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From JIT to Lean Manufacturing

The History of Just in Time

Around 1980 we were all just getting used to the concepts of Material Requirements Planning (MRP) and Manufacturing Resource Planning (MRPII) with their dependence on complex computer packages when we began to hear of manufacturers in Japan carrying no stock and giving 100% customer service without any of this MRP sophistication.

Japanese car manufacturers ensured that every steering column was assembled and fed onto a production line just as the car into which it was to be fitted rolled up at that particular stage. This was all managed by something called a kanban which meant «tag» and was the mechanism by which the assembly line told the feeder areas that they wanted another component. The first visitors to Japan came back to tell us that the kanban replaced MRP and was the key to Japanese success.

In time, we learned that the kanban was the last improvement step of many, not the first. The conceptual goals of minimised lead times and inventories rated above all else. The Japanese aim was having everything only when required and only in the quantity required – in other words, just-in-time (JIT).

We then learned that Toyota led the way in the development of the Japanese approach. We heard of something called the Toyota Production System which was the model for all that had happened in Japanese manufacturing. We heard of Taiichi Ohno, the production engineer responsible for this breakthrough.

The list below highlights what our Japanese counterparts had done.

1. Batch Quantities

Making something in large batches has several negative effects. The first thing which Westerners recognised was that stock levels are partly a function of order sizes. We had a formula for economic batch sizing in which the cost of set-up was offset against the cost of holding the stock. Our theoretical average stock level was half the order quantity + whatever element of safety stock we had built into our plans so reducing the order size would reduce our average stock.

There were, however, other considerations. A piece of plant cannot be immediately responsive to all demands upon it if it makes parts in greater quantities than are required at the time. Responsiveness, and hence service to our customers (whether they be external or the subsequent operations within our own plant) requires that we manufacture components in small batches.

We knew that smooth workloads make management of the manufacturing process far easier and had established smooth finished product plans with the adoption of Master Production Scheduling. However, no matter how smooth our final assembly plans, we still had lumpiness elsewhere.

The major contributor to parts being made in large batches is, of course, set-up times. Shigeo Shingo, a quality consultant hired by Toyota, had set about effectively eliminating set-ups. The accounting conventions that led Western businesses to make significant quantities of parts that may not be used were also shown to be ludicrous.

2. Safety Stocks / Quality

A major element of Western manufacturing’s inventory was that which we held in case of problems. We held safety stocks to allow us to continue manufacturing should some of the components or raw materials in our stores be found to be defective.

Ohno and his colleagues, ironically, had listened to the American quality gurus, W. Edwards Deming and Joseph Juran, who had advised Japanese industry as it recovered after World War II. Among the key concepts learned by the Japanese and neglected for many years in the West were:

Deming’s teaching that we cannot inspect quality in a product but must build it into the manufacturing process.

Juran’s definition of the internal customer. If we each give service to our internal customer then we will ultimately take care of the end customer.

By applying these teachings and aggressively eliminating all sources of non-compliance the Japanese moved quality onto a completely different plane. Where the West continued to measure percentage defect rates our competitors were working in parts per million.

As well as addressing the manufacturing processes, we learned that the JIT approach considered other contributors to improved quality. Is the component designed in such a way as to make it easy to produce or can we simplify it and reduce the chances of a defect? We began to think of «design for manufacture» and combining the previously separate functions of design engineering and production engineering.

We heard about things called «quality circles» where people in different areas of the business came together to investigate problems and work as a team to solve them – rather than follow our own approach of each area attempting to blame another. Perhaps most disturbingly we heard that inspectors were a thing of the past. All had now been trained as quality engineers and were in fact working as process improvement specialists so that their old function was no longer required.

3. Supplier Partnerships

Perhaps the most challenging concept for many companies was that of working with suppliers as partners. Buyers who spent their lives playing one supplier off against others and switching from one to another to save pennies heard that their Japanese counterparts single-sourced in nearly all cases. What is more, large corporations such as Toyota sent out their own specialists in manufacturing improvement to help their suppliers. Where savings were identified then benefits would be shared amicably.

The most readily-visible consequence of this was better service from the company’s suppliers. If we were working together on agreed plans and the supplier could arrange activities based around a long-term relationships then we might avoid a major problem that plagued us in the West – that just as we played off suppliers against each other, they played off their customers. They never knew what demand they may get so they sought more orders than they could, in reality, fulfil. They then reacted to screams and shortages and tried not to fall out too often with each customer. All of this meant all customers holding safety stock to cope with the repeated failures.

Partnership approach brought other benefits – if we worked as true partners then we would not need to spend so much effort in continuously expediting. We could leave behind this ludicrous situation where we had to keep asking «is that order going to be on time?». We could also expect our suppliers to warn us of problems in advance. If their key piece of plant broke down and they told us now of the impact this might have in a week or two, then we could set our own plans to work around the problem.

