The Secret to Fruitful JIT Manufacturing
Just-in-time manufacturing has evolved as players within the manufacturing world attempt to streamline processes, reduce downtime, and eliminate physical inventory, not only for raw materials, but also for industrial parts and components used by their machines.
In the distant past, OEMs engineered and produced parts for their machines, and, as a value-added, warehoused extra parts as a service so their customers could maximize the value of the OEM’s machines. In the near past, the service and associated costs were deemed inefficient and surplus parts were foisted upon distributors. Today, manufacturers feel they have to own their own extra parts in order to safeguard their production.
With the Internet of Things, robots, and other advanced technologies being introduced into factories everyday, employees have grown dependent on mechanized systems. Human relationships that used to drive information flow have largely disappeared, and as such, it has become more critical than ever to take into consideration the visibility and transparency of every supply chain.
First developed in Japan during the 1970s, JIT manufacturing reduces waste by only supplying raw materials and components when necessary throughout the assembly or manufacturing process, eliminating buffer stock of raw materials. In the retail setting, for example, Wal-Mart has applied these tenets to building one of the world’s best-managed logistics businesses. Wal-Mart uses a holistically integrated system, from inventory to checkout, to guarantee stock and allow for automatic replenishment with minimal downtime.
What data does your supply chain collect to analyze and increase efficiency? Does your company have systems, like Wal-Mart, that extend throughout the entire supply chain?
When it comes to surplus industrial parts, however, many manufacturers still revert to a just-in-case mentality over a just-in-time supply chain. Companies are conflicted, having to choose between stocking spare parts themselves and ordering them only when they are needed to continue production.
In the industrial space, OEM machine-makers are unique in that they can determine which parts they need beforehand and plan accordingly. OEMs will design conveyor lines based off of components they know are readily available from distributors. With the ability to control inventory upfront, OEMs have more quantity leverage and can request distributors to carry certain parts for them.
Unfortunately for the majority of manufacturers, this is a luxury that they cannot afford. With changing customer demands, it is less feasible for the average manufacturer to calculate the exact number of parts they might need; forcing them to hold excess inventory or pay a premium to get what they need when they need it.
Visibility in the Supply Chain
In the world of industrial parts and components, transparency is equivalent to information flow. Large distributors have set up extensive intranet services; it is their business to know where parts are for their customers. They can figure out where any manufacturing component is within their network and throughout the world.
Manufacturers are at the losing end in this opaque system; even as the end-users of said parts, they are not privy to such information. While distributors can find what they need with the click of a button, end-users do not have this convenience. An information shortage affects everything from inventory control to timing, and very few manufacturers have the ability to see through their supply chains and pass such information on to decision-makers.
With the entire sector in the midst of a sluggish economic period, information bottlenecks and other blockages are the last things any manufacturer wants to face. If industry goals are to implement JIT production, increase efficiency, and ensure sustained profitability, why not work on increasing collaboration and communication? Why not strive to be a real “value-added”?
Despite having wrung out inefficiencies in raw material supply chains, most companies have not done so with capital inputs needed to turn those raw materials into a final product. Has your company?