May 1 2012
Just-in-time and disasters
See on Scoop.it – lean manufacturing
Every time a natural or human-made disaster occurs, there are journalists and bloggers to see in the resulting supply chain disruption evidence that just-in-time (JIT) is wrong and should be abandoned as an objective.
This is based primarily on the perception that JIT means zero inventories. Since zero inventories means zero production, it is obvious that not all inventory is waste. What is waste is unnecessary inventory, which is a bit more subtle because it requires you to tell what is necessary from what is not. There are telltale signs, like thickness of dust or the inability of anyone to tell you what materials are for, but that is the easy part. Beyond that, you have to figure out experimentally what you really need.
What JIT really is about is protecting yourself against shortages by vigilance rather than inventory. This means keeping accurate inventory data, monitoring the in- and out-flows, monitoring the disruptions that can be anticipated, and responding quickly to events. The reason to pursue this strategy is that , while protecting yourself against shortages by inventories works with crude oil, it does not when you are dealing with thousands of items. If you try, you end up with full warehouses that happen not to contain the item you need today.
When a disaster hits your supply chain, the quick response cannot be yours alone. You need your suppliers’ help, and that is why you cannot be in adversarial relationships with them. Long-term, single-source agreements, the regular exchange of business and technical information, and collaborative problem-solving are all necessary to cement the relationships that make a joint emergency response possible.
See on blog.kinaxis.com
May 1, 2012 @ 11:13 pm
Comment in the Operational Excellence discussion group on LinkedIn:
May 1, 2012 @ 11:14 pm
@Lai Heng – This is what the letters stand for but not what Just-In-Time as a business practice really is. The point is not to force the suppliers to hold stocks but to cascade the approach up the supply chain until the stocks are kept as ores in the ground. Take Just-In-Sequence, for example. The supplier delivers, say, seats to a car assembly line directly to the station where they are mounted into the cars, and in sets sequenced exactly like the car assembly line itself. This is not accomplished by requiring the supplier to keep stocks of different types of car seats to pick kits from. Instead, the manufacturing of the seats starts when the car bodies are loaded onto the final assembly line, and they are made and delivered by the time the car arrives at the assembly station where they are needed.
It sounds like something that requires so much coordination that it couldnèt work, but companies like Johnson Controls or Faurecia make it work.
May 2, 2012 @ 5:34 am
Another element to the JIT and SPD process is the end user’s inventory policies. I say policies because the process requires engineering the solution with all participants within each supply chain. We used to call this the “Bull’s Eye” chart which targeted higher (in hours not days) of inventory the further away a supplier’s ship location was in relationship to the assembly plant. A back-up plan for inclement weather or other unforeseen emergencies were included for each supplier ship location as a contingency. Inventory policies were reviewed as least once per quarter and adjusted as data, such as premium freight costs, were reviewed.
May 2, 2012 @ 3:56 pm
Hello Mr. Baudin. Example you offered of the car seat manufacturer … if car manufacturer implemented true JIT process, the responsibility of carrying inventory falls entirely on to supplier. Any event that may cause delay in production or while product is in transit will inadvertently cause unscheduled delay in manufacturing process/assembly. To avoid this, OEM would have to carry limited number of inventory on site or off site but with in close proximity to cover any type of unscheduled delays.
May 2, 2012 @ 5:06 pm
No! The customer carries no inventory of seats and neither does the supplier. Based on the actual final assembly sequence of the car maker, the seats are assembled, delivered and mounted without ever between stored. It is not easy to set up, but a wonder to behold once it works.
May 2, 2012 @ 6:29 am
Comment in the Operational Excellence discussion group on LinkedIn:
May 2, 2012 @ 6:30 am
@Eric Schmitz – The issue of single sourcing came up with the Aisin Seiki fire of February, 1997. Aisin Seiki was the single source for proportioning valves to Toyota in Japan, and the fire brought all Toyota plants in Japan to a standstill in four hours, with recovery taking six weeks.
