Difficulties and Issues of Just In Time to be aware of before introducing it in your company as a managing philosophy and technique for improving efficiency
By Dr. Michael M Kisembo
Brookline Massachusetts, USA
Just in Time (JIT) is a Japan grown management philosophy, which has been applied in practice since the early 1970s. It has been widely implemented in both supply and manufacturing industries as a survival strategy against global market competition with remarkable success. JIT as a management philosophy, rather than another production technique. It is a collection of concepts and techniques for improving productivity. Monden Y. (1993) defines JIT as “producing the necessary items, in the necessary quantity at the necessary time.” Here I would add the necessary quality to have a complete definition. The primary objective of JIT is to eliminate waste which Toyota President, Shoichiro Toyoda has referred to as “ anything other than the minimum amount of equipment, materials, parts, space, and worker’s time, which are absolutely essential to add value to the product.” In effect JIT attempts to minimize ordering costs and inventory holding costs and at the same time produce high quality and variety of products to meet consumer taste and demand with minimum delay possible.
The West with its own home grown traditional philosophy of mass production characterized with narrowly skilled professionals to design products, semi-skilled and unskilled workers to tender expensive, single-purpose machines, build- up safety inventory to avoid stock outs and the use of Economic Order Quantity (EOQ) concept, it has been rapidly adapting JIT in many of her industries. This global adaptation, as it inevitably spreads beyond the auto industry, will change everything in almost every industry, choice of customers, the nature of work, the fortune of companies, and, ultimately the fate of nations.
However, the implementation of a JIT system is not an easy venture. It is indeed a task that cannot be undertaken lightly. It is expensive and difficulty in terms of management and effort, and both in terms of the initial implementation and in terms of continuing effort required to run the system over time. It raises a lot of issues and difficulties especially in small and medium companies. Because of limitations these companies face, which include limited staffing, and material resources, reduced bargaining power with customers, suppliers and financial institutions they can hardly implement all JIT components with ease.
Main issues and difficulties of managerial nature
Top Management Support. Given the fact that JIT covers a number of key functional areas of the company, its success requires unwavering support of top executives. This issue of full acceptance and commitment to change to the new system by the top management is crucial. Many authors put this factor of top management support as the most important in achieving both long-term and complete implementation of JIT. It is required to empower middle management overcome inevitable roadblocks in implementation (Hay E.J, 1988). The other issue here and especially for small and medium firms is for top management to understand the importance of their support and to render that support to middle management, and for owners to understand that JIT requires new way of management thinking and new attitude towards operations. This can be difficult in small firms as they usually have one or two managers who are always too busy with the daily operations. They may not have the time to sit back to think for the whole operation and the possible ways to improve it, but merely to adapt to changes where they can and possible. Thus without sufficient understanding of JIT philosophy, there will not be a strong commitment from top management on the project and hence its implementation will not reach its fullest completion.
Education and Training: The issue of training and education is crucial to an introduction of any new system like JIT if it has to be implemented smoothly and successfully. Every one at each level needs to understand what JIT is all about and what kind of changes will take place as a result. The difficult here is the availability of resources in terms of personnel who are well versed and able to stay with the company to train others or at least the key staff. It is important to note that there are not many professionals who are usually trained and experienced in new system like JIT. Small and medium companies which are usually the majority in developing countries like the East African nations of Uganda, Kenya and Tanzania, without training department of their own, would find it difficult to send their key supervisors to off-site training as that would mean closing the factory for the period of training. Yet their limited financial resources would make access to outside consulting infeasible.
