Jit- Just in Time, Lean Factory
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- Date Submitted: 06/13/2012 09:49 PM
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The just-in-time approach to manufacturing, which has swept the world's factories over the past two decades, has made a virtue out of keeping inventories lean. But some manufacturers think it has gone too far, and that having a little extra padding might be a healthier option.
Popularized by Japanese auto makers, the just-in-time system is based on a company buying or making only what it needs to fill immediate demand. Although that helps manufacturers hold down costs by keeping stockpiles of components and finished goods low, it can leave them high and dry if production supplies don't arrive as expected, a risk highlighted by the parts shortages caused by the earthquake and tsunami in Japan.
Even before that disaster, some companies were modifying their just-in-time approach. Heavy-equipment maker Terex Corp. TEX +11.01% recently cut deals with its 15 biggest suppliers to guaranteed it would buy fixed amounts of parts for three months in advance.
Enlarge Image
A worker walks past a crane on the assembly line at the Terex Corporation plant, Friday, April 11, 2008, in Waverly, Iowa. Construction machinery makers like Terex Corp. are straining to keep up with foreign demand for equipment used on infrastructure development projects. (AP Photo/Charlie Neibergall)
Since January, lawn-mower manufacturer Ariens Co. has opened four new warehouses across North America to store finished mowers. Al-jon Manufacturing LLC, a maker of machines that crush metal waste, has taken to keeping a stash of hard-to-find parts at its factory in Iowa.
"Just-in-time makes sense, but it's vulnerable to disruptions," says Terex Chief Executive Ron DeFeo, "so what we're seeing now is the theoretical being adapted to meet the world of the practical."
Nobody expects manufacturers to revert to their old ways of piling up masses of parts and products. But many manufacturers have gotten stretched too thin in recent years.
Paul Martyn, a supply-chain consultant in Chicago, says manufacturers...
Popularized by Japanese auto makers, the just-in-time system is based on a company buying or making only what it needs to fill immediate demand. Although that helps manufacturers hold down costs by keeping stockpiles of components and finished goods low, it can leave them high and dry if production supplies don't arrive as expected, a risk highlighted by the parts shortages caused by the earthquake and tsunami in Japan.
Even before that disaster, some companies were modifying their just-in-time approach. Heavy-equipment maker Terex Corp. TEX +11.01% recently cut deals with its 15 biggest suppliers to guaranteed it would buy fixed amounts of parts for three months in advance.
Enlarge Image
A worker walks past a crane on the assembly line at the Terex Corporation plant, Friday, April 11, 2008, in Waverly, Iowa. Construction machinery makers like Terex Corp. are straining to keep up with foreign demand for equipment used on infrastructure development projects. (AP Photo/Charlie Neibergall)
Since January, lawn-mower manufacturer Ariens Co. has opened four new warehouses across North America to store finished mowers. Al-jon Manufacturing LLC, a maker of machines that crush metal waste, has taken to keeping a stash of hard-to-find parts at its factory in Iowa.
"Just-in-time makes sense, but it's vulnerable to disruptions," says Terex Chief Executive Ron DeFeo, "so what we're seeing now is the theoretical being adapted to meet the world of the practical."
Nobody expects manufacturers to revert to their old ways of piling up masses of parts and products. But many manufacturers have gotten stretched too thin in recent years.
Paul Martyn, a supply-chain consultant in Chicago, says manufacturers...