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%ase Analysis Ma&ing the %oncepts 'or& - OP Wali The Just-in-Time (JIT) concept was initially used by Toyota Japan to eliminate waste at the workplace during the 1950s and 19 0s! JIT aims to eliminate waste through the e""icient use o" resources! #aste here means any acti$ity% material or operation that does not add $alue! The concept soon became a success mantra "or Toyota% and as usual% its #estern counterparts &uickly tried to emulate the method! #hile doing so% they made a lot o" interpretations o" the original concept! This resulted in $aried e'periences (not o" the e'pected kinds) "or se$eral companies as is e$ident "rom the case! The JIT "ramework% as adopted by Toyota% was use"ul in a speci"ic conte't! ($en Toyota could not deri$e the same bene"its "rom the JIT methodology in its a""iliates)units in other countries! The key elements o" the JIT philosophy are

*inding the root causes o" the problems and remo$ing them once and "or all +rocess simpli"ication ,educing manu"acturing throughput times% e""ecti$ely replacing traditional batch production by as close as one can get to continuous processing through the use o" cell manu"acturing and set-up reduction techni&ues -ynchronous supplier per"ormance matched to the production line .onstant endea$or "or &uality impro$ement

Impro$ing labor "le'ibility through cross training% so that one can switch people between tasks to cope with the e$eryday ups and downs in demand! To handle all these elements is a daunting task and needs abo$e a$erage capability and strong commitment "rom the management and employees! /perationally% waste elimination is at the core o" JIT application! 0arious areas o" waste are de"ecti$e material% transportation waste% o$erproduction% waiting time% processing waste% in$entory% mo$ement waste etc! #aste elimination is achie$ed through adopting a pull method to stretch e""iciency at $arious steps o" the production process! This procedure works in re$erse order! The method called Kanban ensures that only parts re&uired by the succeeding point are put in the bo' and pushed to the demanding point! There"ore% the bo' with a signal card acts as an in"ormation link as well as channel to enable "low o" material! The materials% parts% components are produced and deli$ered in the re&uired &uantity 1ust be"ore they are needed! In addition% time and cost re&uired to change "rom the production o" one part to another is reduced% thus cutting set up costs and promoting production in small

lots! This system helps minimi2e in$entory! ,eduction in in$entory pre$ents wastage o" space "or storing and also reduces in$entory carrying cost! 3y cutting down on waste o" machine hours% man-hours and material handling time are also reduced! 4ence% this becomes a classic case o" synchroni2ed in"ormation and material "low across the operation "loors and other processes in$ol$ed! 3ut along with the appreciation o" this method% one needs to dare the risk o" getting prepared "or tightly coupled processes (in"ormation and material)! In situations where material and in"ormation are closely inter-related% there remains no scope "or ine""iciency! This is because small issues multiply mani"old and create ma1or problems! +eople and procedures become $ital in any JIT implementation because the philosophy is much more than 1ust changing the production methodology! The working style% company culture% attitude to work and output users ha$e a lot o" bearing on the results o" JIT implementation! 5upta% 4olladay and 6ahoney ha$e mentioned "our components7 education and training program8 de$elopment o" a cooperati$e en$ironment rewards and incenti$e programs% and open communication and worker in$ol$ement as essential humanware critical to success"ul JIT adoption! 9s one can see in the case% Toyota:s culture to assimilate this methodology had e$ol$ed o$er time but the same was not true in the case o" Toyota adopting it "or units in other countries! /ne cannot ha$e a common success mantra "or all the products and processes while adopting the JIT concept! The conte't plays an important role in deciding the outcome o" such initiati$es! #hat applies to automobiles may not apply to processed "ood items or books or medicines! The set o" $ariables which are critical to one set o" products are not same "or the other! *or products where demand "luctuations are $ery high or the supply is $ery uncertain% the conse&uences o" using a JIT system can be "atal at times! -ame is true in the case o" processes also because it is essentially people who carry out tasks and take decisions at $arious nodes o" a process! The work culture% habits and attitudes $ary across di""erent industries% sectors and countries! There"ore% be"ore adopting the methodology% companies need to care"ully assess it "or suitability! To assess the suitability one needs to look at the entire supply chain right "rom the last tier suppliers to the end consumer! I" the JIT system brings e""ecti$eness at the production le$el% there is a possibility that the problem has been shi"ted to the supplier side! To ha$e prompt supply as and when demanded% the supplier needs to keep the in$entory ready accordingly! I" the concept is not stretched to the tails o" the supply chain% the waste which has been eliminated in some part o" the supply chain mo$es)accumulates at other places o" the same chain! The cost o" this waste is ultimately borne by the end consumer! There"ore% to make the concept e""ecti$e% especially on the global scale% the entire chain needs sensiti2ation towards collaboration ad$antages through JIT! JIT is a wonder"ul le$er but the le$erage can be e'plored only through more disciplined management planning% understanding% collaboration and will "or continuous impro$ement! /rgani2ations implementing JIT necessarily need to "ocus on the entire supply chain spanning suppliers% partners and customers! The author is professor, Indian Institute of Foreign Trade (IIFT), New Delhi. ; The I.*9I <ni$ersity +ress ! 9ll ,ights ,eser$ed! %ase Analysis J()* %ritical Success Factors - Bindu Narayan The Japanese approach to producti$ity emphasi2es on two "actors7 elimination o" waste and respect "or people! (limination o" waste is done by using a combination o" the "ollowing techni&ues)practices7

*ocused "actory networks .ellular layout =uality at source +ull production system <ni"orm plant loading Kanban production control system 6inimi2ed set-up times -mall-lot production Total producti$e maintenance -upplier network coordination!