Resistance to change and strikes: Changing to JIT requires new orientation, multi- skills, new attitude, increased responsibility and team- work. Those who cannot change or feel threatened to lose their positions and jobs would naturally resist and at worst organize strikes. It is therefore necessary to first sensitize and convince workers and their unions that the JIT is in their best interest and that of the survival of the company. The harmonious industrial relations, with management and workers working together for the common good, we see today in Japan, was not like that in the past. For example during the post Second World War period and during the period Japan was implementing, the new Toyota production System, the JIT, she had one of the worst strike records in the world. In 1950 Toyota had a big strike while in 1953, the car maker Nissan suffered a four month strike – involving a lockout and barbed wire barricade to prevent workers from returning to work (Beasley J E, 1999). At present in the west industrial relations is dominated by adversarial relationship between the major unions, state and employers. In – house union are not very common. Teamwork and multi-skilling of employees are limited. Such demarcation barriers make it difficult for employers to introduce multi-skilling, rotation practices as well as teamwork concept. Thus low morale and more importantly, frequent industrial disputes make the integrated JIT system very vulnerable. Suppliers cannot guarantee on time delivery and hence the corporation has to carry higher stock level to reduce the risk of unscheduled production interruptions. High inventory results in higher costs of production.
Thorough Planning and starting with Pilot Project first: In order to avoid costly mistakes and to minimize chances of failure and huge unnecessary looses, issues of through planning and project piloting, so to speak, are of prime importance. Difficulties with these, however, are limitation of time and resources. A lot of management time and effort is needed and consumed in the conception, development and implementation of Just in Time system of production. This is not only a painful difficult to small and medium companies, but also to large companies. According to Taiichi Ohno, the commonly accredited originator of JIT, it was not until 1962, ten years after they first embarked on the introduction of Toyota new production system, before they were able to institute Kanbans on a company wide basis. Finch B. (1986) maintains that due to the small size of product range small companies often have difficulties and always limited in their ability to pilot JIT. He asserts that small companies may have to convert their entire operation into JIT or might have to use stage wise implementation with each component implemented gradually with incremental rewards.
Geographical difficulties: One of the factors, which have led to success of JIT in Japan, has been geographic size and proximity of suppliers (Roos Lars Uno, 1992). Suppliers in Japan are usually clustered around the major corporations, which reduces logistic barriers and costs. This is in fact a characteristic of almost all-Japanese industry due to the smallness of the nation. For western industrial countries like the United States, Australia, France and alike, where suppliers are scattered all over the respective parts of the country with thousands of miles apart, the logistic barrier seriously undermines the effective implementation of an integrated JIT. Thus the long lead-time of supplies and economies of scale factors in distribution may increase the need for high safety stock levels. Here the in-house manufacturing of components or setting of collection centers, as General Motors Corporation does it, may be the only answer.
Difficulties and issues Associated with implementation of JIT components.Management of Chain Supply and collaborative Dilemma: JIT presupposes the delivery of the necessary quantity of materials, of necessary quality, at necessary time and to necessary location. Delay and defects are not allowed if the system has to succeed. JIT therefore requires improvements not only in one factory but also through out the supply chain. This raises the issue of how would a customer/buyer make sure that the entire supply chain of the required materials is effective, efficient and well managed. How can he/she exercise control and influence over the chain? In other words, how can the whole interface between the supplier and buyer be effectively managed so that suppliers respond quickly, flexibly, and efficiently in delivering small quantities directly and frequently to point of use? The answer to this is that they too (suppliers) have to adopt JIT approaches, information and quality management systems with assistance of buyer.
This may be possible for big companies, the dominant customer/buyer with sufficient resource base and bargaining power. A strategic buyer-supplier partnership can be formed where a dominant buyer, like Spencer in United Kingdom, General Motors in United States, and Toyota Motors Corporation in Japan offer small suppliers free consultancy services in areas of management practices and systems and in such a way that supplier is able to find ways of delivering supplies on time and of right quality. In most of Japanese companies this kind of collaboration extends to the sharing of planning data, operation, tactics, and strategies. However small consuming companies, because of their limited resources and influence, find this arrangement very difficult if not impossible to undertake. They do not have financial and luxury of many skilled professionals to offer consultancy and training services to suppliers. Besides that JIT purchasing is very difficult for small manufacturers due to lack of purchasing power with their suppliers (Manoocheri G. H. 1988). Small manufacturers usually do not give enough sales to their vendors and are forced to buy in large batches and store a large amount of raw materials or accept to suffer a higher cost to get the materials just-in-time. On the other hand, for small and medium – sized manufacturing suppliers, Taiichi Ohno notes that they may find the prospect of running delivery trucks ten to fifteen times each day cost prohibitive (Schreffler, 1987). To overcome this and to a given extent harness some of benefits of change to JIT, small and medium companies have to find the already established JIT suppliers or customers as more and more companies are striving for JIT. Once this is not possible then companies can opt to implement JIT purchasing or delivery, for goods with high turnover and use the traditional order point method for those with low turnover.
