Today we'll discuss JIT, Just In Time, which is one of the two pillars of the Toyota Production System.
[Intro Video]
Hi, this is Mike Negami, Lean Sigma Black Belt. In an earlier video, I talked about
"Visual Management" being the purpose of Just In Time. If you haven't watched it, please
click this link and watch the video. Some people misunderstand that Just In Time
and the Kanban System are the same things. Just In Time is the philosophy of producing
or procuring "the right items at the right time in the right amounts", then eliminating
waste thoroughly. That also helps to eliminate "Waste, Overburden, Unevenness" and improve
production efficiency. This concept works well not only for manufacturing
operations but is also greatly effective for service operations. For example, if you
replace 'items' with 'information' in the Just In Time statement, it becomes "the right
information at the right time in the right amounts", and if you replace it with ‘personnel’,
it becomes "the right personnel at the right time in the right amounts". As you can see,
it's very applicable to service operations too.
On the other hand, the Kanban System is a unique production system that Toyota has developed
in order to achieve Just In Time. In short, Just In Time is the goal and the Kanban System
is the tool. Moreover, in order to achieve Just In Time,
it's not enough to just complete the Kanban System. Unless you’re practicing the entire
Toyota Production System, such as Heijunka (Production Leveling), Small Lot Production
and Takt Time, just to name a few, you can't achieve Just In Time.
In fact, there are many cases where only the Kanban System was installed and unfortunately,
they just increased their inventory and failed. I’ve mentioned many times in my videos that
one of the great things about Toyota is that they have been teaching their best practices
to other companies and other countries. Today, the Just In Time concept has pervaded many
companies and industries all over the world. Originally, inventory was the main subject
in Just In Time. Can you think of other production methods?
One is a method that doesn't carry any inventory at all. It is “Make to Order”. There are
many companies that assemble after taking orders, which is “Build to Order”. One
of the famous ones is the computer maker, Dell. However, they still have to carry material
inventories for the parts before assembly. If you don't have any material inventory at
all, you have to purchase materials after taking orders. If so, lead time - the time
from taking an order, to delivery - would become quite long, then sales opportunity
losses would occur all the time. Another way is “Mass Production”. It purchases
large amounts of raw materials when those prices are low, and reduces their product
cost per piece by mass production with large equipment using belt conveyers. Decades ago,
Ford became the number one in the world with this method.
Toyota Motor Corporation's founder Kiichiro Toyoda went to the United States and visited
Ford's plants. He was shocked and amazed by their scale and large equipment. However,
he thought that this method didn't suit a small land like Japan and the Toyota family's
philosophy. Therefore, he searched for another method.
The major issue of the Mass Production is that it requires a lot of raw material inventory
and finished goods inventory. While it remains in the company, inventory does not make any
profit. Additionally, there are storage fees and inventory control costs.
As an even bigger problem, the bigger the inventory you had, the more likely problems
in your process would be hidden. Toyota considers this is the biggest problem.
Also, like the present era, when product trends quickly change significantly, excessive inventory
will immediately turn into dead inventory. In such an era, the Just In Time philosophy
is what's needed. By practicing JIT, we can realize High-mix Low-volume Production, minimize
both inventory and sales opportunity losses in a well-balanced manner, and eliminate excessive
inventory control costs and logistics costs. In the Just In Time application, all your
process steps and all your employees have to achieve "the right items at the right time
in the right amounts". It's not easy. What made that possible was the "Kanban System".
I'll explain about that more in the next video. Thank you very much for viewing. Please click
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