Hello readers and welcome back to our Project Management series. Recently you may realize that our articles have focused more on understanding processes that make up projects and how to make them better. This is necessary because project implementation consists of various processes, and the better optimized these individual processes are, the better the project output would be.
A recent and popular production concept that is relevant for all project managers today is the Just-in-Time (JIT) production system. In this article, we will analyze the Just-in-Time production concept and explore how it can be integrated into the manufacturing project environment.
According to Wikipedia, Just-in-Time is “a production strategy that strives to improve a business’ return on investment by reducing in-process inventory and associated carrying costs.” JIT was first developed and used by the Toyota Motor Corporation. JIT focuses on process improvement and the overall goal is to reduce cost and improve return on investment.
The Kanban system
The Just in time philosophy relies heavily on the “kanban system” which was developed by Taiichi Ohno of Toyota. In Japanese, the word “kan” means visual while “ban” means card. This directly translates to visual cards, also known as signboards. Kanban therefore is the use of visual cards as triggers for suppliers or materials to a process when it needs it.
The traditional production system was referred as the “push” system because raw materials were pushed to the processes or finished goods were pushed to the consumers. Kanban on the other hand uses a “pull” system, which pulls resources only when it is required. The Kanban system was the foundation on which the Just-in-Time and the lean production system were developed.
For the effective use of kanban, Toyota developed six rules that must be followed. These are:
- Customer processes order items in the exact amount specified by the kanban at the earlier process.
- Supplier processes order items in the exact amount and sequence specified by the kanban.
- No items are made or moved without a kanban.
- Always attach a kanban to the goods.
- Defective products are not sent for processing to the next process. This would result in 100% defect-free goods.
- Reducing the number of kanban would increase sensitivity by revealing problems and lowering inventories.
It is important to mention that while the kanban system was designed with the use of visual cards to help determine what a particular process or department needs at a particular time, it has evolved from the use of physical cards to an electronic system which is also known as the “e-kanban.” While this is still visual, it has eliminated the problems that arise as a result of the loss of physical cards or of errors from manual input in cards.
Now that we have an idea of what kanban is and how it works, let’s look at other details involved in the JIT production system.
JIT evolved from being a production philosophy aimed at reducing inventory cost alone to one focused on fully eliminating or minimizing waste. Waste here is taken in a generic form and includes the following:
- Waste as a result of waiting time (lead time) – Waiting time or lead time is the time (delay) between the initiation and execution of a process. This involves the time spent for planning a process, pulling the needed resources from the supplier and making it available in the inventory once it has been ordered. Reducing the waiting time is an important part of JIT as it helps in reducing waste.
- Waste from transportation – Let us remember that the aim of Just-in-Time production is to eliminate waste and improve profitability. While it is impossible to carry out a project without moving resources about, waste can be eliminated by transporting only those resources directly relevant to the project and also designing processes so resources can moved in the shortest possible distance.
- Waste from keeping inventory – As discussed earlier, keeping inventory is unhealthy when implementing JIT. Inventory refers to all components, work in progress and inventory which is yet to be processed.
- Waste of motion – This is waste that occurs as a result of people and equipment moving more than is required to perform the process. These could be as a result of the arrangement of workstations, location of work in progress, inventories, etc.
- Waste as a result of overproduction – Just like the name implies, waste occurs when production is greater than demand. This would result in wastage of raw materials which could have been converted to other products, increased cost of storage for finished goods, or wastage due to inability to find clients who require the finished products.
- Processing waste – This is the waste of over-processing which occurs as a result of adding more value to a product than is necessary. It could also be the result of extra steps in a manufacturing process which can be eliminated. For example, painting a part of a product that would never be seen or exposed to corrosion is a waste of over-processing.
- Waste as a result of defect in process – This kind of waste often leads to scrap and rework. These are caused by human or machine error during the manufacturing process. Reworks require additional time and cost, thereby increasing the total cost of a product, and when the error is beyond repair, it has to be discarded. This can be avoided by ensuring that no human or machine error is allowed in the production process.
The Just-in-Time production system helps eliminate these seven types of waste.
There is always room for improvement in all processes and the rate of change of technology is faster now than in previous years. Continuous improvement includes:
- Solving basic problems by removing any process that adds no value to a product
- Keeping up with the current changes in technology in the industry
- Inventing better, simpler and more efficient ways of getting work done
- Ensuring proper quality control, etc. For more information about continuous process improvement, check this link.
So far, we have explained the concept of Just-in-Time and seen its benefits. However, the JIT philosophy comes with its own challenges.
The following are the primary disadvantages of JIT:
These are supply related issues that occur as a result of Just-in-Time production. Since the JIT concept eliminates inventory, the inability for one or more suppliers to deliver when needed would lead to a problem in the supply chain which might cause a big loss to the organization.
A good example is when a fire outbreak occurred on a Saturday at Aisin Seiki, the supplier of brakes for Toyota. The incident stopped the supply of brake systems and by the next Tuesday, Toyota had lost an estimated $15 billion in sales.
This as opposed to supply is the challenge that comes with demand for products being manufactured. For the Just-in-Time philosophy to be applied effectively, there has to be a high and predictable demand rate for the product. When demand is predictable, it would help in forecasting the amount of raw materials needed and when they will be required.
Moreover, a high rate of demand for the product would give the organization a high bargaining power over its suppliers and can allow an organization to have a range of loyal suppliers once they remain assured of your steady demands.
Transferring from a traditional production system (push) to a Just-in-Time production system (pull) does not come cheap. It involves a complete overhauling of the existing system, which is often difficult and very expensive. A cost benefit analysis should be carried out to ensure the investment on implementing a stockless production is justified.
Implementing the JIT in an organization involves building more than the regular buyer-seller relationship with suppliers. Your suppliers are now integrated into your supply chain and you sometimes have to work together with your suppliers to ensure they are productive and effective.
Most organizations that practice JIT often do collaborative research or process improvement with their suppliers. Since your suppliers might not be producing for you alone, it is important to protect your organizational data by signing legal documents.
In some cases some suppliers are not allowed to work with competitors. For example, Airbus and Boeing are the only companies that manufacture airplanes and they invest heavily in helping to develop their suppliers. As a result, they are not allowed to supply to the competitor.
The Just-in-Time production philosophy is an important concept in reducing project and operational cost and efficiency. It more relevant in the manufacturing environment but the concept can also be adapted to the service environment. Using JIT has its own benefits and disadvantages which the article also explored.
That’s all we have for today and once again thank you for reading. Don’t forget to drop your thoughts and questions in the comments section.
Project management body of knowledge (PMBOK)
Sugimori, Y., Kusunoki, K., Cho, F., & Uchikawa, S. (1977). Toyota production system and kanban system materialization of just-in-time and respect-for-human system. The International Journal of Production Research