More Problems with JIT Manufacturing

Just-in-tine (JIT) manufacturing is the idea that a manufacturer should order component parts only when a customer places an order from the manufacturer. As such it is a pull-only process. There are several advantages: the manufacturer does not incur any inventory holding costs; there is no chance of components becoming spoiled (in the case of non-durable goods) or obsolete; and that any defects in the component parts can be quickly identified, and remedial steps can be taken.

The obvious problem with JIT manufacturing is that it is highly vulnerable to supply chain disruptions (Goetsch & Davis, p. 378-379). By having no inventory, a company practicing JIT cannot easily weather interruptions in the flow of needed parts. Problems like this can be minimized by using multiple suppliers, if not all the suppliers are disrupted. Ye et al (2022) recommend a global centralized solution, but this is just making the problem bigger.

There are other problems, however.

Goetsch & Davis discuss the problem of supply chain interruptions from the “up-stream” perspective. Another problem, a “down-stream” problem, is that the customer may be unable to make requests. For example, a recent storm here caused damage to a power station, which forced the closings of two car dealerships and one auto mechanic for four days. During that time there were demands for automobiles and auto parts, but the dealerships and mechanics were unable to place orders for them.

Another problem with JIT is synchronizing the arrival of parts (Guo et al, 2022). If the parts do not arrive at the same time, then production cannot be completed until the remaining parts arrive. The manufacturer not only depends on one supplier but all suppliers. During that time, the manufacturer incurs storage costs. Guo, et al, call for improved manufacturing planning and control (MPC) systems, but no MPC system was listed in their paper.

Does it make sense for all supply chain partners to practice JIT? For example, suppose an automobile maker practices JIT. The maker receives an order for a car, and they then must place orders for each of the component parts (and according to Collectors Auto Supply (2020), there are approximately 30,000 parts). Next, a part maker must order the parts they need from other suppliers. Finally, the raw materials must be dug from the ground and smelted. This is a consequence for when all supply chain partners follow JIT practices. Does this make sense, or is it “JIT for me but not for thee?”

When seen in this light, one of the major benefits of JIT manufacturing vanishes: inventory costs are merely pushed off to suppliers.

The result is to lower customer satisfaction by forcing the customer to wait for fulfillment of his demands. This is acceptable in some industries. For example, certain medium- to high-end automakers sometimes have a waiting period of weeks. Construction companies operate on a timeframe of months - unless they’re Amish! Customer needs are most often better met through companies not practicing strict JIT.

One last problem, the most fundamental problem, is that JIT explicitly ignores sales forecasts. “As the processes and suppliers become more proficient, and the JIT/Lean line takes hold, production will be geared to customer demand rather than to sales forecasts.” (Goetsch & Davis, 2021, p. 383). JIT is calling for us to close our eyes to very real situations where sales forecasts are repeating patterns based on historical data. This happens anywhere from Christmas shopping patterns to the battle regularities of the Taliban in Afghanistan. These patterns are very real, and it is foolish to ignore them.

Imagine a situation where a customer is shopping for a high-value product. This is currently happening in the US where we are seeking to increase the number of merchant vessels and battle force ships. One cannot simply go to a shipbuilder and have the same experience as buying a car! Instead, the customer is purchasing a currently nonexistent product, based only on detailed plans plus the shipbuilder’s reputation. This is a situation where JIT is practical, and it may be practical for other high-value or luxury products. Otherwise, JIT cannot be used as a universal management policy.

References

Collectors Auto Supply. (2020, 5 May). How many parts are in a car? https://collectorsautosupply.com/blog/how-many-parts-are-in-a-car/

Goetsch, D. L. & Davis, S. B. (2021). Quality management for organizational excellence: Introduction to total quality (9^th ed.). Pearson.

