Is Just In Time (JIT) Dead?

Is Just in Time (JIT) Manufacturing / Service Dead?

Recently, I have been asked, "Is JIT manufacturing/service dead?" Well, what do you think?

The world of manufacturing and service delivery as we know it has changed! The process and understanding of our end-to-end operations have to evolve. In today's ever-changing economy, supply chains, and geo-political climates, failing to have a complete end-to-end process understanding will be a death sentence for an organization. Too often, organizations only look at their critical supply base; they do not have a complete understanding of all their suppliers' capabilities; even the smallest screw or glove can stop us from being able to produce or deliver our products or services to our customers. Four examples of impacts have been:

1.??Port closures cause delays in getting products from China, India, and other Asian suppliers to suppliers on the other coast from Europe.

2.??A grocery chain saw seven weeks of normal inventory vanish when customer demand pulled it all in one week. Their forecast model needed to be more accurate, and then the suppliers could not recover in time to avoid stockouts.

3.??Two major consumer goods manufacturers had to adjust their manufacturing operations, supply chain, purchasing, and training for employees as their demand shifted from bulk products being a majority to family and single-use products.

Part 1:?So, what do we do first, "Plan for Changing Consumption Cycles and Customer Demands": First, we must understand our customers. Just–In–Time has now expanded beyond manufacturing to include the consumer and the end consumption. In our online, digital, "I want it now" age, we must look at the complete end-to-end value stream. This now goes from the materials to the end of consumption. If we do not do this, then we will lose customers to our competitors. A couple of examples of knowing your consumption and customers are Discount Tire; their Treadwell program allows customers to find the right tires online before they go to the store. This creates the online experience that has become the standard and lets the different shopping experiences in person to be outstanding by saving time and making it personal. It also allowed Discount Tire to use Big Data to see what products their customers were viewing the most and build a better forecast model for their purchasing department to meet demands. The second is Carvana. Before the pandemic, how many people truly bought cars online? With the pandemic, they saw the opportunity to expand their market share in the car market. With great additions to their website that include 360-degree views of the vehicles, quick delivery, and a seven-day return window, they truly understood what the customers wanted and needed during this time. Now we see people buying cars online more and more. Both companies' "Plan for Changing Consumption Cycles and Customer Demands."

Part 2: "Understanding Your Supply Chain": Second, we must understand our critical suppliers, but we need to have full knowledge of our end-to-end supply base. All suppliers are critical suppliers, especially if we do not have a secondary and even a third source to purchase from. When I talk about an end-to-end supply chain, it must go back at least three levels. We must know what suppliers our suppliers are using; if our suppliers do not get what they need, then they cannot produce what we need from them. That way, we understand where risks can come from and how to mitigate them. Look at how difficult it is to get products from certain countries now. What happens if we see sanctions, ports, or trade routes disrupted? Do you have a secondary source lined up? If not, what will you do? I have moved manufacturing back from overseas; it is not easy, but if done right, you will not lose productivity and cost savings, and you may even see better quality.

Part 3: "Understanding Your Minimum Viable Production Level": Third, we need to understand the time it takes to get our associates up to minimum viable production level. A robust training program for our associates is critical with the current turnover that we are all experiencing. This affects every industry, but especially those in manufacturing and service industries where much of our workforce population, English is their second language. Building a robust training program as well as a development program for the workforce will not only lessen the learning curve but also improve retention and promote a happy, productive, and robust workforce that is nimble and can adapt to changes due to outside influences.

Part 4 "Planning for Market Volatility": Lastly, we must understand our capacity and the overall equipment effectiveness (OEE). This is key to improving production efficiency and managing the volatility that we will continue to see in the market. As we understand how our equipment runs (downtime causes), our associate's ability to deliver to the processes we have established, and our loss ratios for quality and scrap, we can build a JIT model that works. Yes, we will have to increase our inventory some to weather the storms, but when I have seen organizations that have doubled or tripled their inventories, the cost associated with that inventory is devastating... you have a true understanding of the end-to-end supply chain or integrated supply chain, the model will not only work, it will exceed customer expectations and reduce inventory levels and costs, but it will also free up cash. With the FED raising rates, the days of free money are over, at least for now, so free cash will be a key to growth and improvements.

JIT for Manufacturing and Service is not dead, but it must evolve. In today's "I want it now" society, we now must look at the process all the way to the end consumption or customer. We must understand the end-to-end operations. This includes our suppliers; with an ever-changing economy, supply chain disruptions, and geo-political climates, failing to have a complete end-to-end understanding will be a death sentence. As we plan for Chaining Consumption, Understand our full end-to-end Supply Chain, have a true vision of how long it takes for our teams to reach minimum viable production level, and finally, an understanding of market volatility, not only can we have the JIT models that we want and need, but this will give us a market advantage over our competitors.