Just In Time manufacturing from Japan (my MBA paper)

As a production strategy, Just in time (JIT) strives to improve a business’ return on investment by reducing in-process inventory and associated carrying costs.  Originating in Japan in the 1950s, JIT is a type of operations management approach.  By adopting JIT as an approach, Toyota and other Japanese manufacturing firms found excellent results and ended up raising productivity (through elimination of waste) significantly.    In fact, many firms continue to refer to lean/JIT as the Toyota system. The concept emphasized the avoidance of waste of materials, space, and labor. Significant attention was paid to identifying and correcting potential problems that could lead to any form of waste. Operations were constantly being improved and fine-tuned so as to further eliminate waste and thereby increase productivity and yield. In addition, equal respect was paid to all workers, while minimizing the trappings of status. As a result, by using lean/JIT, Toyota was able to reduce the time needed to produce a car from fifteen days to one day.

Implemented correctly, JIT focuses on continuous improvement and can improve a manufacturing organization’s return on investment, quality, and efficiency. To achieve continuous improvement key areas of focus could be flow, employee involvement and quality.

Associated with Japanese management techniques, just-in-time production (JIT) is a set of principles and practices based on the philosophy that firms should hold little or no inventory beyond that required for immediate production or distribution. That is, a manufacturer should receive raw materials or parts from its suppliers perhaps just hours before they will be used in production, and the firm’s output should be shipped to its customers as soon after completion as possible—without holding onto a stock of either raw goods or finished products.

In 1924 Henry Ford’s Highland Park plant, and later the River Rouge operation, mass-produced Model T parts just-in-time for assembly while assembly lines pulled work forward to the next assembly stations just-in-time. One hundred freight cars of material were unloaded daily, with materials flowing through fabrication, subassembly, final assembly, and back onto the freight cars. The production cycle was twenty-one days. At River Rouge the cycle was only four days, and that included processing ore into steel at the on-site steel mill.

Lean manufacturing encompasses a number of things. It essentially is a Westernized version of JIT and Japanese kaizen, or continuous improvement. Lean manufacturing is a process for measuring and reducing inventory and streamlining production. It is a means for changing the way a company measures plant performance. A knowledge-based system, lean manufacturing takes years of hard work, preparation, and support from upper management. Lean manufacturing is so named because it purports to use much less of certain resources (space, inventory, workers, etc.) than is used by normal mass-production systems to produce comparable output. The term came into widespread use with the 1990 publication of the book The Machine That Changed the World by James P. Womack, Daniel T. Jones, and Daniel Roos.

Additionally, this reduction in inventory and lot sizes promotes rapid feedback from downstream work centers when there is a quality problem. This feedback results in a reduction in scrap and rework, and ultimately a higher level of overall quality.

Reduced inventory and lot sizes also result in increased inventory turns. Inventory turn increases have been noted at Haworth (a twofold increase), Hewlett-Packard (a threefold increase), Richardson-Vicks Homecare Products (a threefold increase), IBM, Raleigh (a fourfold increase), and Harley-Davidson (a sixfold increase).

While Japan has led the way in Lean Manufacturing/JIT, they continue to be a tremendous example to the United States in wages, savings, and better planning.  Few Americans realize that Japan generates on par or higher average wage rates than the U.S.

  • The average Japanese family has a consistent yearly savings while the average American does not have any savings.
  • Japan had a record $236 billion current account surplus (trade plus interest income and other receipts) with the rest of the world in 2007 – while the US had a record $731 billion balance trade deficit to the rest of the world during that same period.

Japan must be doing something right! Better planning, direction, and a more responsive government are keys to their success. They have learned a great deal from us and have improved on it. Perhaps it would be wise for us to study their improvements for our own benefit.

Compare this to:

  • As of April, 2008, the U.S. has borrowed nearly $600 billion from Japan and $502 billion from China to keep our government running. This Money is also used to give ourselves tax refunds, pay for our internal budget deficits (over $10 trillion), and our external balance of trade deficit (2008 alone estimated to exceed $800 billion).
  • The U.S. has two-and-a-half times Japan’s population, plus much more land and natural resources, but we are producing less, importing more, and borrowing more than ever before as well as selling our irreplaceable assets to pay for imports and debt.

Sources:

Womack, James P., Daniel T. Jones, and Daniel Roos. The Machine That Changed the World: Based on the Massachusetts Institute of Technology 5-Million Dollar 5-Year Study on the Future of the Automobile. New York: Rawson Associates, 1990.

Read more: http://www.referenceforbusiness.com/management/Int-Loc/Lean-Manufacturing-and-Just-in-Time-Production.html#ixzz3Ipp2MtlR

http://www.ft.com/cms/s/0/e2352f1e-5004-11e0-9ad1-00144feab49a.html#ixzz3IpaIHsCd

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