Guo, D., et al. (2022). Towards synchronization-oriented manufacturing planning and control for Industry 4.0 and beyond. IFAC, 55(2), 163-168. https://doi.org/10.1016/j.ifacol.2022.04.187

Ye, Y., Suleiman, M., & Huo, B. (2022) Impact of just-in-time (JIT) on supply chain disruption risk: The moderating role of supply chain centralization. Industrial Management & Data Systems, 122(7), 1665–1685. https://doi.org/10.1108/IMDS-09-2021-0552

JIT Manufacturing and Supply Chain Fragility

One of the problems with JIT manufacturing is that it is susceptible to supply chain interruptions. Taiichi Ohno, the inventor of JIT/Lean manufacturing, recognized that problem. It is worth quoting in full Goetsch & Davis’s discussion of this issue and Ohno’s solution:

Mass production advocates emphasize that the lines need to keep moving and that the only way to do this is to have lots of parts available for any contingency that might arise. This is the fallacy of just-in-time/Lean according to mass production advocates. JIT/Lean, with no buffer stock of parts, is too precarious. One missing part or a single failure of a machine (because there are no stores of parts) causes the JIT/Lean line to stop. It was this very idea that represented the power of JIT/Lean to Ohno. It meant that there could be no work-arounds for problems that did develop, only solutions to the problems. It focused everyone concerned with the production process on anticipating problems before they happened and on developing and implementing solutions so that they would not cause mischief later on. The fact is that as long as the factory has the security buffer of a warehouse full of parts that might be needed, problems that interrupt the flow of parts to the line do not get solved because they are hidden by the buffer stock. When that buffer is eliminated, the same problems become immediately visible, they take on a new urgency, and solutions emerge—solutions that fix the problem not only for this time but for the future as well. Ohno was absolutely correct. JIT/Lean’s perceived weakness is one of its great strengths. (Goetsch & Davis, 2021, p. 378-379)

According to this, maintaining a buffer stock hides any supply chain issues until the buffer stock is exhausted. This only happens, though, when the buffer stock levels are not monitored. By continually tracking buffer stock – and the rate at which the stock is replenished – any supply chain problems are revealed, and they are revealed at the exact same time that users of JIT manufacturing would notice these shortages. The difference is that the company maintaining buffer stock is not immediately affected, whereas the one using JIT must halt production until the situation is resolved.

The solution Ohno advocates (according to Goetsch & Davis) is that supply chain problems cannot occur (“there could be no work-arounds for problems that did develop, only solutions to the problems”). Problems are avoided simply by having everybody involved working on alternatives to problems that have not yet occurred. Unfortunately, no plan survives contact with reality, and no amount of mental gymnastics will change this, and when there are shortages, Ohno would resolve the issue by having multiple people screaming for a solution. Having multiple people call a supplier pressuring them to resolve a delay does no better than having one person making one call. Phone calls, by themselves, are not sufficient to identify and repair the problem that caused the supplier’s inability to produce needed parts.

One of the workarounds (that Ohno claims is unneeded) to the issue of supplier shortage is to maintain “total visibility – of equipment, people, material, and process” (Kumar, et al, 2013). There are two problems with this: adding such visibility is sure to increase the level of bureaucracy in the supplier, and not all suppliers are willing to allow total visibility. The reason for the latter is that when a company wants visibility into a supplier, it is wanting not only the production rates of a certain part, but also for all the company’s competitors that happen to use the same part.

Akhil Bhargava offers a number of different solutions to the supplier shortage issue. According to him, “The solutions to the traditional mindset of holding Safety stock include Increased data processing involvement in implementation planning efforts in order to upgrade systems to JIT level, statistical process control enhancement to provide timely feedback for engineering and managing tuning, meaningful contingency planning as a response to defects in critical parts, and materials and effective user supply dialogues to support delivery and quality issues.” (Bhargava, 2017). He is basically calling for “better living through IT™”, and none of these solutions actually address supplier shortages, except for the “meaningful contingency planning” option, which is just another phrase for maintaining buffer stock.

The JIT supply chain fragility issue appears to be a problem that has not been resolved and may be unsolvable.

References

Bhargava, A. (2017). A study on the challenges and solutions to just in time manufacturing. International Journal of Business and Management Invention, 6(12), 47-54. https://www.academia.edu/69920210/A_Study_on_The_Challenges_And_Solutions_To_Just_In_Time_Manufacturing

Goetsch, D. L. & Davis, S. B. (2021). Quality management for organizational excellence: Introduction to total quality (9^th ed.). Pearson.

Kumar, S., et al. (2013). Difficulties of Just-in-Time implementation. International Journal on Theoretical and Applied Research in Mechanical Engineering, 2(1), 8-11. http://www.irdindia.in/journal_ijtarme/pdf/vol2_iss1/2.pdf

Just-In-Time and Lean Strategies

Introduction

This post discusses the relationship between Just-In-Time (JIT) manufacturing and Lean strategies. We begin by (trying to) define each of these separately, then examine how they work together as JIT/Lean. Next, the relationship between JIT/Lean and total quality management (TQM) is discussed. We conclude by noting that while JIT/Lean strategies seek to advance the goals of TQM, it does not advance all the goals of TQM.

