--By Basant Chaudhary
A stitch in time saves nine. This common saying in English finds an echo in almost all languages, across countries and cultures. From the ancient Sanskrit invocation Shubhasya Sheeghram (sooner the better) to Nike’s rather modern slogan ‘Just do it’ humans have always understood and appreciated the value of time.
The reason is simple. Time is the most perishable of resources. Even as I pen this piece time is flowing away. That is why saints and sages have been telling us to live in the present, in the moment. No wonder then that ‘present’ also means gift.
Transport this concept to the world of business and you will quite easily understand the thought and philosophy behind the popular and respected Just-in-Time (JIT) process of the Toyota Production System (TPS). Quality and JIT have been the pillars of TPS since the 1960s and 1970s and have done wonders for this automobile giant which now straddles the planet.
The concept has now spread across the world, undergone subtle to significant changes in keeping with the needs of different industries, countries and cultures. So, we have lean manufacturing, quick response manufacturing, pull-based production system, etc.
However, JIT is rooted in the philosophy of waste elimination, with a predominant focus on wastage of time. We usually do not attach much value to time, and, therefore, suffer. You must have seen how tyres of Formula 1 racing cars are changed in three seconds flat, while most people take 15 to 20 minutes for the same task. We are, at least, 300 times slower than the experts.
In business, time lag spells the difference between failure and success. Manufacturing companies following the conventional path gradually lose their competitive edge and die when JIT-driven players enter the market. Leading business organisations of yesterday are nowhere in the top league following globalisation which opened the markets for smart players.
Manufacturers who failed to change either fell along the way or sought shelter in government protected regimes. But the rules of the game are compelling even the most stubborn of governments to change their ways because the very future of their countries is at stake.
With JIT’s need established beyond doubt, let me share its basics within the confines of this article. A manufacturing plant or factory has several stations where different functions happen. In an automobile company, the functions could be stamping of metal sheets in the form of vehicle exteriors and interiors, body welding, painting, assembly and quality inspection.
Each station requires a very large number of materials from within the plant and also components from vendors to complete its respective task. Therefore, maintaining a perfect bill of materials (BOM) is vital. If the required quantity of materials (with pre-decided quality too) does not reach the station just in time, then the station will be starved for work and will fail.
On the contrary, advance arrival of material will create unwanted inventory which eats up space needed for operations at the station. It also has financial implications. The flow of materials has to be smooth and even.
At any given time, several processes happen in a factory. JIT coordinates the concurrent processes and, most critically, makes optimal use of the factory’s space.
By coordinating the flow of materials from one station to the next, JIT ensures a uniform flow of capital investments in materials. The flow is vital because you will get money once the materials have moved from one station to the other and exited the plant as a finished product.
If you disrupt JIT at any point, you will disrupt the entire production and business chain. You will fail to match customer demands. However, if you follow JIT earnestly, then you will delight the customer and will take in only what you need leading to minimum capital expenditure and low inventory levels.
However, it is easier said than done. Not many manufacturing organisations are able to implement JIT effectively. The reasons are many. The foremost, is the inability of a factory’s different departments like materials management, marketing, R&D and production/assembly line, to finalise one fixed bill of materials (BOM). This costs the organisation a real bomb. Lack of inter-departmental communication and the usual tendency to work in silos lead to such a situation quite frequently, especially so in organisations which lack a team work culture.
Lack of linear and constant demand also causes JIT to fail because the BOM keeps fluctuating. The smooth flow of materials gets disrupted. Suppliers and vendors too lose their balance and trust. Exact forecasting is difficult. The organisation needs to sign very strong contracts with the vendor base. But all organisations are not in a position to do so for a plethora of reasons which can be the topic of another discussion.
So JIT can be a game changer for your organisation. But adopting it simply because some are scoring big successes with this mantra is not advisable. See whether it works for your company. Or, in plain words, check whether your company is equipped to use this business brahmastra? Otherwise you may risk an implosion.
The author is Chairman of BLC (Bhuramal Lunkarandas Conglomerate) and Basant Chaudhary Foundation and can be contacted at [email protected]. Views are personal.