A 'Just-In-Case' Case

Aisin Seiki Company (Kariya, Japan) makes master cylinders for automotive clutch and brake systems. They have a successful business with over 400 machine tools in production. Aisin ships around 80 percent of its production to Toyota Motor. Toyota has a 22 percent stake in Aisin.

Disaster hit on February 1. Aisin Seiki's entire brake-parts manufacturing factory was destroyed by fire. What made this fire particularly catastrophic was that Aisin had only a minimal volume of brake and clutch parts—just three days' supply—in its warehouse. That's because keeping a lean inventory is an important feature of the just-in-time (JIT) production system that Toyota Motor is credited with having fully developed.

As a result of the fire, Toyota Motor could miss selling an estimated 50,000 passenger cars. Exacerbating the situation, both Aisin and Toyota were at full capacity. Passing off production to other plants was not practical because all were geared up for a run on the car showrooms anticipated prior to a scheduled increase of the Japanese sales tax rate from 3 to 5 percent on April 1.

Events like this raise questions about absolute adherence to a JIT philosophy. That it's a good idea to make only what is needed would find little dissent. But for many shops, once the concept is embraced or imposed, JIT compliance becomes a matter of degree.

Several shops I've visited have developed a pragmatic corollary to the JIT philosophy. It's called JIC which stands for just-in-case manufacturing. Its philosophy is identical to JIT principles but includes a practical realization that "bad things happen to good companies."

Why JIC? For one reason, when a surprise order comes through, the shop has parts to help out. The customer thinks it's a miracle and is grateful. Another reason for JIC is cost control. Running single JIT lots can be more costly than running several at a time. The savings in setup will often offset the risk of an engineering change making the stored parts obsolete.

In JIT theory, no one, from top to bottom of the supplier chain, wants to hold inventory. But, everyone wants their product JIT.

A little JIC padding at each link in the supply chain could prevent a catastrophic interruption of production by buying a little scramble time.

Is JIT under review at Toyota? Well, when asked, its chairman said the system works but is "not perfect yet."