Just-In-Time Manufacturing

Just-In-Time (JIT) manufacturing is a production strategy that minimizes waste by ordering and producing goods on an as-needed basis, directly in response to customer demand. JIT manufacturing is a pull system, so there is no need to rely on forecasts (which is a push system). There is little or no inventory holding costs since production is triggered only when the customer demands it. Besides low inventory holding costs, one of the other advantages to requesting parts only as needed, there is reduced risk of waste in the forms of spoilage (in the case of perishable goods) or obsolescence (for manufactured goods).

Lean Manufacturing

Like JIT, Lean manufacturing is also concerned with reducing waste, but on a broader scale. Goetsch & Davis (2021, p. 377) state that there are seven types of waste that Lean manufacturing seeks to minimize:

• Overproduction
• Wait time
• Transportation costs
• Processing
• Inventory
• Unnecessary motion
• Product defects.

These include wastes not strictly covered by JIT, in particular transportation costs and unnecessary motion.

Comparing the Strategies

It makes sense to combine these two manufacturing philosophies, as they were both invented by Taiichi Ohno (1912 - 1990). As Ohno was employed at Toyota Motor Corporation, the system was initially called the Toyota Production System (TPS) and was seen as an alternative (or refinement) of Henry Ford’s mass production system. As it spread to other industries, it gained the name Lean manufacturing.

Goetsch & Davis do indeed combine JIT and Lean manufacturing, calling it JIT/Lean, which they roughly define as follows:

Just-in-time/Lean is producing only what is needed, when it is needed, and in the quantity that is needed. (p. 376)

This definition doesn’t include the full scope of Lean manufacturing, however.

Combining JIT/Lean with Total Quality Management

JIT/Lean manufacturing integrates well with total quality management (TQM) manufacturing. In particular, by minimizing the production of defective goods, companies following JIT/Lean are concerned with increasing the quality of their goods. Since the system operates only in response to customer demand, product defects are identified early and corrected. Finally, since the JIT/Lean operates as a pull system, it is inherently concerned with customer satisfaction.

This is essentially the conclusion of Cua, McKone & Schroeder, (2001). They combine TQM and JIT together and find that they are compatible with each other as well as with something called Total Productive Maintenance (TPM).

Tesfaye & Kitaw (2017) claim that integrating TQM and JIT are insufficient to guarantee organizational success and requires “interaction between the core company and the external stakeholders (such as governmental organizations, universities, banks, research institutions, and others)” as well as what they call “technological capability accumulation.” This latter refers to transferring and adopting knowledge into the company instead of being “just passive receivers and users of foreign technologies.” (Tesfaye & Kitaw, 2017, p. 22).

The research by Tesfaye & Kitaw (2017) focused exclusively on Ethiopian leather and leather manufacturing companies, but the lack of technological capability accumulation occurs in other industries, even in software companies. Software and IT companies “burn through” technologies at an incredible rate, caused by employee turnover as well as the idea of rejecting older technologies in favor of adopting “the new hotness.”

Conclusion

JIT and Lean are both strategies that improve manufacturing processes. Both are concerned with eliminating waste in such processes, with JIT concerned with minimizing inventory holding costs and minimizing costs that result from spoilage and obsolescence. Lean improves on this by minimizing additional types of waste such as wait times and transportation costs.

JIT/Lean brings the benefits of TQM – improved quality and focus on customer satisfaction – but only to production departments. Companies practicing TQM require continual improvement and customer focus of all departments of a company, whereas JIT/Lean is applicable to production departments. As such, JIT/Lean works well with TQM, but it is distinct from TQM.

References

Cua, K., McKone, K., & Schroeder, R. (2001). Relationships between implementation of TQM, JIT, and TPM and manufacturing performance. Journal of Operations Management 19(6), 675-694. https://doi.org/10.1016/S0272-6963(01)00066-3

Goetsch, D. L. & Davis, S. B. (2021). Quality management for organizational excellence: Introduction to total quality (9^th ed.). Pearson.

Tesfaye, G. & Kitaw, D. (2017). A TQM and JIT integrated continuous improvement model for organizational success: An innovative framework. Journal of Optimization in Industrial Engineering 22,15-23. https://doi.org/10.22094/joie.2017.265