"JIT" As A Cause of Delayed Shipments?
“Just in Time” so often gets a bad rap. People blame “JIT” for all sorts of problems, when it's often a problem with how JIT is implemented instead of being a problem with the core principle of Lean in and of itself.
At a Lean conference, a group from a company was talking through an A3 problem solving example. The problem statement was that customers were not getting orders in the promised timeframes.
As they went through one of their “5 Whys” analyses, one of the “root causes” was listed simply as “JIT.”
Helping to facilitate, I probed a bit…. that didn't sound like a root cause yet. Why was JIT a problem?
They said that the upper managers had gotten hold of the JIT concept and they, predictably enough, slashed inventory. They complained that managers were suboptimizing inventory levels (trying to keep them low) while ignoring the need to make customer shipments. The production process was dependent on a circuit board, shipped from a long distance away, that had highly variable quality yields (due to the specialized nature of the product).
This is a common mistake, unfortunately, when first learning about and implementing Lean. We hear about one aspect of Lean and someone runs with it, without really thinking it through or understanding the whole Lean concept.
A lesson I learned early on from a Japanese Lean sensei:
“First, keep the line running. Second, keep inventory low.”
Instead of low inventory for low inventory's sake, the point is to keep inventory as low as possible while meeting the first goal — maybe not keeping the line running precisely 100% of the time (since that often requires a TON of inventory), but not allowing the line to be down for hours each day.
So, one of the root causes for “JIT” being a failure mode was really “lack of deep Lean understanding.”
Do you have examples of a situation where inventory was intentionally cut so low that it really hurt the overall business or prevented you from meeting customer needs?