Just-In-Time Management

Conceptual Overview

The creator of the just-in-time production management system, Taiichi Ohno, believed that traditional mass production is inherently inefficient and produces wastes at every stage of the production process. He identified seven wastes of mass production systems:

• 1.
  Waste arising from overproducing
• 2.
  Waste (time) arising from waiting
• 3.
  Waste arising from transport
• 4.
  Waste arising from processing itself
• 5.
  Waste arising from unnecessary stock-on-hand
• 6.
  Waste arising from unnecessary motion
• 7.
  Waste arising from producing defective goods

Mass production often generates overproduction, produces bottlenecks in the flow of production, moves [Page 743]work back and forth across the manufacturing plant, retains inefficient processes, maintains large levels of stock-on-hand, permits nonvalue adding movement across production lines, and produces defective goods because of production pressures. An important goal of just-in-time production management is the elimination of these wastes.

Traditional mass production management is based on a push system, whereby marketing forecasts tell the factory what to produce and in what quantity. Raw materials and parts are purchased based on these forecasts, stored and forced into the front end of the production process, and subsequently pushed through each succeeding step of the process. Push-mass production systems produce significant inventories of work-in-progress goods, as well as finished goods. Contrary to traditional mass production, just-in-time production management is a pull system. The just-intime production schedule does not exclusively originate in market forecasts, but from the customer: the demand is made on factory assembly by pulling finished products out of the factory.

Production control in pull manufacturing systems is provided by the use of a kanban, a visual signal, card, or signboard that controls the movement of materials between workstations, as well as replenishing those sent downstream to the next workstation. The Toyota Production System uses two types of kanban to regulate production: a production kanban signals the need to produce more parts, while a conveyance kanban signals the need to withdraw parts from one work center and deliver them to the next workstation.

Just-in-time production management attempts to drive inventory levels to zero. Although this is impossible in practical terms, its real objective is to minimize raw materials and work-in-progress inventory to the maximum possible extent without shutting down production. Proponents of mass production systems believe that excess inventory levels are beneficial because one does not have to worry about on-time materials delivery and permits manufacturing to continue during machine breakdowns. However, holding excessive inventory carries significant costs: the cost of warehousing raw and work-in-progress materials and finished goods, as well as the costs associated with spoilage, deterioration, and obsolescence of goods. Producing and holding excessive inventory is wasteful and does not ultimately provide value to the customer. A major drawback of holding excessive inventory levels is that it acts to mask production problems that go unnoticed and unresolved, repeated over and over, while consuming resources and delaying process and product quality improvement. Unmasking the production system's problems through the elimination of inventories is a major strength of just-in-time production management.

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