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Unit 13: Supply Chain Management and JIT

Stores, which separated process-stages in the plant, were located between quilting and assembly Notes
(item 5) and framing and assembly (item 6). These stores were the only way to transfer units
between he feeder and the assembly lines. They operated on a first-in, first-out basis. Therefore,
the stores protected the unambiguous production mix and sequence established at the start of
quilting and framing. Stores also protected the production rate across process-stages because of
their capacity limitations.
As materials were depleted, individual 'Kanban' cards were sent to the person who ordered
material thereby automatically authorizing delivery of small batches of replacement supplies.
Kanban cards were the only way of reordering certain materials and were used every time a
specific customer had to reorder material of a particular type. They went to a specific supplier
and established the criteria for a good response (i.e., the card for fabric-1 was different than that
for fabric-2 and indicated a pre-agreed quantity, such as 20 meters worth of cloth). The person
who received the individual Kanban cards reordered materials by sending a shipment worth of
Kanban cards to the external supplier, on an established schedule. By extending the rate and
sequence with which customer orders were filled from within the Aisin plant to external suppliers
as well, the entire system was linked to the mass customization effort.
The plant transitioned from mass production to mass customization in 1986. The impact of using
JIT in spite of continued increases in volume and variety is shown in Table 13.1. One can see the
increases in productivity and simultaneous reductions in lead-time and inventory.

Table 13.1: Aisin Mattress Production Historical Mix, Volume and Inventory

1986 1988 1992 1996 1997
Styles 200 325 670 750 850
Units per day 160 230 360 530 550
Units per person 8 11 13 20 26
Finished goods (days) 30 2.5 1.8 1.5 1.5
Productivity Index 100 138 175 197 208

This transition was achieved despite challenges characteristic of making complex items more
general such as multiple process stages, imbalanced and variable process times, product variety
and fluctuations in the mix, volume, and timing of demand. Thus, rather than facing static trade-
offs along a fixed 'production possibilities frontier' the plant repeatedly improved its
manufacturing process and continued to achieve much better frontiers.
Manifests traveled with mattresses at each step. The information on each manifest established
fully the criteria of what each worker had to do to achieve a good outcome. Linking individual,
customer orders to the end of production initiated a pull that extended upstream to external
suppliers. Each batch of Kanban cards also had an unambiguous meaning. A batch of cards was
the only way to specify the mix and volume of the next shipment and was sent for every order.
The example shows the JIT system at work. The process established the production rhythm for
the entire plant by structuring information unambiguously between external customers and the
plant, within the assembly line, between assembly and its feeder process-stages and between
the feeder processes and their external suppliers.

13.10 JIT in Services

In spite of the natural differences manufacturing and service, there are possible applications and
benefits of JIT techniques in service industries. In his pioneering article, Benson (1986) argues
that "service operations are organised systems of production processes with the same potential
of improvement through implementation of JIT precepts as manufacturing operations". In this

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