Just-In-Time Manufacturing A lean, mean manufacturing system means less inventory-and, often, more cash in your pocket.
The words "just-in-time manufacturing" might evokeimages of vast automotive assembly lines, but the principles thatrevolutionized large-scale American manufacturing in the 1970s and'80s are being applied on a smaller scale all over thiscountry.
One small business that has recently switched to thejust-in-time system is Gamblin Artist's Oil Colors, a smalloil-paint manufacturer in Portland, Oregon, owned and operated byhusband-and-wife team Martha and Robert Gamblin.
Robert Gamblin is a painter who began making and selling oilpaint more than 20 years ago, not long after graduating from theSan Francisco Art Institute. "It's a rare and fortunateindividual who is able to make a living by selling art," saysRobert. "There was a need for someone in this business to makepaint with the artist in mind."
From a modest start in Robert's garage, producing just threecolors of paint, Gamblin Artist's Oil Colors now sells 87colors of oil paint all over the United States and abroad, has 20employees, and owns its own manufacturing facility. The paints costbetween $7 and $20 a tube. The Gamblins declined to state thecompany's gross revenue.
As the company has grown, Martha, co-owner and general manager,has taken steps to solve the problem of managing the increase inpaint production. "We started talking about making bigger andbigger batches of paint," she says. "A 100-millilitertube of titanium white weighs one pound. Add that up, and it'sa [hefty] weight. When someone started talking about putting 400pounds of paint on a rail above our heads, I knew I needed to talkto an engineer."
Martha found that manufacturing consultants charge about $200 anhour-a fee that a small business like Gamblin just couldn'tafford. After talking to the Portland Development Commission,Martha found Charlie Martin, a manufacturing consultant for theOregon Manufacturing Extension Partnership (OMEP). Martin guidedthe Gamblins through their transition from a traditionalmanufacturing system to the newer, leaner, just-in-time model.
Martin's fee was just $65 an hour, a rate that issubsidized, in roughly equal parts, by local, state and federalfunding. "If I were doing this privately, I couldn'tafford to work with most of them," says Martin, who advisesabout six different small businesses at a time.
OMEP is part of the Manufacturing Extension Partnership (MEP), anational network of not-for-profit centers organized in 1986 by theNational Institute for Standards and Technology. The program hasmore than 400 centers around the country, at least one in everystate and territory, and it helps more than 20,000 smallmanufacturing businesses a year. Most of these businesses, like theGamblins', have 50 or fewer employees. Eligibility forparticipation in MEP varies by region. (Call 800-637-4634 for moreinformation.)
The Gamblins used to make colors in batches of 1,200 tubes ofpaint at a time, which would remain on the shelves as inventory forthree to six months. "Old-style American manufacturing workson a push system," notes Martha. "The whole system isabout putting a pig in a python-one huge bite that moves throughthe shop."
Now the Gamblins make colors in smaller batches-about 500tubes-and they focus on producing a single type of color at a time,like different kinds of red all made on the same day. "Manysmall businesses don't realize that we need a manufacturingphilosophy," says Martha. "We increase creativity andflexibility by reducing variation."
After implementing new manufacturing strategies, the Gamblinscut their inventory in half and freed up about $200,000 in cash,which they'll use to invest in capital growth and launch theirfirst advertising campaign.
The equation is simple: less inventory means more cash-and cashflow is king for any small business. "Each color turns twiceas fast. We're not putting three months of product on theshelf," says Martha. "Now it's down to six weeks, soour cash returns twice as fast."
The inventory change is just one of many the Gamblins have madesince they started working with Martin and the OMEP more than ayear ago. Quality control has also improved. "In each station,we ask the question, 'Am I making good stuff?' "says Martha. "If the answer is no, the production processstops. The manager is called, and there's 20 minutes to make adecision. Adjust and fix, or pull. The decision gets made right atthe station."
Every week, the 10-person production crew aims to solve oneprocess problem as a team. Everyone is involved-from staff meetingsto conversations and problem-solving on the floor. "Thisengages workers," says Martha. "They're not checkingtheir minds at the door. We have better jobs, better teams, bettermanagement, and a better environment for personal growth."
Although Martha has experience in business and management, shesays she still found the lean manufacturing systemcounter-intuitive at first. "We're well-educated peoplewith good common sense," she says, "and we couldn'thave done this without help."
Martin's guidance and the OMEP's help have made iteasier for the Gamblins to implement new procedures, but thechanges have not been easy for everyone to accept. "We startlooking at the shop floor as a system, and our goal is to improvethe function of the whole system. Instead of being hierarchical,it's more of a team process," says Martin. "But noteveryone works in this environment well. You do lose a smallpercentage. The shop-floor folks prefer it. The people who getthreatened tend to be first- and second-level managers-people whohave struggled their way up."
In fact, during the transition, the Gamblins lost twoemployees-a supervisor and a key operator-who were not comfortablewith the changes. "It's traumatic," says Martha,"but it's the price of change."
Jane Applegate is a syndicated columnist and the authorof 201 Great Ideas for Your Small Business. Fora free copy of her "Business Owner's Check Up," sendyour name and address to Check Up, P.O. Box 768, Pelham NY 10803 ore-mail it to email@example.com. Sarah Prior contributed to thisreport.