Maybe “Just in Time” (JIT) Should Be Called “Short Lead Time” (SLT) Supply Chains
This is the starting point for a blog post that I should expand on… after posting these initial thought fragments on LinkedIn.
JIT might have been given the wrong name… please hear me out.
There has been so much confusion over time about the phrase “Just in Time” related to #Lean / Toyota Production System.
Just in Time production or Just in Time receipt of supplies is a CONSEQUENCE of operations and supply chain design and decisions that are made by leaders.
As Jamie Flinchbaugh pointed out:
“Building on that theme…I think we should separate JIT “production” from JIT “supply chain.” Those are two different environments, two different sets of problems, and two different sets of problems.“
He's right, let's talk here about “just-in-time supply chains” — the purchasing of parts to use in our factory or the purchasing of items to sell in our retail establishment.
You cannot just mandate “low inventory” — low inventory might be a consequence of good system design.
Supplies or products arriving “Just in Time” is also a consequence of, among other things, SHORT LEAD TIMES.
SHORT LEAD TIME –> SLT
Bringing parts from China on a literal slow boat is a LONG lead time approach. That's not “Just in Time.” JIT cannot be a consequence of LONG lead times and poor supply chain decisions.
Would that have reduced confusion, leaving us in a better place?
You can join the discussion on LinkedIn:
There's already some great discussion taking place…
Here is the Toyota explanation of JIT from their Toyota Production System page. They describe the consequence of good supply chain decisions:
Making only “what is needed, when it is needed, and in the amount needed”
When we have LONG lead times, we then get forced into relying on forecasts. Forecasts are notoriously difficult to do. The longer the lead times, the less accurate the forecasts will be. That's a fact of life — basically a law of physics. Having long lead times means you'll not be making or receiving the right quantities at the right time. You'll have too much of some parts and not enough of others.
Short Lead Times really help. Short lead times, among other factors, make low inventory possible without interrupting flow, production, or sales. Or, we could say Short Lead Times are a precondition for Lean or JIT.
Here's just one of the MANY examples where the Wall Street Journal totally misrepresents JIT as somehow involving long, slow, global supply chains:
Here's an article about the pain felt by retailers who have long, slow supply chains:
After optimistic forecasts based on early pandemic buying patterns… overoptimistic orders plus long lead times means missing the market:
“So to fill all the orders they think shoppers are going to make, Amazon sellers are ordering more and more and more stuff from overseas.”
And there was this article from July
The merchandise surplus comes at a time when inflation is forcing consumers to cut back. Flickinger says some stores are overstocked by more than 30% and there's no place to put everything. Target recently admitted it needs to “right-size its inventory” and the retailer's plans include “additional markdowns.”
Again, Short Lead Times mean that you're relying less on forecasts to be accurate… Target could reduce the need to “right-size” (meaning reduce) their excess inventories by shifting to suppliers with shorter lead times, but given the global shift of manufacturing to China and the rest of Asia.
But, it's easier for a manufacturer like Toyota to put a captive supplier next to (or inside) their factory than it is for a retailer to reverse 25+ years of shifting manufacturing to China.
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