As competition continues to increase, manufacturing companies are seeking to produce their products at minimum cost while maintaining or improving quality. To do this, many are adopting a variety of techniques including inventory reduction, changes in production layout and optimization of resource usage. While perfect scenarios are not possible, there are many methodologies of industrial production planning that can significantly contribute to a more efficient and effective production approach. This means that in order to select the right production management system, your company’s managers need to have a deep understanding of the options. In this article we describe one efficient workflow methodology aimed at reducing flow times within production systems, in addition to response times from suppliers and to customers – Just-in-Time (JIT) manufacturing.
When to Implement JIT Manufacturing Methodology?
Just-in-Time (JIT) is a methodology that calls for eliminating all sources of waste including unnecessary inventory and scrap in production. It also constitutes a complete solution for the organization, control and continuous improvement of production systems and products’ development. JIT was first established in Japan, mainly by the Toyota Motor Corporation. Japan had severe capital constraints and problematic warehousing due to limited land availability, forcing companies to operate with reduced inventories. By applying JIT systems, the Japanese achieved the most competitive industry in the entire world, both in quantity and quality of products. The philosophy of the JIT methodology is to minimize anything considered waste to increase overall productivity.
Toyota identified the categories of wasteful manufacturing practices which became to be known as the seven wastes:
- Overproduction – Manufacturing products in advance or in excess of demand wastes money, time and space.
- Waiting – Processes are ineffective and time is wasted when one process cannot move forward until another finishes. Instead, the flow of operations should be smooth and continuous.
- Transportation – Waste in transportation includes movement of people, tools, inventory, equipment or products further than necessary. Excessive movement of materials can lead to product damage and defects.
- Inappropriate processing – Over-processing refers to doing more work, adding more components, or having more steps in a product or service than what is required by the customer. In manufacturing, this could include using a higher precision equipment than necessary, using components with capacities beyond what is required, running more analysis than needed, over-engineering a solution, adjusting a component after it has already been installed or having more functionalities in a product than needed.
- Excessive inventory – Excessive inventory wastes resources through the expense of storage and maintenance. Accurate control of inventory is essential for great financial results. Do you know how much it could affect your bottom line? Read our article about Warehouse Management System if you think your company is failing in this step.
- Unnecessary motion – Includes any unnecessary movement of people, equipment, or machinery. This includes walking, lifting, reaching, bending, stretching and moving. Tasks that require excessive motion should be redesigned to enhance the work of personnel and increase health and safety levels.
- Defects – Defects occur when the product is not fit for use. This typically results in either reworking or scrapping the product. Both results are wasteful as they add additional costs to the operations without delivering any value to the customer.
If you recognize that your company is failing in any or some of these areas, it’s time to implement the JIT manufacturing methodology. When done well, its adoption can have a drastic impact on an organization’s productivity, risk management and operating costs. Here are just a few of the quantitative benefits experienced by manufacturers worldwide:
Implementing JIT Manufacturing Method Through ERP System
Enterprise resource planning (ERP) is a method for effectively planning and controlling resources in manufacturing and other aspects of business. A little more than 30 years ago, ERP became the most advanced technical approach to manufacturing planning.
JIT manufacturing requires companies to identify their value streams and standardize their processes. When a company’s supply chain is not properly supported by an ERP system the level of service can be affected with the subsequent impact in business performance. While you can work in a JIT fashion with ERP support, naively implementing it will not make you lean. For that, you will need a supply chain and procurement pipeline structured for JIT.
The ERP reflects your current understanding of your company’s processes. This means the JIT ideas must come before the technical solution. While implementing JIT can help you, the process changes that will drive inventory costs down will not happen automatically. Building processes that will take advantage of the new technologies can be done throughout the implementation process but must be guided by a holistic understanding of your customer needs and supply chain.
As mentioned before, JIT manufacturing requires a framework for dynamic scheduling. It should have the following functions – automatic and accurate resource check and dynamic scheduling functions; timely material delivery status sharing between the company and suppliers; timely resource and scheduling information sharing among departments within the company.
In general, while there are some potential risks, especially for smaller companies, those using a JIT manufacturing system enjoy reduced cycle times, faster times to market, and reduced inventory costs. To find success with JIT, it is important to identify suppliers that are willing and able to work in a way that supports your inventory requirements. Secondly, you must find a partner that understands your technology requirements and can support you throughout the implementation.
If you are looking to get started with a JIT manufacturing system but do not know what to do next, contact our team and we will treat you to a free, non-binding consultation with one of our experts.