JIT for Small Manufacturers

ABSTRACT: SYSTEME DE "FOURNITURE SUR COMMANDE "POUR PETITS PRODUCTEURS JIT (systeme de fourniture sur commande) est generalement employe par les grands producteurs faisant l'objet de commande de routine. Cependant, les petites compagnies avec ateliers peuvent a ussi beneficier de facon significative de l'application de JIT, ou des systemes de production/livraison sur commande, par elimination de la necessite de conserver trop de produits en depot. Les petits producteurs ont souvent un taux de production assez bas, ce qui implique habituellement une division du travail a moindre echelle, un moins grand nombre d'ouvriers specialises, davantage d'equipement a usage multiple, et moins d'automatisation. Ces caracteristiques facilitent, pour eux, l'emploi de technologies de groupe et d'employes a fonctions diversifiees, deux elements essentials du JIT. Les petits producteurs ont aussi plus de souplesse et un esprit d'entreprise qui leur permet de s'adapter plus facilement que les grandes entreprises. During the 1960s, Toyota developed the just-in-time (JIT) system in order to streamline its manufacturing operations. Soon after, JIT became popular throughout Japan. According to one estimate, the Japanese can build a car and ship it to the U.S. for $2,000 less than the cost of an American-made car. Five hundred dollars of this cost advantage is associated with the application of JIT in the Japanese firm. ' Intrigued by the success of the Japanese, U.S. firms are now using JIT. According to one expert, many American companies, including most of the Fortune 1000 industrial corporations, have JIT efforts under way. The primary reason behind this high acceptance of JIT in the U.S. is the significant benefits it brings. As one expert put it, the U.S. manufacturer using JIT can: reduce inventory and lead time by something like 90 percent, cut labor costs 10 to 30 percent, reduce set-up time by 75 percent, manufacturing and storage space by 50 percent and improve the quality of manufacturing by 75 to 90 percent. JIT is most appropriate for production of complex standard consumer products such as autos, televisions, motorcycles, and copiers. This does not mean, however, that the application of JIT is limited to these industries or to large companies. Small companies, as well as large ones, in a variety of industries, could adopt JIT. In fact, many Toyota suppliers that have adopted JIT are very small companies, as are many suppliers of Hewlett-Packard, GE, Ford, and Xerox. JUST-IN-TIME PRODUCTION SYSTEM: OVERVIEW The objective of JIT is to eliminate waste by producing an item "just in time" to be sold or used by the next work station, eliminating the need for much inventory. Proponents of JIT consider inventory the root of many problems in operations. Inventory is expensive. As inventory increases, so do associated costs, including the opportunity cost of capital, storage facilities, labor costs, material handling costs, paperwork, sophisticated computerized inventory control system costs, pilferage, obsolescence costs, and taxes. Even more important is the fact that inventory hides operations problems, and undiscovered problems cannot be solved. Large inventory can cover the buyer's mistake in ordering the wrong part, or a worker's mistake in producing defective parts, or a machine's inability to produce within tolerance, or errors by schedulers, supervisors, maintenance crews, and others. With a very low inventory, any mistake causes a disruption in the operation, attracts attention, and is identified and corrected. This process helps to streamline the operation. Exhibit 1 gives examples of JIT benefits drawn from a number of U.S. firms. In the absence of a large inventory, JIT attempts to minimize sources of uncertainty and/or to design a more flexible system that can better adapt to changes. Hence, the JIT system is quite different from conventional systems, and adoption of JIT requires a major overhaul of the operations system. …