Nonsense about JIT

10/4/2001
Permalink   |   Post a Comment   |  

In the days since the terrible events of September 11 we've seen many mentions in the American media of the impracticality of Just-in-Time supply of parts and calls for massive warehouses to buffer supply chains. The problem, of course, is that this advice is wrong, and it's hurtful to those of you implementing lean. Let's take just a minute to think this situation through.

In almost every value stream, there will be some inventory at points where the product cannot flow. This inventory will typically consist of finished goods at the shipping point in each facility, work-in-process between fabrication steps within each facility, and raw materials (incoming goods) at the receiving end of each facility.

In the current situation, with uncertainty about deliveries from upstream and gyrations in demand from downstream, you may feel it necessary to increase the size of your finished goods and raw materials stocks. However, these extra stocks should be kept aside -- out of the path of the value stream but not in some remote warehouse -- and their presence does not in any way effect the logic of Just-in-Time parts supply. Each downstream process needing parts should still signal directly to the upstream supplying process when more parts are needed and these should be supplied frequently in small lots. The one adjustment necessary over time, if bottlenecks persist at border points, may be longer reorder times. (Logically this is the same as assuming that suppliers have suddenly moved further away.) Otherwise lean production can proceed as in the past.

All this said, the current crisis does beg us to ask a very simple question central to lean thinking: Why are the value creating steps along most value streams today so far apart, with many border crossings? Why not compress your value streams for each product family to put all of the value creating steps in one area (as at Toyota City) or even in one facility? Depending on factor costs and customer expectations, the appropriate location may be in a high labor cost area -- close to end users -- or in a low cost area -- for price sensitive products where customers are willing to wait. In either case, you will be better off if as many steps as possible are co-located.

 

0 Comments | Post a Comment
Other Jim Womack Related Content

Books

Articles

  • The Power of Personal Yokoten
    Personal yokoten to teach new mindsets and attitudes is an activity all of us can perform out in the world every day with every manager, team leader, and team we touch, says Jim Womack. He believes we can transfer new, lean ideas about management and leadership in our civic roles and even in our families as we think through tough issues.
  • The Power of Yokoten
    I’ve written a lot about yokoten in recent years – the practice of spreading good (lean) ideas horizontally between and across organizations from their point of initial success (“Yoko” means in Japanese horizontal.) It turns out that this is hard, even for the methods and tools needed to create lean value streams. Lean requires practice, even when the theory is clear and simple, and it’s hard to find enough teachers with enough experience and time to lead the cycles of practice needed for sustainable yokoten.
  • How A Complete Lean Production System Fuels Global Success
    In this article prepared for the 2007 relaunch of the seminal book The Machine that Changed the World, co-author Jim Womack correctly forecast Toyota's rise, and identifes the key elements of a dynamic lean production system.

Webinars