Just-in-Time in the Factory

Step back in time to 1950. Japan, devastated by war but eager to reenter global markets, examines its factories and management practices. At Toyota, Taiichi Ohno finds that the company's factories are only fractionally as efficient as their American competitors. Ohno and Dr. Shigeo Shingo, inspired by American efficiency experts such as W. E. Deming and Frank and Lillian Gilbreth, examine the entire factory process and propose a radical restructuring. The goal is to reduce waste, improve quality, and ultimately return Toyota to profitability.^[1] The new approach to the factory will be known by its central tenet, 'just in time' inventory management.

But it includes other key factors as well. It incorporates an unprecedented emphasis on quality, and a fundamental respect for the humanity of the worker. It is instrumental in bringing Toyota and Japan back to the world stage as an industrial superpower. By the 1980s this was the pattern that American industry hoped to emulate or outdo.

Just-in-time inventory management and its characteristic kanban control cards are at the center of it all.^[2] As the term suggests, just in time describes a production system that does not rely on a large inventory of components stored at each factory or in central warehouses. Instead, each production station maintains a small store of only those items it needs for orders currently being processed. When the inventory becomes low, the station places an order from its supplier, and the supplier is expected to fulfill the order almost immediately. Production flow is controlled locally, using the kanban inventory-pull cards, instead of being planned and monitored by a central system.

The most obvious advantage of the system is that the cost and potential waste of maintaining a large inventory is reduced. The company buys only what it needs from its suppliers, and it makes the purchases just in time to use them. In a factory setting, supplies may be requested several times a day. The suppliers themselves may be production units within the factory, or they may be external to the company. Capacity of suppliers and the main factory is reduced to exactly what is required.

Beyond inventory cost control, an equally important goal of the system is to provide significant improvements in quality. Toyota strives for zero-defect final products, since any defective product reflects on the quality of the entire brand. The small lots from suppliers allow each item to be inspected at the production station before it is used. Defects are returned immediately to the suppliers, representing a quantum improvement over the traditional approach in which thousands of items may be purchased and warehoused with only spot checks for quality. Because defects are returned immediately, suppliers can quickly correct any error in their processes. This also encourages a continual improvement of process and quality, referred to as kaizen.

To further reduce waste, workers are expected to be skilled in many tasks. Not only do they perform many of the set-up and clean-up activities associated with their workstations, but they are able to step in and help with coworkers' tasks when demand requires. This allows skilled labor to be supplied 'just in time' as well.^[3],^[4]

The multiple skills of workers, the team responsibility for the quality of output, and the dependence and trust in suppliers all recognize the importance of the workforce. Workers are expected to have a profound understanding of their tasks, and their suggestions are the key to making kaizen, the continual improvement of the process, possible. The worker's proactive participation is essential to the just-in-time factory.^[5],^[6]

By the 1980s, the Toyota approach was so successful that it was imitated by many American and European factories. Corporations using just-in-time or 'zero inventory production' systems included Hewlett-Packard, General Electric, Tektronix, and many others. Related practices include quality functional deployment (QFD), total quality management (TQM), and quality control circles (QCCs). Some of these peaked as fads and were later discounted, but the core directions remain very much alive.

Although just-in-time processes were designed for the factory, many of the ideas are also applicable to service industries. A similar focus on quality, efficiency, and zero-defect production has been the key to success for private mail services such as Federal Express. Even accounting firms have found it applicable. And as we shall see, it is well suited to user interface design within the software factory model used by Nokia.

^[1]S. Shingo, A Study of the Toyota Production System from an Industrial Engineering Viewpoint (rev. ed.). Cambridge, Mass.: Productivity Press, 1989.

^[2]Y. Monden, Toyota Production System, an Integrated Approach to Just-In-Time, 2d ed. Norcross, Ga.: Institute of Industrial Engineers, 1983.

^[3]J. P. Alston, The American Samurai. Berlin/New York: De Gruyter, 1986.

^[4]R. L. Harmon & L. D. Peterson, Reinventing the Factory. New York/London: The Free Press, 1990.

^[5]I. Majima, The Shift to JIT, How People Make the Difference. Cambridge, Mass.: Productivity Press, 1992.

^[6]M. J. Schniederjans, Topics in Just-in-Time Management. Boston: Allyn & Bacon, MA. 1993.