Development of JIT/Lean

We have identified Ohno as the creator of the just-in-time/ Lean system, and it is true that he was responsible for devel­oping the system as it is now known. However, other names should be remembered, at least to the extent to which they contributed by inspiration. The first is Henry Ford, creator of mass production. Because of Ford’s great appreciation of the expense of waste, Ohno said that if Ford were alive today, he would have developed a system much like Toyota’s. In his 1926 book Today and Tomorrow, Henry Ford talked about the waste of inventory in raw materials, work-in-process, and finished goods in the pipeline to market—and about the efforts taken to reduce the investment in this waste. Between 1921 and 1926, Ford output doubled, but investment in in­ventory of raw materials, semifinished goods, and finished goods actually declined. Based on 1921 performance, Ford could have had $170 million tied up in this inventory but in fact had (in 1926) less than $50 million. Ford also recog­nized the waste arising from transportation, waiting (time), and inefficiency on the factory floor. He believed in plan­ning ahead to eliminate the waste before it happened. This is very contemporary thinking, and Ohno may be correct that Henry Ford, had he been living in the past 40 years, might well have developed a Toyota-like system. When Ohno wrote his book on the Toyota Production System, it was titled Just­in-Time for Today and Tomorrow. It is not known whether the book’s title was a tribute to Henry Ford’s book, but it is at least an interesting coincidence.

Ford was a great influence on the Toyoda family— Sakichi, Kiichiro, and Eiji. Sakichi Toyoda, a designer of looms and founder of Toyota, is credited with the concept of autonomation, or automation with a human touch. His auto­matic loom could determine whether a thread was broken or missing, shutting itself down instead of making a defective product.³ Autonomation is one of the two pillars of the TPS, the other being just-in-time/Lean. Kiichiro Toyoda, Toyota’s founding chair, planted the seeds of the TPS prior to World War II with his planning for the introduction of the assembly line at Toyota’s Kariya plant. He wrote a booklet about how production was to work, and it contains the words just-in­time. His original meaning in English was “just-on-time,” intending that things be done exactly on schedule, with no surplus produced. World War II halted further work on the system, and after the war, it was Taiichi Ohno who revived and developed it into the present-day⁴ Toyota Production System, which we call JIT/Lean.

Eiji Toyoda, Toyota’s president and chairman from 1967 to 1994 and Taiichi Ohno’s boss for 35 years, is credited with the JIT/Lean philosophy: “In broad industries, such as auto­mobile manufacturing, it is best to have the various parts ar­rive alongside the assembly line just-in-time”⁵ Eiji Toyoda’s greatest contribution may have been his support for Ohno’s trial-and-error approach, shielding him from the inevitable controversy of his endeavors. Ohno claims that Eiji never told him to back off or slow down. He absorbed the heat and let Ohno press on unimpeded.⁶

Taiichi Ohno’s motivation, like that of the Toyodas, was to eliminate all forms of waste from the production process. He was well schooled in the Ford mass production system and observed that the system itself created waste in huge proportions. If one was determined to violate the seven wastes, a mass production line would do it. Mass produc­tion is prone to overproducing; having people or materials waiting; transporting work-in-process back and forth across the plant; retaining inefficient processes; maintaining costly inventories of stock on hand; requiring non-value-added motion because lines were set up to accommodate product, not workers; and producing defective goods because the line must continue to move. The italicized words represent the seven wastes.

Ohno believed that a production system based on just- in-time/Lean could eliminate the wastes. To appreciate fully what is involved here, one must understand that the mass production system as defined by Henry Ford was not ir­rational. Ford’s objective was to produce huge quantities of the same product using an assembly line technology that required little expertise of its workers. The result was a reli­able, cheap car that millions of buyers could afford. In that, he and others who used his mass production technology were eminently successful. But mass production is inflex­ible and wasteful—inflexible because it is driven by the great stamping presses and other machines that do not easily ac­commodate a variety of products, and wasteful because the underlying philosophy of mass production is that the line must crank out products that spring from market forecasts in a never-ending high-volume stream. To support that high-volume stream, there must be stockpiles of the materi­als that go into the product because the lack of a single part can shut down the mass production line. Machines must be capable of high output and are so costly they cannot sit idle without creating trauma in the accounting department. Therefore, even when fenders are not needed, the machines must continue to stamp them out. The overproduction will be warehoused until it is needed—perhaps when the press breaks down. So it is with all the parts and subassemblies that make up the complete product. They are stored in large quantities, just in case something goes wrong in their pro­duction or transportation cycle, when they might be needed to keep the final assembly line moving—fenders for a rainy day, so to speak.

