Just-in-Time Manufacturing

Computerworld - Until a crystal ball comes along that lets companies forecast exactly what their customers will want so they can make it in advance, large corporations will continue to turn to just-in-time manufacturing.

This process lets manufacturers purchase and receive components just before they're needed on the assembly line. As a consequence, it relieves manufacturers of the cost and burden of housing and managing idle parts.

Although companies such as SAP AG offer enterprise resource planning software to coordinate supply chains so they can handle just-in-time processes, analysts say there's still a lot of room for improvement by using the Web.

Most observers point to automotive firms such as Torrance, Calif.-based Toyota Motor Sales USA Inc. as the earliest and highest-profile adopters of just-in-time processes. High-tech companies such as Round Rock, Texas-based Dell Computer Corp. and San Jose-based Cisco Systems Inc. have followed suit.

"The Toyota production system is famous for efficiency and coordination, but it has been a highly manual system with very low-level technology," says Tom Jones, a senior vice president at Miami-based Ryder System Inc., which outsources just-in-time supply-chain services.

But Toyota has been working to make its supply chain more flexible by moving it onto the Web, and other car companies such as Dearborn, Mich.-based Ford Motor Co. have been following in Toyota's treads, says Jones.

The Web allows the automakers to send requests for parts to their suppliers as the need arises, regardless of whether disparate computer platforms are involved. For instance, if a car company experiences a high demand for a certain color vehicle, it can notify its paint supplier and get the product delivered to its factory quickly and with a minimum amount of human intervention or paperwork.

Build to Order

In the high-tech area, companies are turning to a build-to-order process in which a product is customized and manufactured according to specific customer requests, making just-in-time manufacturing and delivery key, says Michael Burkett, a senior research analyst at AMR Research Inc in Boston.

At Dell, the process is called "pull to order," says company spokesman Venancio Figueroa. "It's a critical element of our build-to-order manufacturing process," he says. The model contributes to "increasing the accuracy of doing business, both from a customer and supplier standpoint."

Once the parts are delivered, the assembly-line process can begin prepping components. Dell then begins manufacturing the actual computer. Afterward, it tests and does custom integration work for the finished product.

The build-to-order process is only one part of Dell's approach to efficiency - to further improve the manufacturing processes, the company also relies on special hydraulic tools, conveyor belts and tracks, reducing the need for human intervention by half. This means better overall quality, says Figueroa.