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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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