According to the Toyota Production System, just-in-time is an industrial management principle that strives to reduce inventory and its carrying costs. Synonymous with its name, the time that inventory is received should be optimized according to the time the product is needed. From making observations at two factories in the Seattle area: Fluke and Genie, I noticed that ”Kanban” signals were crucial for the success of implementing just-in-time.
At Fluke, many of its components were placed there by the supplier. Therefore, the inventory and carrying costs are the responsibility of the supplier and the components were only purchased by Fluke when they are needed (just-in-time). This provided a win-win situation for Fluke as they get immediate access to the goods without having to tie down cash flow. Further, the quantities of multi-meters are made to either actual customer orders or estimates based on the “heijunka” system (“Fluke” Tour Guide, 2009).
At Genie, the style of just-in-time implementation varied based on the leadership team. If the plant manager comes from a materials management background, then reduction of inventory would be more conservative. Those who have experiences in process improvement would be more aggressive in reducing any excess inventory. Regardless of the management, the materials still need to be purchased and kept as inventory based on the estimates. Per a conversation we had with a production lead at Genie, his method was to experiment by slowly reducing quantities until a lower limit was reached. From observation, systems were created at the Beckwood Punch Machine such that weld cell consumption triggered replenishment of the link tubes (“Genie” Tour Guide, 2009).
At Fluke, just-in-time is evident in its manufacturing processes through the use of vendor managed inventory. Internally, they have also implemented a train system where goods are moved from its receiving department to different stations on an hourly basis. The internal transportation system prevents workers in different stations from working ahead of the ”Kanban” quantities.
Due to the complexity of the products made by Genie and the need to manage a growing inventory of over 2,000 parts, just-in-time is emphasized internally in the delivery of parts to the various stations on an as needed basis. In general, material handlers at Genie try to group the parts together for each lift and have them ready when the respective stations have the need through a two-bin system. It is much easier control inter-company transportation than coordinating part deliveries with outside suppliers. In the worst case scenario, even if one of the over 2,000 parts were to run out, the entire production line could be halted, so underestimating is extremely risky.
”Kanban” signals are vital in the just-in-time system. At Fluke, ”Kanban” signals are triggered by its MRP forecasts and work its way up the supply chain using a self-regulating pull system. According to an industrial engineer at Fluke, physical ”Kanbans” are most useful. Not only do they serve as visual controls, they include important information that pertains to the part such as: part number (new and old), destination, location cell, ”Kanban” quantity, total quantity, lead time and amount per package amongst other important information. Additionally, they are color coded for different types of purchases: internal, external, expense, inventory and supplier (reorder point). Ideal quantities tend to be smaller per batch but with a higher frequency than having all products sent at once. The number of interim products moved with each signal varied depending on the customer orders, but is usually adjusted to meet one piece flow requirements. In a good economy, MRP forecasts are close to accurate and allow for production leveling based on those predictions. However, amidst the current credit crisis, it is much harder to accurately predict inventory needs (“Fluke” Tour Guide, 2009).
At Genie, ”Kanbans” take shape in the form of cards, labels, and storage bins as well as designated areas on the painted floor for storing standard work in progress (SWIP). In general, SWIP (the minimum number of units needed to keep the product line running smoothly) is limited to two units at a time. Although they strive to maintain a one piece flow production line, with each ”Kanban” signal, there could be more than one interim product being moved. Almost every part in the line is moved by the ”Kanban.” Essentially, blue ”Kanban” cards indicate that the part is from an outside supplier while the orange labels are for internally made parts. Additionally, colored visual controls sort parts by product line. When materials are consumed, barcodes of Kanban cards are scanned, which provide material information to the respective machines (“Genie” Tour Guide, 2009).
In comparison between Fluke and Genie, it appears that the application of just-in-time is more evident at Fluke. One reason for this is that the products made by Fluke are much smaller. By observing the processes at both factories, it appears that Genie’s equipment and tooling are more investment intensive, so it is more difficult to implement any improvements. By comparing the two plants, it is quite evident that Lean manufacturing is more integrated at Fluke than at Genie.
At Fluke, one of their main priorities is to focus on their core competencies. In this case, it is to handle the final assembly of the multi-meter, while having many components built elsewhere. For example, the PCA assembly division is to be outsourced to a factory in Alabama. The main objectives of Fluke/Danaher is to free cash flow to buyout troubled companies, then apply Lean and either keep them for a high return or resell them. From observation of their factory in Everett, there was a clear sense of organization with 45 cells grouped in a well-lit facility. In addition to just-in-time, principles such as 5-S and safety as well as QDIP (quality-delivery-inventory-productivity) measures are used to determine the success of the plant (“Fluke” Tour Guide, 2009).
Many of Genie’s processes follow its parent company’s TEREX Operating System, which is primarily a combination of just-in-time and “jidoka”. The objective of “jidoka” is to produce high quality products with one-by-one confirmation to detect any flaws. If there are quality problems, the entire is line is stopped. Additionally, some of its machines are able to detect abnormalities witnessed in the products. In particular, the Turning Center and Large Slab Scissors Links Weld stations emphasized “jidoka” in their operations. Prior to delivery, the Turning Center checks each part for defects while the weld cells are equipped with inspection lighting and other visual control aids to check for the quality of the weld. As a whole, Genie also emphasizes level production on its machines using the “heijunka” board. Aligned with their lean philosophy to reduce costs by eliminating waste, its system has three assurances: delivery and minimum cost, safety and morale, as well as product and process quality. Additionally, we were informed that the unused space in the factory is part of an attempt to consolidate other factories as part of its space reduction plan (“Genie” Tour Guide, 2009).
As with both companies, the goal of using just-in-time is to make money. In order to make money, one must increase throughput while reducing inventory and other operating expenses. Optimization using Lean manufacturing techniques like just-in-time allow for reduction of wastes such as inventory and unnecessary overhead.
“Fluke” Tour Guide, Fluke Electronics, Everett, Washington, personal communication, Nov. 10,
“Genie” Tour Guide, Genie Industries, Redmond, Washington, personal communication,
Nov. 19, 2009.