9n interesting thing about JIT is that it does not necessarily re&uire hea$y in$estments in e&uipments or systems! -ome o" the techni&ues like Kanban are $ery simple% making use o" di""erent types o" cards to signal mo$ement o" goods! 6inimi2ed set up times are achie$ed not necessarily by costly technologies% but by doing things di""erently and utili2ing people and machines in an optimal manner! The cellular layout is a good e'ample% where the workstations are <-shaped and machines are positioned in such a way that one operator can simultaneously operate more than one machine! 9ny company can emulate all the abo$e techni&ues)practices! 4owe$er% the second element% namely the respect "or people has to be "urther in$estigated to understand the concept:s applicability in the global scenario! To compare the Japanese and global business en$ironments $is->-$is the concept o" JIT% the "ollowing points are worth considering7

+oyalty o, -or&ers* Japan has always stressed on li"etime employment "or their employees! <nlike India% where 1ob security is the main reason behind the lethargy "ound in public sector employees% the Japanese ethos is $ery di""erent! Job security makes Japanese employees more "le'ible and loyal towards their organi2ations! They go o$er-the-board to impro$e producti$ity! It would be di""icult to "ind such an attitude in countries like the <-% where ?hire-and-"ire: is the order o" the day! Subcontractor net-or&* Japanese industries work on long-term supplier-customer relationships! It is common to "ind speciali2ed suppliers supplying parts to a "ew selected customers! /n the other hand% certain companies maintain single suppliers pro$iding a $ariety o" components "or a single customer! It would be di""icult to de$elop such a supplier network in countries% where the economy thri$es on cut-throat competition! .ottom/roun0 management* The Japanese style o" management is more o" consensus than compromise and o" collaboration than con"rontation! @ecisions are taken a"ter in$ol$ing all the parties concerned and decisions o"ten come "rom the lowest le$els! The upper management concentrates on strategic decisions and operational decisions are le"t to the lower le$els! In most o" the de$eloped countries% it would be di""icult to "ind such a decision-making system! This is because% there% the upper management likes to ha$e a hold e$en o$er operational decisions! This in turn is due to the "act that the management is more about con"rontation and compromise! +ogistical issues* To make the JIT system a success% Japanese companies de$eloped a system o" "ocused "actories and supplier networks% where there are no large integrated plants! Instead% there are speciali2ed plants supplying to the ne't le$el in the supply change! The Japanese were able to drastically reduce the lead time% mainly because "actories were located in more or less the same geographical area! It would be di""icult to achie$e such reduced lead times elsewhereand especially in regions where companies depend on global sources "or raw materials! In addition to the abo$e problem areas% organi2ations trying to implement JIT can "ace certain other practical di""iculties7 Fluctuations in 0eman0* JIT system can work e""iciently only on the

basis o" ?"ree2e windows:% where the estimated demand is "ro2en and the production plan is based on this estimate! JIT systems cannot per se tolerate demand "luctuations beyond 10A! +ogistical issues* -mall-lot production is an important "eature o" JIT! *or e$ery single lot o" production% raw materials are sourced "rom di""erent points o" origin in small lots! This is achie$ed by hea$y coordination throughout the supply network! 3ut% this could lead to logistical problems! /ne drawback is that companies cannot le$erage on bulk transportation charges! -econdly% the "re&uency o" orders goes up! .ollecti$ely% these two issues result in increased transportation costs! In "act% in Japan% it was "ound that with more and more companies adopting JIT% the roads were getting congested with too many trucks mo$ing back and "orth! .ehavioral pattern* JIT is all about empowering people! In "actories with JIT system% workers are allowed to stop the production line using the Andon system under the principle o" Jidoka! /nce a de"ect is detected% the production may be stalled "or a couple o" hours be"ore the correcti$e action is completed! -uch a system will work only when the workers are skilled enough to identi"y the errors and responsible enough to call "or a stop o" production! 9n o$ereager worker or an under-skilled worker may cause unnecessary delay in the production schedule!

4a$ing said that implementing JIT e""ecti$ely and reaping its bene"its could be di""icult indeed% one should also keep in mind that i" properly implemented% the methodology can de"initely lead to $arious gains! /rgani2ations can hope to reap the "ollowing bene"its7 .ost sa$ings due to reduced in$entory le$els Impro$ed &uality due to close monitoring -pace sa$ing due to lower in$entories ,educed lead time due to better integration Increased producti$ity and better "le'ibility! The author is le turer in !perations "esear h, s hool of o##uni ations and #anage#ent studies ($%&$), %o hin. ,e"erence B 1C-0D-11-0C ; The I.*9I <ni$ersity +ress ! 9ll ,ights ,eser$ed