Just in time manufacturing delivers the parts required to complete a product shortly before they are needed. Accordingly, this vastly reduces inventory cost while typically increasing quality by aligning the manufacturing needs of part suppliers and the final manufacturer.
Toyota engineer Taiichi Ohno needed a better way to manufacture. Specifically, efficiency was low and quality suffered, especially when necessary parts ran out. In due time, he noticed that supermarkets used a visual card to indicate when an item was running low. Therefore, this system signaled to supermarket workers to restock the bin immediately. Without this system, bins might be filled with unneeded food that would spoil or sit empty, forcing customers to make a later trip or go to a different store.
Ohno adapted this system calling it “Kanban,” which means “visual signal” or “card” in Japanese.
Eventually, Ohno brought the system to Toyota’s manufacturing facilities. When parts ran low, workers turned over a car and somebody quickly came to replenish the parts. There were never too many nor too few parts for a workstation on an assembly line.
Kanban has four core properties. First, visualize the workflow. It is necessary to lay out a workflow so an ordinary person can grasp it visually. Second, limit work-in-progress. There must never be too much nor too little work-in-progress. Third, manage flow. It is necessary to align the workflow with the workers and the need for literal or figurative parts. Fourth, make process policies explicit. Clarify the workflow so everybody understands what is required. Fifth, create feedback loops. Ask and observe what works and what doesn’t and adjust accordingly. Finally, improve collaboration. Use small, continuous, incremental evolutionary changes that stick. Do not try to boil the ocean.
Toyota found Kanban vastly increased efficiency and decreased costs and adopted it through the Toyota system.
During the 1950s – 1970s, the quality of Japanese manufacturing rapidly increased while the quality of US manufacturing similarly declined. American executives studied the Japanese and found the core two components of Japan’s secret sauce was the use of Kanban and techniques taught by statistician W. Edwards Deming after the war. Deming tied Kanban’s flow into a statistical system called Total Quality Management TQM, producing higher quality goods (especially cars) at lower prices.
Eventually, US firms adopted Kanban and TQM while the process evolved in both Japan, the US, and elsewhere. Most notably, Michael Dell created a computer company that relied heavily on parts created by others. Dell computers were custom-configured when ordered, then quickly delivered. He needed a system where vendors aligned with his own factory to quickly build high-quality computers. Dell’s Just-In-Time (JIT) methods revolutionized manufacturing, enabling him to work with countless suppliers to ensure the supply bins were never either empty nor too full.