This is the norm with mass production. The problem with this is that the building space in which these parts and materials are warehoused is expensive. It requires a small army of people to care for the stored materials and parts, and these people add not a whit to the ultimate value of the product. Spoilage occurs by loss, damage, or obsolescence of stored parts—all waste: part waste of inventory, part waste of overproduction.

Mass production advocates emphasize that the lines need to keep moving and that the only way to do this is to have lots of parts available for any contingency that might arise. This is the fallacy of just-in-time/Lean according to mass produc­tion advocates. JIT/Lean, with no buffer stock of parts, is too precarious. One missing part or a single failure of a machine (because there are no stores of parts) causes the JIT/Lean line to stop. It was this very idea that represented the power of JIT/ Lean to Ohno. It meant that there could be no work-arounds for problems that did develop, only solutions to the problems. It focused everyone concerned with the production process on anticipating problems before they happened and on develop­ing and implementing solutions so that they would not cause mischief later on.⁷ The fact is that as long as the factory has the security buffer of a warehouse full of parts that might be needed, problems that interrupt the flow of parts to the line do not get solved because they are hidden by the buffer stock. When that buffer is eliminated, the same problems become immediately visible, they take on a new urgency, and solutions emerge—solutions that fix the problem not only for this time but for the future as well. Ohno was absolutely correct. JIT/ Lean’s perceived weakness is one of its great strengths.

Mass production is a push system (see Figure 21.5). The marketing forecast tells the factory what to produce and in what quantity; raw materials and parts are purchased, stored, forced into the front end of the production process, and subsequently pushed through each succeeding step of the process, until finally the completed product arrives at the shipping dock. It is hoped that by then there are orders for these goods, or they will have to be either stored or pushed (forced) into the dealers’ hands, a widespread practice in the automobile business. The whole procedure, from imperfect forecast of marketability to the warehouse or the dealer, is one of pushing.

What if the market will take only half of the predicted amount or wants none? What if the final assembly pro­cess can accommodate only two-thirds of the preceding processes’ output? These situations present big problems in terms of cost and waste, and they are common.

Just-in-time/Lean, on the other hand, is a pull system (see Figure 21.6; the term kanban in the figure will be clarified soon). The production schedule does not originate in a market forecast, although a great deal of market research is done to de­termine what customers want. The production demand comes from the customer. Moreover, the demand is made on the final assembly process by pulling finished products out of the factory. The operators of that process, in turn, place their pull demands on the preceding process, and that cycle is repeated until finally the pull demand reaches back to the material and parts suppli­ers. Each process and each supplier is allowed to furnish only the quantity of its output needed by the succeeding process.

Figures 21.5 and 21.6 also show a difference in the rela­tionship between the customer and the factory. In the mass production system, no real relationship exists at all. The market forecasters take the place of the customers and place demands on the factory months in advance of production. In the JIT/Lean system, however, the customer’s demand is felt throughout the system, all the way to the factory’s suppliers and even beyond that. The JIT/Lean system is simpler, elimi­nating entire functions such as material control, production control, and warehousing and stocking.

The simplicity of JIT/Lean production is most evident on the factory floor. In mass production plants, or even conven­tional job shops (low-volume, high-variety shops), it is almost never possible to tell from the factory floor how things are going relative to schedules. Parts of any product may be in any num­ber of disparate locations in a plant at any given time—in the machine shop, in the welding shop, on the line, or in storage. Computers keep track of it all, but even then, it is difficult to track a given product through the plant or to track its status at a given point in time. On the other hand, JIT/Lean, being a very visual process, makes tracking easy—even without computers. Parts have no place to hide in a JIT/Lean factory. The only work- in-process is that for which the process has a kanban (see the discussion of kanban in the section titled “Process Problems”).

The simplicity of today’s JIT/Lean belies the difficulty Ohno encountered in developing the system. Because pro­duction must stop for a missing part, a process problem, or a broken machine, methods had to be developed to prevent these occurrences. These preventive strategies are explained in the following sections.

1. Machine Problems

There are two basic concerns about machines:

1. Is it running and turning out product?
2. If it is running, is the quality of its output product acceptable?

In a mass production environment, question 1 matters most. The tendency is to let the machine run as long as there is product, good or bad, coming out of it. Defective parts will cause problems farther down the line, but the consequences of shutting the machine down to fix it are seen as an even bigger problem. The JIT/Lean factory is more concerned about the second question because allowing a machine to produce defective parts permits the production of waste, and that, above all, is forbidden.

Common sense dictates that machinery should always be maintained properly, but that can be very difficult in a mass production plant. Unfortunately, in many North American factories, machines tend to be ignored until they break down, in keeping with the grammatically in­correct but telling expression “If it ain’t broke, don’t fix it.” Toyota eliminated the machine problem through a systematic preventive maintenance process that keeps all machinery in top shape, modifying it for better reliability or performance, and even predicting when parts should be replaced or adjustments made to maintain the highest- quality output. This has come to be known as total produc­tive maintenance or total preventive maintenance (TPM). It has found widespread acceptance in forward-looking companies. Total preventive maintenance, by keeping the machines available for use when they are needed, elimi­nates a great many line stoppages. We will discuss TPM in more detail later in the chapter.

