When the Just-in-Time concept is applied properly, it addresses the needs of lean manufacturing and distribution as well as continuous improvement. And like any of the topics MH&L covers, they are intended to not only highlight trends in the industry, but to help you analyze your operations and maybe find a better way to work.
Too many times we see good ideas and programs go bad for all the right reasons. People latch onto an idea that is supposed to solve their problems and benefit their company without fully understanding that idea.
JIT is one of those good ideas. When an idea or program becomes popular, it gets a name, an acronym, or a title. People jump on the bandwagon, read all about it, maybe attend a seminar, then they implement it. Don’t get lulled into this trap.
When approached in this manner, a good program can fail in the worst way. When it does, it leaves a bad taste in everyone’s mouth and makes the next good idea that much more difficult to implement. I’ll give you two examples.
Company “A” was supplying a customer in a JIT fashion. Inventory was delivered to the assembly line with few or no hiccups in the system. They also ran their own operation in the same manner. They received inventory, built the sub-assemblies and shipped to their customer. They ran their operation without a warehouse and had less than four hours of inventory under roof at any one time. In fact, this was a key performance indicator (KPI) that they reported to their customer.
To quote the late Paul Harvey, here’s the rest of the story. Company “A” thought that they had really implemented JIT and were proud of it, but in reality they were only going through the motions. On the inbound side they only had four hours of inventory under roof—but the balance of their inventory was staged in trailers in the yard. They would pull in a trailer, unload what was needed and restage the trailer. In essence they had four hours of inventory “under roof,” but slightly more “on-site.”
On the outbound side, there was a shift’s worth of inventory on trucks staged a block away for the assembly plant. Just like clockwork, the trucks would arrive at the assembly plant and keep the assembly line supplied, Just In Time.
Company “B” gave a whole new meaning to JIT. They were designing a brand new distribution center. Having operated in a facility that was 10 years past its useful design life, they were looking forward to an efficient design and application of the latest productivity tools. Not only were they investing in equipment, but they were also reviewing their process so that when they moved into the new facility they could hit the ground running and maximize their operation’s efficiency.
As part of the review or design process for the new facility, they were also looking at the inventory. They knew that to be as efficient as possible they needed to eliminate excess and obsolete inventory and only deal with A and B items when possible. The slow-moving excess and obsolete inventories would only detract from the operation.
When asked about their plan for this inventory, they said that it would be stored on trailers in the yard and picked once a month. Note: It is never a wise decision to plan for trailer storage moving into a new facility. By definition, you are already out of space.
Their idea of inventory control wasn’t Just-In-Time, but rather Jammed-In-Trucks.
If you are going to implement a program, make sure you understand it completely—including the work involved in a successful implementation. Make no mistake, it will take time, money and commitment to make any program work. But when done correctly, your company will be one of the lean, mean fighting machines and ready to take on any competition.
Don Kuzma is an industry analyst based in Cleveland who specializes in distribution center design and management. He can be reached at [email protected].