the type of industry this might be stretched up to a week-by-week basis, but not any longer. A manufacturer should only manufacture a product that he has an order for and should only carry a stock of materials for what he will make on a single day Now, most companies carry stock for several days, even for several weeks- fearing that if they. if they run short of a particular material, their entire production process will be disrupted Interviewer: Yes, but surely this is true? If just one component is lacking, then production does have to stop Carl Feldman: Yes, but the point is that it's a waste of money, having capital tied up in materials that won't be used for several days. And you save money if your materials arrive just in time to be used in the manufacturing process Interviewer: Where does J I T originate from? Carl Feldman: The story is that a group of Toyota engineers from Japan were touring industrial plants in the USA, on the lookout for new methods of improving efficiency- this was in the 1970s. They were impressed by what happened in the supermarkets they went into: they noticed that as soon as a shelf in a supermarket was nearly empty shelf-filler came along and topped it up. They simply applied this principle to manufacturing. So that's how it all started Interviewer: Now, an account would insist that you have to keep your workforce busy all the time and keep your machines running at all times. This maximizes your efficiency. Carl Feldman: With J IT you only run machines if you have a product to make. In most manufacturing, the cost of materials is around 60% of the total costs of running the business, so any materials sitting unused in a warehouse cant begin to repay their costs until they have been turned into a product. The traditional accountants view has to be reassessed Interviewer: But in any industry there are fluctuations in demand. How does J I.Tcope with this? Carl Feldman: In the same way that capital tied up in materials is being wasted, making products for stock also ties up capital. If there are no orders for a particular day, there is no gic in making for stock. Both machines and workforce have to be grouped by product, not by function, so that theyre flexible enough to deal with fluctuations-which may mean more work on some days and less on others Interviewer: So how do you keep the workforce busy on a slack day? Carl Feldman: There's time then for maintenance, training and so on - particularly important these days is quality Interviewer: So, to come back to the supply of materials, this depends on the co-operation of your supplies, then? Carl Feldman: Absolutely! And changes in philosophy are essential here too. Most major companies obtain materials from over 2, 000 different suppliers, with J.I.T. this number has to be cut down to around 200. The benefit to the supplier is that he will get more orders from you if he can work with you in this way. Inevitably, this involves very close co-operation on the design and quality of the materials he supplies and he must adopt the J I.T. philosophy in his own plant If not, he'll find that the pressure is on him to hold stock for his customers- and this will clearly notthe type of industry this might be stretched up to a week-by-week basis, but not any longer. A manufacturer should only manufacture a product that he has an order for and should only carry a stock of materials for what he will make on a single day. Now, most companies carry stock for several days, even for several weeks- fearing that if they…if they run short of a particular material, their entire production process will be disrupted. Interviewer: Yes, but surely this is true? If just one component is lacking, then production does have to stop. Carl Feldman: Yes, but the point is that it’s a waste of money, having capital tied up in materials that won’t be used for several days. And you save money if your materials arrive just in time to be used in the manufacturing process. Interviewer: Where does J.I.T. originate from? Carl Feldman: The story is that a group of Toyota engineers from Japan were touring industrial plants in the USA, on the lookout for new methods of improving efficiency- this was in the 1970s. They were impressed by what happened in the supermarkets they went into: they noticed that as soon as a shelf in a supermarket was nearly empty, a shelf-filler came along and topped it up. They simply applied this principle to manufacturing. So that’s how it all started. Interviewer: Now, an account would insist that you have to keep your workforce busy all the time and keep your machines running at all times. This maximizes your efficiency. Carl Feldman: With J.I.T you only run machines if you have a product to make. In most manufacturing, the cost of materials is around 60% of the total costs of running the business, so any materials sitting unused in a warehouse can’t begin to repay their costs until they have been turned into a product. The traditional accountant’s view has to be reassessed. Interviewer: But in any industry there are fluctuations in demand. How does J.I.T cope with this? Carl Feldman: In the same way that capital tied up in materials is being wasted, making products for stock also ties up capital. If there are no orders for a particular day, there is no logic in making for stock. Both machines and workforce have to be grouped by product, not by function, so that they’re flexible enough to deal with fluctuations-which may mean more work on some days and less on others. Interviewer: So how do you keep the workforce busy on a slack day? Carl Feldman: There’s time then for maintenance, training and so on – particularly important these days is quality. Interviewer: So, to come back to the supply of materials, this depends on the co-operation of your supplies, then? Carl Feldman: Absolutely! And changes in philosophy are essential here too. Most major companies obtain materials from over 2,000 different suppliers, with J.I.T. this number has to be cut down to around 200. The benefit to the supplier is that he will get more orders from you if he can work with you in this way. Inevitably, this involves very close co-operation on the design and quality of the materials he supplies and he must adopt the J.I.T. philosophy in his own plant. If not, he’ll find that the pressure is on him to hold stock for his customers – and this will clearly not be economic