2. Process Problems

Process problems can be eliminated when people thoroughly understand the processes, optimize them, and use statistical methods (i.e., SPC) to keep them under control. In addition, the processes are continually improved, most often through the efforts of the same people who work with them every day. Time is allocated for these kinds of efforts in all JIT/ Lean factories.

The most difficult conceptual problem with JIT/Lean is the precise control of production and the flow of material or parts through the complete production process. For that, Ohno developed the kanban to signal the pulls through the system. Mass production demonstrated that one should not start the control at the beginning of the process. Too many things can go wrong at the bow wave of the flow. Ohno de­cided that the control had to start at the output end of the factory. From this concept, he introduced kanban, which is a Japanese word meaning “card.” Ohno used kanban cards to trigger activity and the flow of materials or parts from one process to another. When a succeeding process has used the output of the preceding process, it issues a kanban to the pre­ceding process to produce another.

Although Ohno describes the kanbans as slips of paper in a vinyl pouch—close enough for “card”—kanbans have evolved to a number of forms. A square painted or taped on a workstation may be a very effective kanban. For example, a process produces a subassembly and places it on the marked area of the succeeding process workstation. When the suc­ceeding process uses the subassembly, the marked area—the kanban square—becomes empty and signals the preceding process to make another subassembly and fill the square. The same is done with totable bins. When the parts from a bin have been used, the empty bin is sent back to the preceding process as a signal for more production. Both of these kan­ban devices work when the part or subassembly in question is the only possible output of the preceding process. Should there be a variety of part or subassembly models, however, the kanban square alone will not provide sufficient informa­tion, and the bin with a descriptive card or the kanban card, or its electronic equivalent, must be used. (More information about kanban is provided later in this chapter.)

3. Lot Size

A final issue to be overcome by JIT/Lean production con­cerns lot size. Mass production is keyed to the largest pos­sible lot sizes: set up the machines and parts streams to make as many as possible of the same item, like Henry Ford’s iden­tical black Model T’s, before changing to another model or product. So-called economic lot size is still being taught in many universities. Just-in-time/Lean seeks to build in the smallest possible lots. The modern consumer demands va­riety. No auto company could survive today with a single car model, with each unit the same in all respects includ­ing equipment and color. JIT/Lean accommodates variety by being flexible. That is, the factory is set up so that changes can be rapidly implemented and at little cost.

Traditionally, it has been a major problem to change models on a production line because breakdown and setup of the machines that have to be changed take a lot of time. Hours and days and even longer for new setups are not un­common. Ohno saw that the inherent inflexibility of the mass production line was in the setup time for the machines. Too much setup time meant that a manufacturer had to have a second line—or even a new factory—for the other model, or the customers’ demand for the second model was simply ignored until the run on the current model was finished. By attacking the problem head-on, Toyota was able to reduce setup times to the point where they were no longer signifi­cant. Other companies, using the Toyota approach, found that they could quickly reduce setup times by 90% and even more with some effort.

Omark Industries was one of the first American compa­nies to study the Toyota Production System. Using Toyota’s techniques, it reduced the setup time for a large press from eight hours to one minute and four seconds.⁸ After setup time became irrelevant, it was possible to manufacture in small lots—even lots of one—thereby permitting the inter­mixing of models on the same line. This meant that cus­tomer responsiveness was possible without huge inventories of prebuilt stock in all models. It also meant that one produc­tion line (or factory) could do the work of several. This abil­ity is crucial if the factory is to respond to customer demand in a pull system.

The development of just-in-time/Lean produc­tion required more than the kanban, a point lost on many Westerners. JIT/Lean came about from the understanding of the seven wastes and the need to eliminate them. The key elimination of nearly all material and parts inventories dic­tated the requirement for reliability and predictability of the plant’s machinery and processes. This led to total productive maintenance and made necessary the use of statistical pro­cess control and continual improvement.

With the customer as the driver of production, the con­trol technique for production changed from push to pull, and kanban was introduced as the controlling system. The requirement for small lot sizes, both for elimination of waste and for responsiveness and investment economy, led to the effort to reduce setup time. With all of these factors in place, JIT/Lean was born. Without doubt, JIT/Lean, by any of its names, is the manufacturing system for today. It is adaptable to operations both large and small, high-volume/low-variety, and low-volume/high-variety as well as anything in between. In JIT/Lean, costs, lead time, and cycle time are reduced, quality is improved constantly, and both the customers and the producers and their employees benefit.

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.