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Just in Time Manufacturing 

PART IV. 

 

Supplier Partnerships

Traditional supplier relationships don't work very well in a REAL JIT enterprise, either. Genuine partnerships must be forged with single sources of supply for entire families of parts who will deliver certified-quality material to the customer's point of use in small quantities at frequent intervals while continuously reducing costs and prices. The REAL JIT customer will offer long-term agreements for these advantages, along with stable capacity demands, rapid communication of small incremental changes in requirements and strategic information sharing in a true partnership fashion. It's a higher-risk, higher-reward strategy that only works when both partners win!

Transport innovation also changes the delivery system. Instead of high-cost commercial carriage, regularly scheduled milk runs for inbound material, using contract carriage partners, enable the customer to receive twice as many shipments (often right to the point of use) while cutting total transport costs in half. Long distances are overcome by rapid communications, coupled with production regularity and enough leadtime to cover the distance traveled. When done correctly, a third-party carrier can become a recognized extension of the customer, welding the connection to the supplier-partner.

Making It Happen

Given the right ingredients, they must be combined in the proper process to achieve REAL JIT. When a fine recipe for an award-winning dish calls for several hours of baking at a low temperature, you can't speed it up by substituting a microwave oven and expect to get the promised results. Completeness and time are the essentials of success. Impatience, more than anything else, has sabotaged too many implementation efforts. But there's more ...

Health professionals tell us that fad diets do more harm than good. Even when they produce short-term reductions, they are accompanied by a feeling of deprivation and the lost weight is usually regained. (A 1992 U.S. News and World Report study of 850 companies showed that, while public announcements of downsizing raised stock prices by an average of 8% in the short-term, those same share prices lagged behind the competition by 26%

three years later.) The only way to permanently lose weight is to change one's lifestyle. That means both diet and exercise patterns must be modified forever. Is it easy? No. Is it fast? Not likely. But, does it work? You bet!

REAL JIT means permanently changing your company culture. Everybody (and I mean everybody) will see significant job changes. From top executives to professionals to support staff to operators to janitorial services, nothing will be the same. How can that happen if those people don't understand the new perspective, don't specifically know what to do or how to do it the new way? The training job is gigantic.

All of the successful transplant companies recognized this when they came to America. Typically, they required new hires to undergo 400 to 800 hours of training (that's 10 to 20 weeks) before they could even start producing products. Ongoing training requires one to two additional weeks per year. Yet, too many native companies seem to think that just talking about it or passing out some literature is sufficient. That's like believing you can create competent mechanics by issuing everyone a repair manual. Even training a small cadre of experts is insufficient when you are trying to create a new culture.

REAL JIT requires a workforce of thinking, creative teams of flexible people who all understand the concepts and the how-tos of implementation. This is not to be confused with awareness training. (As Ron Zemke, Senior Editor of Training Magazine, put it, that's like Music Appreciation 101, with Deming, Juran and Crosby subbing for Bach, Beethoven and Tchaikovsky.) REAL JIT training entails a sizable investment in specifics that needs time to pay off, just like a piece of capital equipment. If your average payroll cost is only ten dollars an hour, 40 hours of training for 100 people is a $40,000 investment. For that kind of money you should expect a significant payback and will need to be very selective about your training material to secure it.

The REAL JIT Payoff

The rewards for implementing the demanding process I've just described will exceed your greatest expectations. Orders of magnitude quality improvement and double digit productivity increases are routine. Producing products in half the space in less than half the time with less than half the inventory investment is commonplace. One of our clients recently reported a one million dollar profit improvement on less than six million dollars of sales in his second full year of REAL JIT implementation, and he's nowhere near the end.

The secret to success is accepting all the changes (i.e., the complete recipe) to make it happen and providing the necessary time for gestation and development. Buzz words and jargon make for great conversation, but you have to walk the talk if you expect to achieve world class results. It starts with the willingness of top management at the location, be it a plant, division or a company, to embark upon changes that are so significant that they will, indeed, result in a different company culture, even if the old culture is comfortable. But, as George Bernard Shaw put it, The man who cannot change his mind cannot change anything. After that, it's persisting long enough to make those changes permanent, whether you call it REAL JIT or XYZ. It doesn't matter what you call it; it's how you do it that counts.


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