11.2. Just in Time Production and Total Quality Management

Key words: job production, batch production, flow production, Just In Time inventory control (JIT), lead time, Total Quality Management (TQM), empowerment, statistical process control, quality circle, quality chains, best practice benchmarking.

If production is to be run efficiently, resources must be available when they are needed. Production will be slowed or held up if a firm suffers shortages of labour, machine breakdowns, and power failures, or if supplies of natural materials and semi-finished components run out. Keeping a sufficient stock of materials or component parts is, therefore, vital to the production process in any firm.

However, keeping excessive stocks of materials and work-in-progress is costly in terms of storage space, and because it ties up working capital. Because of this, firms are increasingly using techniques such as Just In Time (JIT) and Total Quality Management (TQM), developed by Japanese industry.

Just In Time production

One reason for the high levels of productivity in Japanese industry is the cost reductions achieved by employing Just In Time inventory control. This means that suppliers deliver components or materials to production lines ‘just in time’ for them to be processed. JIT is also known as ‘stockless production’.

JIT production is based on the principle that products should be produced when customers need them and in quantities customers want, in order to keep stocks of materials, components, and finished products as low as possible.

For JIT to work, a number of requirements must be met:

• The quality of materials and parts must be high. Poor materials and defective parts can hold up assembly-line production.

• The supplier must be dependable and deliver on time. JIT requires lead times between ordering supplies and delivery to be as short as possible. This will be helped if the company and the supplier have a good business relationship.

• It also helps if suppliers are located near the company – but quality and reliability matter more. 

Quality assurance

Product quality is an important determinant in the buying decisions of consumers. An organisation that fails to assure consumers of quality will lose sales and will eventually be forced to cut back production.

In the past, ‘quality control’ in many organisations meant inspecting employees’ work and products after production had taken place. However, producing poor-quality products and then hunting down the causes in production processes uses up valuable time and resources. Errors are costly.

Total Quality Management (TQM)

To prevent errors happening, Japanese companies have for many years employed methods collectively known as Total Quality Management (TQM). 

The main aim of TQM is to focus companies on the wants of their customers, and on the relationship between suppliers and customers. It involves building-in quality checks at each and every stage in a production process. In this way, problems can be spotted and solved before products complete the production process. Employees are given the responsibility to control the quality of their output, and make changes if and when they detect a problem.

Features of TQM

Empowerment. This means allowing every employee in an organisation to use and realise their full potential and abilities. TQM encourages people at all levels in a company to work in teams to analyse production processes and remove waste and inefficiencies. Teamworking improves communication and co-operation in business.

Continuous monitoring and improvement. Kaizen in Japanese means ‘continuous improvement’. A business will use TQM to improve productivity, reduce costs, and satisfy consumer wants more effectively than its competitors. However, if a business is to find scope for improvement, production processes need to be continually monitored. Statistical process control (SPC) involves collecting data on business performance. Variations in performance, output, delivery times, product quality, materials, employee efforts, absenteeism, can all be analysed to find out what may have caused changes to occur.

Quality circles. These are simply groups of employees, usually between 6 and 12 in number, who work for the same supervisor or line manager. Workers in each circle are responsible for the organisation and development of their own jobs. Circle members are trained in problem-solving techniques, in statistical process control, and working in teams. Each quality circle meets regularly to identify and discuss their work-related problems. They will pass on their findings and any solutions to problems to senior management.

Quality chains. In any business there will be a whole series of suppliers and customers. For example, a secretary supplies a service to a manager. Canteen staff supply a service to a hungry workforce. These supply chains will also include customers and suppliers outside the firm. For example, a company may contract the services of another firm to supply and maintain computer equipment. Suppliers must carry out their services to the satisfaction of their customers. Failure to do so may hold up production or result in poor-quality output. TQM places great emphasis on the effective operation of such quality chains and good relationships between suppliers and the firm.

Benchmarking. This involves observing the products and processes of rival companies and then improving on them to satisfy consumers’ ever-changing wants.