4. The Elimination of Variety

Variety was recognised for its cost in that it complicated the manufacturing process. A sunroof on every Toyota Corolla was not only a marketing trick but a practical manufacturing improvement as having to make two different types of roof and two different types of headlining introduced potential problems.

5. Shortened Cycle Times

One point which we all understood was that our overall cycle times for our product dictated the level of work-in-progress (WIP). If we have an average lead time of four weeks for the components going through our welding department, then we will have an average WIP level of four weeks’ worth of production.

The Japanese had addressed this in a number of ways, primarily in a fundamental redesign of factory layout and process flow. We learned that rather than have one area of the plant for presses, another full of lathes, another drills, and so on, they had switched to «focussed factories» where each area of the plant made a particular type of component. The unit making drive shafts had saws, followed by milling, turning, drilling and so on. These focussed units then brought the opportunity for multi-skilling and teamwork which helped to provide for productivity improvements – as well as significantly reducing the movement of materials through the factory.

6. «Pull»

Essential Vocabulary

1. Material Requirements Planning – планирование потребности в материалах

2. Manufacturing Resource Planning – планирование производственных ресурсов

3. stock n – акция; товарные запасы

4. sophistication n – искушенность, изощренность, сложность

sophisticated a – искушенный, изощренный, сложный

5. lead time – время между размещением заказа и получением материалов от поставщика; время между началом производственного процесса и изготовлением первого изделия или всей партии

6. inventory n – запасы

7. just-in-time (JIT) – система «точно в срок»

8. breakthrough n – прорыв

9. highlight n – центр внимания, основной момент

highlight v – освещать, выдвигать на первый план

10. counterpart n – двойник, аналог, копия, дубликат; противная сторона

11. batch n – партия, группа

12. order n – приказ, распоряжение; заказ

order v – приказывать, распоряжаться; заказывать

13. set-up n – установка, наладка, система

set up v – устанавливать, налаживать

14. offset n – зачет, компенсация, возмещение

offset v – зачитывать, компенсировать, возмещать

15. workload n – рабочая нагрузка

16. Master Production Scheduling – главный план-график производства

17. accounting n – бухгалтерский учет

accounting a – бухгалтерский

18. accounting conventions – учетные правила

19. compliance n – согласие, соответствие правилам, соблюдение (законов, правил)

comply (with) v – соглашаться, соответствовать, соблюдать

20. quality circles – кружки качества

21. demand n – спрос, требование, потребность, нужда

demand v – требовать

demanding a – требовательный, сложный

22. failure n – неудача, провал, банкротство; отказ (в работе), повреждение, срыв, авария

fail v – потерпеть неудачу, провалиться, обанкротиться; отказать

23. expediting n – связь с поставщиками, время исполнения (время для розыска и выполнения потерянного или неправильно направленного заказа)

expeditor n – диспетчер, экспедитор

expedite v – ускорять

24. work-in-progress (WIP) – незавершенное производство, полуфабрикаты

25. cycle time – время рабочего цикла

26. layout n – схема расположения, компоновка, планировка, чертеж

lay out v – располагать, размещать; выделять средства

27. waste n – отходы, потери; расточительство, перерасход

waste v – терять, тратить попусту, расточать

28. dedication n – посвящение, преданность, приверженность

dedicate v – посвящать

dedicated a – посвященный, приверженный, преданный

29. lean manufacturing – рациональное производство

Exercise 1. Answer the following questions.

1. What were the news from Japan that amazed the US manufactureres and scholars around 1980? 2. What was the company that pioneered the development of the Japanese manufacturing principles? 3. Why did the US companies manufacture components and parts in large batches? 4. Why did the US companies hold safety stocks? 5. What were the ideas of the US quality gurus that the Japanese successfully applied? 6. What other contributors to improved quality did the JIT approach consider? 7. What was the underlying principle of the quality circles? 8. Why were partnership relations with suppliers so important? 9. Why does it make economic sense to eliminate variety? 10. How did the Japanese shorten cycle times? 11. What was the basic idea of kanban? 12. Why were the Japanese companies happy when they discovered some problem in a process? 13. What is the key premise of the Lean Manufacturing?

Exercise 2. An American car manufacturer hired a Japanese consultant to help enhance its competitiveness and cut costs. The advisor suggested applying some of the Japanese manufacturing principles. Invent a dialogue between the US vice-president for production and the foreign consultant. Use the following terms.

JIT

kanban

batch size

safety stocks

long-term partnership relations with suppliers

elimination of variety

shorter cycle-times

quality circles

elimination of waste

problem-solving

lean manufacturing

commitment to excellence

Exercise 3. Compare the American and Japanese management principles along the following lines.

Exercise 4*. Fill in the blanks using terms given below.

The Characteristics of the Japanese Approach to Business

The system of…….. in the large organizations is called Nenko Seido. This means:

– guaranteed employment until……… at 55;

– promotion and……….. by seniority;

– an internal labor market meaning………. from within the company;

– extensive…….. with an emphasis on long-term behavior, attitudes and performance;

– extensive……… package, which is regarded as a right and incorporates the needs of the workers’ family;

– pay which starts off low, but rises dramatically with……….

