Lean Principle 1 – Just In Time (JIT) Continuous Flow
Generate revenue and conserve cash
Just In Time (JIT) is one of the primary principles of Lean. It forces organisations to address shortcomings in their capacity management, quality and delivery performance. It looks for velocity of product across the value stream to improve margins and revenue.
- Increased margins
- Increased stock turns and improved cash flow
- Improved problem solving capability
- Maintain constant flow by de-coupling and optimising bottle-necks
- Continuous efforts to improve the process
- Manage operational fluctuations
JIT suffered greatly as a system in the early adoption of Lean by companies. The principle was poorly understood by leaders who had heard of this Japanese method but not fully valued the impact the strategy had on Toyota’s cash flow or its relentless focus on flow. Nor do current accounting methods support inventory reduction as a strategy, making it difficult for middle management to adhere to the principle fully. Alongside this, western companies had, over time, lost the ability to problem solve effectively on the frontline. The moment problems appeared that were normally hidden by higher inventory levels the quicker leadership would blame the Kanban tool or the Japanese culture rather than address the real issue of a ‘tool based’ approach as opposed to the principle or the lack of training provided in root cause problem solving.
JIT, implemented effectively, will revolutionise the product journey. It has the ability to expose all the waste and weaknesses in a process. This is not something to be feared by leadership but rather something that can provide the true north for improvement activities to strengthen the organisation’s position in a crowded marketplace. In a world of Just In Time there is no room for poor quality, unsafe behaviours or wasted time. By placing the product, patient or customer journey under the microscope of a time-based strategy (how long to complete), every activity can be viewed in a data driven manner as either adding value or not. If it is wasteful it can be challenged and eliminated leaving the process, the customer and the profit margin all in a better place.
These Operational Excellence pages talk about fundamental lean principles and associated tools. Understanding how to apply these principles and tools to the individual circumstance of discrete organisations is where expertise and experience is paramount. The GENEO team has many decades of experience in doing exactly this.