This article clarifies the difference between ‘Just In Time’ and the Kanban System, and explains what ‘Just In Time’ is and its application to service operations.
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JIT – ‘Just In Time’, which is one of the two pillars of the Toyota Production System
Hi, this is Mike Negami, Lean Sigma Black Belt.
In an earlier post, I talked about ‘Visual Management’ being the purpose of Just In Time. If you haven’t read it, please click the link below and read it.
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Some people misunderstand that ‘Just In Time’ and the Kanban System are the same things.
‘Just In Time’ is the philosophy of producing or procuring “the right items at the right time in the right amounts”, then eliminating waste thoroughly. That also helps to eliminate ‘Unevenness’, ‘Overburden’ and ‘Waste’ and improve production efficiency.
This concept works well not only for manufacturing operations but is also greatly effective for service operations. For example, if you replace ‘items’ with ‘information’ in the ‘Just In Time’ statement, it becomes “the right information at the right time in the right amounts”, and if you replace it with ‘personnel’, it becomes “the right personnel at the right time in the right amounts”. As you can see, it’s very applicable to service operations too.
What’s the Kanban System
On the other hand, the Kanban System is a unique production system that Toyota has developed in order to achieve ‘Just In Time’. In short, ‘Just In Time’ is the goal and the Kanban System is the tool.
Moreover, in order to achieve ‘Just In Time’, it’s not enough to just complete the Kanban System. Unless you’re practicing the entire Toyota Production System, such as Heijunka (Production Leveling), Small Lot Production and Takt Time, just to name a few, you can’t achieve ‘Just In Time’. In fact, there are many cases where only the Kanban System was installed and unfortunately, they just increased their inventory and failed.
I’ve mentioned many times in my articles that one of the great things about Toyota is that they have been teaching their best practices to other companies and other countries. Today, the ‘Just In Time’ concept has pervaded many companies and industries all over the world.
Comparison between ‘Just In Time’ and other production methods
‘Make to Order’
Originally, inventory was the main subject in ‘Just In Time’. Can you think of other production methods?
One is a method that doesn’t carry any inventory at all. It is ‘Make to Order’. There are many companies that assemble after taking orders, which is ‘Build to Order’. One of the famous ones is the computer maker, Dell. However, they still have to carry material inventories for the parts before assembly.
If you don’t have any material inventory at all, you have to purchase materials after taking orders. If so, lead time – the time from taking an order, to delivery – would become quite long, then sales opportunity losses would occur all the time.
Another way is ‘Mass Production’. It purchases large amounts of raw materials when those prices are low, and reduces their product cost per piece by mass production with large equipment using belt conveyors. Decades ago, Ford became the number one in the world with this method.
Toyota Motor Corporation’s founder Kiichiro Toyoda went to the United States and visited Ford’s plants. He was shocked and amazed by their scale and large equipment. However, he thought that this method didn’t suit a small land like Japan and the Toyota family’s philosophy. Therefore, he searched for another method.
The major issue of the Mass Production is that it requires a lot of raw material inventory and finished goods inventory. While it remains in the company, inventory does not make any profit. Additionally, there are storage fees and inventory control costs.
As an even bigger problem, the bigger the inventory you had, the more likely problems in your process would be hidden. Toyota considers this is the biggest problem.
‘Just In Time’
Also, like the present era, when product trends quickly change significantly, excessive inventory will immediately turn into dead inventory. In such an era, the ‘Just In Time’ philosophy is what’s needed. By practicing JIT, we can realize High-mix Low-volume Production, minimize both inventory and sales opportunity losses in a well-balanced manner, and eliminate excessive inventory control costs and logistics costs.
In the ‘Just In Time’ application, all your process steps and all your employees have to achieve “the right items at the right time in the right amounts”. It’s not easy.
What made that possible was the “Kanban System”. I’ll explain about that more in the next post.