There was a time when manufacturers talked about just-in-time deliveries of their production inputs (raw materials, components, supplies), then just-in-time-production or lean manufacturing. There is something missing in JIT and lean understanding which intimidates some manufacturers and service providers, and therefore causes them to “give up” without even trying. What do you mean, JIT?
Several years ago, I was sent by our corporate office to help one of our manufacturing plants with production ramp up and just-in-time deliveries to an OEM customer. The OEM was presented in Jeffrey Liker’s book The Toyota Way (1st edition) as a role model, a North American company that successfully adopted and implemented lean manufacturing.
JIT or Lean is broadly understood as “no more than four hours worth of components in this plant.” Or at least, that’s what I heard when I and other members of an Ontario (Canada) engineering association was in an educational tour of a Toyota site where they produce the legendary Corolla. Beyond a Toyota plant, I have also travelled to and observed operations in many other automotive OEM sites that operate lean or Just-in-Time.
In this article’s particular example, I was delighted to visit the OEM location — because the finished vehicle has been adjudged (by the Insurance Institute for Highway Safety, IIHS) as the safest in its class. (Note: The safest vehicle in each category can change from year to year, as each car manufacturer tries to make theirs the safest – and this is good for the customer!)
Components and car sub-assembly suppliers send parts for pre-production and production trial runs, before there can be shipments for the regular, mass production parts. After a vehicle is in regular production, and there’s an engineering change in one component or sub-assembly, that too has to pass a new “production trial run” to confirm and verify that the new version is better than the old.
My role in this particular case was to represent our plant during the trial at the OEM. The customer specified the trial parts’ pick-up time from the supplier location, and the time I needed to be at the car assembly line. The customer asked for advance notification when the trial parts shipped, and the trailer number. I was at the plant the night specified for pickup/ship time, but wasn’t able to take a photo of the shipment and note the trailer number. The shipping team lead asked me to come back at dawn the next day, if I wanted to take a picture of the load and note the trailer. I did. Shipping then advised that I could proceed to the OEM site, the parts would be there ahead of me and I could support the trial run.
Guess what? The trial was cancelled/delayed! I pointed out to my email to the OEM, with picture of the trial parts inside the trailer. In turn, it was pointed out to me that the shipping labels indicated: (a) the date and time the parts should have been in the trailer, and (b) the date and time the parts could be line side at the assembly plant (applicable only if the load time was followed strictly). (c ) The time the trailer could be in the vicinity of the OEM plant could be estimated by both the supplier and the OEM, and it was correct that the trailer arrived ahead of me, but (d) because the parts left the supplier x hours later than scheduled, the trial run would likewise occur x hours later.
What Just-in-Time Deliveries Mean
Obviously, the plant’s shipping staff were not aware of the implications of the two “dates and times” on the shipping label. To me, it was an epiphany of what JIT deliveries meant: While it was true that the car assembly plant did not carry more than four hours worth of component parts, it didn’t mean the assembly line got components replenishment directly from the suppliers every four hours.
It was the intent and it worked for Toyota Kentucky USA. At the start, Toyota wanted their parts suppliers to be within four hours drive, and deliver parts every four hours as needed in the assembly plant. If the supply chain was stable, it was possible for auto parts to be from-supplier-dock-to OEM-dock every four hours. But the supply chain in North America is such that parts ship internationally to/from three countries, U.S., Mexico, and Canada.
On this scenario, suppliers can ship as frequently as every four hours, but also can ship “as less often as once a day.” I suggest that even on a best-case scenario, (e.g., travel time from supplier to OEM is less than four hours), an OEM may decide to have a buffer — in case of unexpected delays.
For example, in case of a heavier than usual snowfall, or fog along the highways that won’t clear for a long time, the OEMs wouldn’t want their car production to stop; yet still maintain “no more than four hours worth of components within the assembly plant.”
I learned that the building not far from the OEM assembly plant was called a cross-dock. Alternatively, it can also be called a sequencer. (There are full-pledged sequencer companies, but their purpose is different: They receive sub-components from lower-tier suppliers, put the sub-components together, then ship the sub-assembly direct to the OEMs.) The cross-dock may have more than four hours worth of components, when they shipped to the OEM on the next building–not too far, the cross-dock needs to receive new stocks from the parts supplier.
I believe that “supplier companies” are naturally apprehensive about just-in-time manufacturing at their end. I know for a fact that suppliers go into panic mode when a production line goes down, then it takes an unexpectedly long time for it to get back up into producing parts. They fear they may shut the OEM down. The extreme reaction is to carry huge finished goods (F/G) inventories – to protect the OEMs, we will never shut them down. But this is the anti-thesis of JIT or lean manufacturing – the goal being to carry as little as possible of F/Gs.
I was in a Toyota supplier in Kentucky. I and many others who have been there, were told they didn’t have a finished goods warehouse. They shipped to Toyota every four hours. They operated on a “make-to-ship” basis – from the end of their assembly line direct to the staging area in the Shipping Department. When the next shipment was already covered, production stopped.
Just-in-Time Manufacturing is a Journey
15 years after his The Toyota Way, 1st edition was published, I read the 2nd edition (all-new materials) of Jeffrey Likers’ book (published at the end of 2020). By this time, Liker has studied Toyota for more than 30 years and been to more Toyota and no-Toyota plants around the world, observed many failures and successes in implementing lean.
I noticed that among his new successful case studies, are companies which I would say are more like the OEM location where I had my revelation: There can be more than four hours worth of raw materials or finished stocks in the pipeline, and yet “no more than four hours worth of components in the OEM site.”
The supplier community themselves can be at different stages of lean. Some may still carry days of F/Gs. But to reduced carrying costs, increase profits and be able to able pay team members (employees) better, it’s worth continuing on in this journey. And along the way, enjoy the scenery.
We can embrace the concept of Jus-in-Time, Lean and not be discouraged by the thought of “it’s not for me/us; it’s only for Toyota and other world-class companies.”
Because we are all in this together. Eliminate waste. Eliminate inefficiencies. Better use of resources. Low inventory. Leave a better place for the next generation, our children!
When I came back from the delayed production trial run (from the OEM hailed as a model North American lean company), I told the plant: You know what, we will continue to protect the customer byas much as possible not missing a shipment, but in case of unexpected emergencies that we may miss one, don’t panic. We won’t cause their assembly line to shut down. There are parts at the cross-dock. Just-in-Time. (Caution: This is not an authoritative, blanket statement. Some suppliers, but not all, can actually shut an OEM down – like when there’s a wildcat strike and it took a while to order the team members back to work.)
I want to end with a quote from Joseph F. Paris Jr. as follows: “In the years since, the principles of TPS and Lean have been common and widely adopted to other industries, although with varying degrees of completeness and success. As such, it is important to always keep in mind Lean is a journey, not a destination.” (STATE OF READINESS, Operational Excellence as Precursor to Becoming a High-Performance Organization, Greenleaf Book Group, 2017), p.29
About the Author
Vir Alvaran is a continuous improvement professional, with over three decades of CI experience under his belt, in the Asia-Pacific and North America. He is a recipient of the Citicorp/Diners Club International Franchise Network Service Quality Award and served as president of the Philippine Institute of Industrial Engineers. He worked for twenty years in automotive parts manufacturing engineering, supplying components and sub-assemblies to the OEMs in North America.
Vir now owns a consultancy, “Closer to Lean” based in Toronto, Canada where he helps companies improve their operational capabilities.