The Idea of Just in Time
The idea of Just In Time originated in Japan. Actually this type of inventory/production was originally known as the "Toyota Production System". A man by the name of Taiichi Ohno is credited as the person who first came up with this system. He looked at the Western industries and found that the manufacturers would set up their manufacturing lines to produce a large quantity of one product before stopping and and switching to a different product. They also would order and stock an overabundance of inventory so that the right parts were always on hand.
Ohno did not feel that this would not work in a nation that demanded a smaller quantity but a greater variety to its products. So he came up with an innovative system of production that was based on the idea of eliminating waste. This system eliminated waste by only have items brought to the production line in the amount they needed and only when needed. He also came up with a system that used more machines than people. People were used only when the machines detected an error and then the system would stop until the problem had been corrected. This system is known now as “automation”. In this system having too much stock was seen as being a waste.
A number of things that contribute to waste include:
· overproduction - waste from producing more than is needed
· time spent waiting - waste such as that associated with a worker being idle whilst waiting for another worker to pass him an item he needs (e.g. such as may occur in a sequential line production process)
· transportation/movement - waste such as that associated with transporting/moving items around a factory
· processing time - waste such as that associated with spending more time than is necessary processing an item on a machine
· inventory - waste associated with keeping stocks
· defects - waste associated with defective items
At the time car prices in the USA where typically set using selling price = cost plus profit mark-up. However in Japan low demand meant that manufacturers faced price resistance, so if the selling price is fixed how can one increase the profit mark-up? Obviously by reducing costs and hence a large focus of the system that Toyota implemented was to do with cost reduction.
To aid in cost reduction Toyota instituted production levelling - eliminating unevenness in the flow of items. So if a component which required assembly had an associated requirement of 100 during a 25 day working month then 4 were assembled per day, one every two hours in an eight hour working day. Levelling was also applied to the flow of finished goods out of the factory and to the flow of raw materials into the factory.
Toyota changed their factory layout. Previously all machines of the same type, e.g. presses, were together in the same area of the factory. This meant that items had to be transported back and forth as they needed processing on different machines. To eliminate this...