Furthermore, there is an issue of potential conflict of interest between the buyer and supplier at a given point. The question is: Whose interest will prevail over the other during a period of high effective demand or during periods of very low demand and excess supply of raw materials? The fact is that buyers want suppliers to deliver supplies of highest quality and with maximum reliability at the lowest price. On the other side of the spectrum, suppliers want orders at the highest price, true with an eye for customer quality and reliability requirements but knowing that these cost. Business sense has it that if a buyer needs premium quality and service, then the cost must, wherever possible be paid for by the customer. In addition, market forces have it that if demand is high and supplies are short, the suppliers will want freedom to improve their profit margins by increasing prices. Here buyers are faced with a situation of accepting what they can get unless they can move quickly to an alternative source of supplies. The opposite is true in case of a buyers’ market where buyers face an excess of supply capacity.
Adopting and implementing Cell Technology: Changes associated with JIT include the adoption of Cellular and Flexible manufacturing systems aimed at improving operational flows. Cellular manufacturing is based on a cell within a factory. It becomes a small factory within a large factory. It is self-sufficient unit in which all operations to make a family of parts; components or complete products can be carried out. This mini factory, so to speak, with a cell team, manages the unit as their own operation and acts as a server to other cells or operations. Different machines necessary for various operations to complete a product made by and within the cell are clustered within the cell. This arrangement result in benefits like shorter processing times, better team attention to quality problems, reduction in work in progress inventory, lower handling costs and simpler scheduling.
On the other hand change to cellular manufacturing technology raises several issues like financing and purchasing new machinery, appropriate factory layout for cellular based manufacturing, getting multi-skilled, committed, highly motivated, cooperative, quality oriented and long serving workforce, who would treat the company as their own for which they would work for lifetime. The difficult here is first, how to raise all that money needed to buy new machines needed in various cells. Should the company opt for Debt or Equity financing? The choice is not easy especially so when it involves a lot of money. The Board has to be convened and shareholders resolution or authorization sought. The process is difficult, long and beaucratic. Even after getting the finances it is difficult to get multi-skilled and highly committed workforce overnight. It is difficult to change workers who were used to work on one machine to get him or her work on two or more machines. Besides that, due to lack of skills they would resist to change. Furthermore, an American worker force is not used to staying to one job for long. In fact researchers have it that an average tenure for a Chief Executive Officer in England is one and a half years compared to a life long tenure in Japan, the home of JIT. Therefore a company would find it difficult to convince workers in whom they might have invested so much by the way of training to remain working for the same company for life. Workforce in the west unlike in Japan is highly mobile and very independent with no much loyalty to the company for which they work.
Adopting and implementing Flexible-manufacturing systems: As already alluded to above while considering cellular manufacturing, issues in the flexible-manufacturing systems, include the need of re-engineering the process, computerizing the manufacturing so as to reduce set – up times or changeover procedures by the use of Computer Aided Design (CAD) and Computer Aided Manufacturing (CAM) Software. The difficulties for companies as I did mention earlier while discussing cellular based manufacturing, is first how and where to get experienced multi-skilled staff that can re-configure their workstations with required materials within moments of time. The second difficulty for companies is where, how and at what cost to get sufficient capital to change the system and to buy an interfacing computer system for all the cells in entire factory. For small and medium companies the burden for implementing the Flexible Manufacturing would even be much heavier. These companies have limited number of machines to form cells. They lack expertise to simplify components and have very limited resources, funds included, to acquire additional machines not to mention the lack of bargaining power with financial institutions.