Toyota’s long-term response was not to develop another supplier as a second source but to ask Aisin Seiki to make these parts in more than one plant. The effect in terms of protecting the supply chain is the same, but it does not weaken the bond between customer and supplier.
But that is in the car industry. In the semiconductor production equipment industry, demand is much more unstable, and a machine shop producing parts may be faced with a sudden doubling of the demand, or massive cancellations. I know of one such machine shop that made an second-sourcing agreement with a competitor to have surge capacity without over-investing. The customer ended up with dual sourcing, but it should be noted that the arrangement was initiated by the supplier, not the customer.
To answer your question precisely, as far as I know, committed, single-sourcing relationships are part of the TPS approach to supply chain management. When you apply Lean in other industries, single-sourcing may not always be feasible, but involving a second-source should not be a unilateral decision by the customer, as such a decision would destroy the confidence required for a collaborative relationship.
May 3, 2012 @ 5:18 am
Comment in the Operational Excellence discussion group on LinkedIn:
May 3, 2012 @ 5:42 am
You single-source in order to have the closest, most open partnership with your suppliers but, regarding international plants, there are also other considerations, including the need to be perceived as a good corporate citizen and to defuse the social tension that a foreign-owned plant can create.
In the US, Toyota and Honda brag about building cars with a higher domestic content than Ford or GM. And training local suppliers in their production systems also enhances their image. Sometimes they adopt different approaches than in their domestic market. In the US, for example, Toyota trained Transfreight in Lean logistics and uses it as a third-party logistics provider (3PL). In Japan, Toyota does not use 3PL.
Rather than saying “this is the JIT answer” and make it a dogma, I think it is more useful to consider what companies are doing and ask why. Then you can make up your mind about whether you want to do the same.
May 2, 2012 @ 6:32 am
Comment in the Operational Excellence discussion group on LinkedIn:
May 2, 2012 @ 6:33 am
@Frederick Popoola – JIT is not a rigid set of practices but an approach to managing your logistics and your supply chain, and you have to adapt what you do to the infrastructure you have.
Where roads and communication systems are inadequate, chances are your supplier base is as well, and there are many different possible responses. One is a higher level of vertical integration than in more advanced economies. If you can’t buy it and get it delivered from a reliable supplier, you make it yourself.
These are issues you need to consider before you build the plant. Wages should not be the only consideration.
May 2, 2012 @ 8:09 am
Comment in the SME Society of Manufacturing Engineers discussion group on LinkedIn:
May 3, 2012 @ 6:14 am
Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for… discussion group on LinkedIn:
May 3, 2012 @ 10:45 am
Comment in the IndustryWeek manufacturing network discussion group on LinkedIn:
May 3, 2012 @ 11:10 am
I don’t speak for your customers.
When writing about disruptions that can be anticipated and responding quickly, I was thinking of specifics:
Just because contingency planning in a Lean supply chain does not involve keeping two months of everything on a shelf does not mean it doesn’t exist. For example, having a Logistics group in Chicago monitoring, among other things, the weather and making the decision to reserve the trucks IS contingency planning. It is the sort of thing I mean by vigilance.
So far, very few companies are capable of having anything other than adversarial supply chain relations. Collaborative relations are difficult to establish and easy to break. Few managements understand what it takes to make them work and that what is at stake is the best protection they can get against VUCA.
By the way, I didn’t know VUCA and had to look it up. It stands for: “Volatility, Uncertainty, Complexity and Ambiguity.”
May 3, 2012 @ 4:45 pm
Comment in the IndustryWeek manufacturing network discussion group on LinkedIn:
May 4, 2012 @ 10:38 am
Paul Novak, CEO of the thirty-eight thousand member Institute of Supply Management, speaking to Patricia E. Moody of Blue Heron Journal, sees big changes ahead for the profession, and for manufacturing as well. Looking back on supply management’s last few years, Novak summed up the changes, “”Our world got bigger – supply management will own manufacturing.”
Another article that confuses Lean with reckless | Michel Baudin's Blog
July 23, 2012 @ 9:37 am
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