Why Everybody's Talking About "just In Time"

A new approach to reducing costly inventories may seem like a lot of common sense, but for many U.S. companies, it is revolutionizing the way they run their plants.

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The cartoon is a simple illustration of a fisherman sitting in a small boat in the middle of a lake. In the first frame, the water level in the lake (meant to represent inventory) is high, concealing rocks (potential problems) on the lake's bottom; in the second, the water level has dropped, revealing the rocks and allowing the fisherman to more safely steer his course.

What the cartoon illustrates is a system, called Just-in-Time, that has already changed the fundamental ways in which companies view their manufacturing operations. As a philosophy JIT targets inventory as an evil presence that obscures problems that should be solved, and that, by contributing significantly to costs, keeps a company from being as competitive or profitable as it otherwise might be. Practically speaking, JIT has as its principal goal the elimination of waste, and the principal measure of success is how much or how little inventory there is. Virtually anything that achieves this end can be considered a JIT innovation.

Take as an example the reduction of machine setup times. Long setup times require long runs in order to justify the expense; product not immediately required by customers becomes dead inventory, which then takes up space, gets in the way of employees, and contributes nothing to a company's bottom line. If, by eliminating one adjustment on a machine, setup time can be reduced, smaller runs, which minimize inventory and are more responsive to changing customer demands, become possible. That is a JIT innovation, as are requiring more frequent deliveries from vendors, which reduce a company's stockpile of raw materials or parts; moving machines involved in a process closer together (no forklifts ferrying dead inventory); and transporting parts to the point where they are needed only as they are needed (no piles of inventory waiting by each machine).

The point is to make sure that each person involved in the manufacturing process gets what he needs "just in time."

It may seem obvious, something that industrial engineers should have been doing all along, but, somewhere between Henry Ford I and us, tradition took precedence over innovation. Manufacturing, theory and machine and factory design became more set in their ways than circumstances warranted.

But JIT, which is generally regarded as a Japanese development (there it is known as kanban hoshiki, or "card system"), has recently become a hot, top-of-the-agenda topic in this country. Automotive Industry Action Group, a three-year-old productivity task force made up of Big Four representatives, has a JIT project team, presents seminars, and has developed a four-hour videotape series on the subject. And the American Production and Inventory Control Society has launched a JIT "crusade"; at its annual convention in New Orleans this past November, some 4,500 chief executive officers, plant managers, and inventory specialists attended standing-room-only addresses on JIT. "Just-InTime, Just-In-Time," one non-JIT lecturer groused to his wife over coffee. "No one came to hear my presentation."

A growing number of U.S. companies are making use of the approach. Omark Industries, a $300-million-a-year corporation based in Portland, Oreg., last year saved itself an estimated $7 million in inventory carrying costs with its own version of JIT, which it calls ZIPS (Zero Inventory Production System). T. D. Shea Manufacturing Inc., of Troy, Mich., a $4-million-a-year producer of plastic products for the automotive industry, calls its brand Nick-of-Time. And, at the Harley-Davidson Motor Co.'s engine plant in Milwaukee, where it is used to help restore the company's edge in the large-motorcycle market, it is known as MAN (Material-asNeeded). At least three universities are now offering courses in JIT.

"In the U.S., we've sold our soul to Murphy's law," admonishes Edward J. Hay, a JIT consultant with Rath & Strong Inc., of Lexington, Mass. "We believe that there's some mystical force out there that's going to do us in -- that's going to shut down a line -- and so we protect ourselves with inventory- The Japanese believe that human error, machine breakdowns and defective parts can be prevented and that inventory simply hides the problems and keeps companies from achieving their goals."

During the 1950s, Hay explains the Japanese, recognizing that they would have to upgrade their manufacturing expertise significantly if they were to make additional inroads in world markets targeted quality and the elimination of waste (read: unnecessary inventories). U.S. statisticians Edward Deming and Joseph Juran helped with the first, preaching statistical process and quality control (ironically, Japan's most coveted industrial honor is the Deming award for quality), while Taiichi Ohno, then a vice-president of Toyota Motor Co., assembled the fundamentals of JIT. Together, the two wreaked havoc with the U.S. automobile industry. "The Big Four," Hay recalls, "couldn't understand how the Japanese could import all of their raw materials, produce a quality car ship it 7,000 miles, and still enjoy a $1,200 to $1,500 cost advantage in the American market." When they sent study groups over to Japan to find out, they discovered that slave wages was not the answer.

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