Adopting Kaizen and Continuous Quality Improvement Culture: Japanese companies have succeeded with JIT, partly due to their culture and employment practices among other things. Japanese employment practices are characterized by a far greater commitment to a philosophy of continuous quality improvement than the Western companies. Workforce feel empowered both as individual and as a group to take personal and group responsibility to attend to low in value added activities and problems so as to minimize waste like that from product defects, from overproduction, waste of motion, of waiting time, inventory, processing, and transportation waste, all aimed at continuously improving the product quality and market competitiveness. As an industrial norm Japanese business managers or owners believe and highly value skills and especially multi- skills, committed employees who respond flexibly with know-how to resolve local, operational problems and fluctuations. Japanese managers care, support and encourage commitment of everyone working in operation. Mutual support between internal groups is ingrown norm and indeed essential.
The issues here is how to change the mind-set up of our workforce, their attitude towards work and companies for which they work; and how to change the management and managers’ philosophy and practice towards their subordinates and the company. The company changing to JIT has to draw its workforce to focus to the detail of activities which seem of low value but which matter and when added up, could result in big problem once ignored, but when attended to as they happen would greatly contribute to productivity, product quality, waste minimization and cost reduction, and overall continuous quality improvement.
Changing the mind set up, attitude, management practices and indeed business or manufacturing culture as a whole necessary to successfully implement JIT is not easy. It is a long and difficult process. It is indeed difficult to convince an American worker to stay on one job and working for one company all life long. Labor force in the west is highly mobile. Members of the labor force move from one company to another looking for greener pasture. They lack long commitment to company employing them. Their commitment tends to be on what they earn. Whichever company with a better package that is where one will sell his/her service, all things being equal.
Furthermore, with western traditional culture of individualism, lack of positive attitude to labor, lack of a feeling of being obligated to contribute to economic performance of the enterprise as reflected by shorter average hours of 38.3 worked per week in Germany and United States compared to 42 hours in Japan, pauses difficulties in implementation of JIT (Briggs, 1992). In the vein the implementation of true teamwork with mutual support between internal groups, an essential feature of JIT becomes difficult though possible. One of the biggest problems was encountered by Toyota in Kentucky with JIT concept of Kaizen, the continued quality improvement. Employees found it very difficult to understand why Toyota wanted to keep changing, moving machines and racks continually. They asked, “ Don’t you guys know how to this? I thought you were experts! Aren’t we done yet? (Purchasing, 1992). A couple of employees left even not caring for all changes made whether good or not.
On the side of management, western managers tend to only focus on production techniques rather than worker’s morale. Taken together with lack of true team work, it becomes difficult to convince workers to re-orient their thinking and focus on details of activities which may be adding low value or to activities which may seem not directly their responsibility but which would be deemed to continuously improve quality.
Just in Time (JIT) is a Japanese invented competition survival production philosophy aimed at reducing total production cost by minimizing waste and at the same time continuously improving total product quality. JIT as an integrated production and control system with interdependence of components has had a lot of benefits to large manufacturing companies like Automobile and Electronics where it was first developed and implemented. Its success in Japan has been partly due to the unique culture, character, orientation and work ethic of Japanese work force on one hand and workers centered management style, positive and cooperative industrial relations, dependability and proximity of suppliers, geographical feature and size on the other. The introduction and implementation of JIT in the rest of western world despite the enthusiasm, has not been without difficulties. Unlike in Japan, Industrial relations in United States, United Kingdom, Canada and Australia to mention but a few, is dominated by adversarial relationship between the major unions, state and employer making it difficult for employers to introduce multi-skilling, job rotation practices and team work. Furthermore, unlike a Japanese worker with a positive attitude to work, western workers generally do not feel obligated to contribute to economic performance of an enterprise. They look at labor negatively. This cultural differences pauses a lot of difficulties. The dispersion of suppliers significantly increases logistics barriers and cost unlike Japanese industries whose suppliers are in close proximity to respective factories they supply.
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Any comments on and contributions to this position paper are greatly encouraged and appreciated.