- March 3, 2021
- Posted by: David Marshall
- Category: Manufacturing, Productivity
One of the things manufacturers often come up against is the issue of just-in-time manufacturing. You find it with large manufacturers that mass producing a lot of products for larger projects.
Just-in-time manufacturing means that your products or parts show up at another manufacturer’s plant or a project site just in time to be used, installed, or implemented. This helps the recipient avoid any storage or warehousing issues since stored products not only tie up your cash flow, but they have a greater opportunity to be damaged.
For example, auto manufacturers don’t have all kinds of wheels and tires stored in racks in a warehouse. The requisite number of wheels and tires show up each morning on a truck, just in time for that day’s production run. In some cases, the suppliers may even drop two or three loads in a single day, each arriving at a specified time. And at the end of the day, there are no wheels or tires left to start the next day.
If a supplier can’t make the delivery right at the precise minute, they could be fined thousands of dollars per minute that they’re late.
Needless to say, just-in-time manufacturing can be stressful at that level.
We did work with a few just-in-time customers at Robroy. The thing with just-in-time at that level is it that ends up being more of a hope than a consistent reality, depending on the complexity of the parts you’re talking about, and the size of the projects the customer is working on.
In other words, if an order is just for one part number, that’s great. But if it contains 5,000 part numbers, you’ve got a serious problem.
Still, it’s not that hard if you know how to plan for it. (I’m only speaking of my own experience. Giant manufacturers like the automotive industry are a beast of a different color. And species.)
To plan for just-in-time delivery, I would ask the customer for a forecast of what they thought they needed and when, and then I would ensure that we met their forecast. If I couldn’t, I would tell them upfront.
We typically had a 24-hour lead time on our A items — our most ordered, most produced. On the B items, it was three days’ lead time. And on the C items, it could be forever depending on the OEM, since we didn’t manufacture a lot of those C items ourselves.
The customer’s ability to forecast became important to just-in-time delivery. We had several instances where the customer stopped suddenly, and that was always an interesting set of circumstances. If you’ve ever been in a line of people walking single file and the person in front suddenly stops, you get a good idea of what that was like.
And of course, a customer would sometimes call us and tell us they had to cancel that day’s order. But if we needed 24 hours’ notice to start, we needed 24 hours’ notice to stop, too.
The truth of the matter is when that happened, I told them the truck had already left. I said I couldn’t just recall the order, but if they wanted to pay for the shipment and send the order back to me, that was okay.
No one ever did that, but they did take the last order and we knew not to produce the next day’s shipment until they gave us the go-ahead.
The products we dealt with weren’t consumer products, so the rules of engagement ended up being different. In consumer products, the leverage belongs to the purchaser, not the manufacturer. In other words, if Lowe’s said they didn’t want your shipment of garden hoses today, you as the manufacturer have to deal with getting the shipment back whether you liked it or not.
On the other hand, you may have other outlets to sell those returned products. But when you make conduits for oil fields, it’s not like you can send your returned products to the outlet mall for clearance sale.
My advice for any manufacturers that want to get into just-in-time manufacturing is to make sure you can produce your most popular A items in 24 hours. Next, develop a 24-hour turnaround philosophy: Any order of your A items will be placed on a truck within 24 hours of your receiving the order. If you can fulfill them in a regular day’s production run, then you’re ready for just-in-time manufacturing.
I’ve been a manufacturing executive, as well as a sales and marketing professional, for a few decades. Now I help companies turn around their own business, including pivoting within their industry. If you would like more information, please visit my website and connect with me on Twitter, Facebook, or LinkedIn.