. In the first (12 minutes) a theoretical approach to the just in time philosophy is made, in the second (23 minutes) a JIT implementation is presented in a British car production company.