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Jul 06

Just-in-time Delivery in the Uncertain World. What-if Scenarios, Resource Allocation, and Risk Assessment

Just-In-Time delivery

When global supply chains are disrupted for one reason or another, JIT production can leave factories unable to meet demand and worsen an economic downturn. Because there is no inventory buffer, businesses suffer greatly if an element of production is delayed.1 Let’s look at three project management tools that help hedge Just-In-Time Delivery in unfavorable times.

Just-in-Time was born in post-war Japan, where supplies were scarce and the future was uncertain. Today we are also experiencing great uncertainty, the availability of materials and supplies is not guaranteed, and market expectations are changing rapidly as are the available technologies.

Does JIT remain valid in turbulent times? Or, perhaps, could the risk of bringing production to a halt cannibalize the benefits of JIT, such as an attractive balance sheet, higher ROA, tiny warehouse, and zero risks of a batch of products becoming obsolete?

We believe that JIT organizations can be efficient in the 2020s. But only under the condition, that they are constantly adapting to the market demand as well as modernize their production processes and the accompanying project management techniques and tools.

Interestingly, both JIT practitioners and project managers make use of Kanban boards – together with the ‘limit work in progress’ hint. What if we applied a few more project management tools to our production line? Could Scenarios, Resources, and Risk matrix tools adapt the proven Just-In-Time technology to the current, less predictable reality? Are these simple PM techniques a right response to threats that the changing world poses to Lean Manufacturing?

What-if scenarios

Companies practicing Just-In-Time are highly dependent on suppliers. As long as the cooperation is going well, the buyer enjoys high efficiency. However, if the supplier fails to deliver, the low flexibility of the Just In Time production line kicks in and the manufacturing processes may come to a complete stop. Even worse, innovation in materials and components is not that encouraged in JIT companies, since the focus on synchronization overshadows the sad fact of product life cycles. The entry barrier for a new supplier, cheaper materials, or more modern components, is high in JIT supply chains.2

Here we come to the first project management tool – What-if scenarios – that can help explore and schedule radical changes to the otherwise smoothly running JIT production line. Use What-if Scenarios to schedule the change of a supplier, material, or technology in your stable JIT environment. Scenarios are a feature of the Gantt chart. How do Scenarios work? Clone your baseline plan, one that provides for no radical changes, and explore how a change in technology or setting up cooperation with a new supplier affects your initial schedule.

Just In Time scenario

Figure 2. Explore an upgrade of technology or a change of a supplier with Scenarios available in many project management timelines; here – Gantt module of BigPicture.

 

‘As late as possible’ scheduling with Gantt chart
As late as possible delivery

Figure 3. As late as possible scheduling in BigPicture or BigGantt.

Some Gantt charts feature an ‘As late as possible’ mode. Just-in-Time practitioners should like the ALAP mode as it resembles the JIT’s way of scheduling the production.

—Just In Time is part of production management. Typically PMO sits higher in organizational structure, than Operations. The two areas mingle together, though. While the Gantt chart originates in project management, you could also plan production on the Gantt chart timeline. For instance, to schedule a delivery as late as possible in BigPicture or BigGantt, drag and drop from the beginning of a succeeding bar to the end of the preceding bar to create a “reversed” Start to End dependency. The ASAP mode will switch on by default, as seen in Figure 3, and the BU-7 Batch delivery task will slip automatically to directly precede the BU-1 Production run – says Jerzy Sekula, Product Manager at SoftwarePlant.

Example 1: Let’s suppose your JIT production line outputs tennis balls at a rate of 100000 balls per week. Three suppliers contribute to the final product, and each of the suppliers stocks other industries, too. A new, cheaper, and more efficient tennis balls manufacturing process was invented, but it requires adjustment on the suppliers’ side. Use the Gantt chart and its What-if Scenarios to create an optimistic, realistic, and pessimistic schedule for your upgrade of technology.

 

Resource allocation

At the heart of JIT is the principle that the assembly line is running only when there are orders. If there are not enough orders, the workers should, in theory at least, be assigned another activity, be it another production line, a training course, maintenance duty, or a day off.

While such extreme flexibility might seem awkward in the 2020s, the resource allocation in JIT companies calls for more advanced software than a simple 9 to 5 attendance schedule. For instance, to pair the maintenance crews’ skills with the available tasks and chores, and neither to underload nor to overload your skilled maintenance teams, use Resources modules that project managers normally utilize to balance resources in a project. Figure 4 depicts the Resources module of BigPicture.

As a rule of thumb, orange means the proper allocation, while green denotes underallocation of a person, and red – overallocation. Note the Skills pane to the bottom.

Assembly line resource planning

Figure 4. Plan resources to maintain the flexibility of a JIT production line.

 

Risk assessment

While the previous two chapters have remained valid for quite a long time, the beginning of the 2020s brings new risks to JIT. Pollution, overpopulation, and demographic processes result in elevated uncertainty, at least in some industries. When JIT organizations are rethinking their technologies and supply chains, another project management tool – the Risk matrix and register – lends a helping hand.

The Risk matrices focus the attention of JIT managers on the risks with the highest probability and impact ratios. Mitigating just the “red” risks can lower the overall risk level for a Just In Time company hundredfold, to acceptable levels. Let’s name some well-known and new risks that JIT delivery faces:

  • Japanese culture and geography make a dream environment for JIT. The further from Japan, mentally, and in terms of population density, the smaller the net value of Just In Time seems to be
  • 5-25% higher material prices in JIT delivery
  • the disproportionally high carbon footprint of JIT supply chains2
  • unplanned downtime due to weather, fire, law changes, political instability
  • low bargaining power of a supplier can hit a buyer back during a crisis
  • absence of free-market self-regulation; mutual dependence between supplier and buyer, liquidity vulnerability if one of them quits
  • consolidation of suppliers; one global supplier; the resulting rebalance of power in favor of the supplier
  • JIT environment might discourage and disrupt innovation on both the supplier and buyer side
  • resurge of protectionism in trade

 

Risks matrix for Just In Time assembly line

Figure 5. Risks matrix and register help focus on tasks with high both probability and consequence. Pictured is the Risks module of BigPicture.

 

Conclusion

JIT is being questioned as of the 2020s. Accelerating change might undermine Just In Time. But you can transform your JIT production line to a more future-proof state with the project management tooling – What-if Scenarios, Resources, and Risk matrix. BigPicture, a project portfolio management application, has all three.

 


1 What are the main problems with a JIT (just in time) production strategy? Investopedia.com
2 Po drugiej stronie lustra. Ukryte koszty Just In Time. Grzegorz Kucia

 

About The Author

With his automotive background Marcin goes beyond the 'Jira + software development' standard. He likes simple, up-to-five-sentence answers to complex questions.