Nenko workers in Japan are the privileged………. This system only applies to male……., and there are many smaller non– Nenko organizations, which service and supply their big brothers. The role of the non– Nenko organizations in the economy is to provide the……….. and lower………, achieved by lower wages, absence of job security, pensions, sick leaves, welfare benefits and bonuses.

The second distinctive characteristic of Japanese business is the fundamental importance of the group. Work is divided and allocated to groups, not individuals. The groups operate as specialists in dealing with………, but within the team the worker is regarded as a………… who will……… between jobs………. in company practices, rather than acquiring a specific technical skill.

The third feature, which is typical of Japanese corporation, is a very tight centralized control based on…………, which are linked to detailed planning. Also stringently controlled from the center is the……….. of trainee managers, who will ultimately be trusted to carry the company forward into the future.

Control is also indicative throughout the entire organization, particularly at an………… when applied to quality and technical……….. The concept of total quality management means a………. to a continuous improvement program and a strong…… on efficiency achieved by investment in the most modern plant and machinery available.

Managers adopt………. style of leadership and supervision. The manager will be the representative of the group as well as a technical…….. Despite the………. role that the individual plays to the group, consultation and consensus are seen as vital before decisions are made and action taken. There is much interaction and evolution in the……….. of new ideas and directions. Slow……… and tolerance of operating in ambiguous situations is normal. This is the direct opposite to what might be found in some western organizations where direct and decisive action taken by individual leaders operating without consultation and consensus is the norm.

The above characteristics can exist in the form they do because there is a strong corporate culture in every Japanese organization. This will be unique to the individual organization, but it is firmly………. in the culture and history of Japanese society as a whole. Key………. are obligation, duty, loyalty, cooperation and commitment to the company regarding it as the family to which the individual is bound.

Source: Corporate Strategy Study Guide, IFA Services Ltd., 2004.

Terms:

embedded, focus, recruitment, development, trouble shooter, subordiante, employment, operational level, rotate, remuneration, key performance indicators, promotions, decision making, efficiency, appraisal, generalist, welfare, seniority, minority, staff, flexibility, operating costs, tasks, training, commitment, hands-on, values, retirement

Exercise 5. Translate into English.

В поисках качества

В то время как американские менеджеры всегда говорили о том, что они «верят» в качество, что они «за» качество и всегда «боролись» за качество, большинство из них начинает понимать, что они ориентировались в основном на достижение некоего приемлемого уровня качества.

Несмотря на лозунги и призывы, качество пока еще не стало для американцев первоочередной задачей. Большинство руководителей компаний, управляющих, правительственных чиновников и экономических стратегов пока не думают о проблемах качества постоянно и ежедневно.

Главное в управлении качеством – не контроль, а бездефектная работа

Высокое качество обеспечивается главным образом путем налаживания бездефектного производства, а не через контроль уже готовой продукции. Основная идея такого подхода состоит в том, чтобы все усилия направить на ликвидацию самой возможности появления брака в процессе производства и сборки. В результате возможные дефекты устраняются еще на промежуточных этапах, а не в готовом изделии. В американских компаниях такой подход не получил пока массового распространения. Во многих случаях непроизводительная работа по проверке качества и устранению дефектов, выпуску новых деталей взамен бракованных отвлекает от 15 до 40% производственных мощностей предприятия. Причем затраты на эти работы составляют от 20 до 40% на каждый доллар продаж.

Одним из подходов, который дает возможность решить эти проблемы, является разработанная японцами система организации производства, получившая название «точно в срок».

Базовая идея этой системы весьма проста. Материалы и детали должны поступать на каждое рабочее место по соответствующим запросам точно в тот момент, когда в них возникает необходимость, а не храниться в больших количествах возле каждого рабочего места.

Главная цель такой системы состоит в постоянном совершенствовании процесса производства, ликвидации всех возможных потерь: времени, материалов и т. п.

В настоящее время сотни американских компаний с успехом применяют эту систему на практике – от «Кэмпбелл» и «Уорнер Ламберт» до «Моторолы» и «Интел». Например, применение этой системы в компании «Харлей энд Дэвидсон» позволило высвободить 22 млн долл., которые ранее были фиксированы в материальных запасах.

Использование такой системы позволяет также резко сократить расходы на аппарат управления, обнаруживать дефекты в ходе производства и устранять их сразу же на месте, обеспечить работу всех подразделений при минимальных затратах.

Конечно, внедрение такой системы требует четко отлаженного механизма и ответственности каждого работника на своем рабочем месте. Необходимо также преодолеть психологическое сопротивление менеджеров, которые не привыкли работать без страховых заделов и запасов.

Источник: выдержка из Грейсон Джексон К. младший, О’Делл Карла; «Американский менеджмент на пороге XXI века», http://ek.–lit.agava.ru