Just-in-time: The reincarnation of past theory and practice

Svensson, Goran
Management Decision; 2001; 39, 10; ABI/INFORM Complete
pg. 866

Focus on management history

Just-in-time: the reincarnation
practice

of past theory and

Goran Svensson
Vaxj6 University School of Management and Economics, and
G6teborg University. School of Economics and Commercial Law, Sweden

Keywords
Just-in-time, Organizational theory

Abstract
Many widespread managerial
concepts are expressed as
abbreviations of two or three
letters. In addition, they have
often been introduced and treated
as new-to-the-world by both
scholars and practitioners. For
example, Just-In-time (JIT1 is a
managerial concept that has been
heavily promoted In the world-wide
automotive industry. Its underlying
principles have been implemented
by most car manufacturers or car
assemblers for many decades. JIT.
as a phenomenon. has been
named differently at different
times during the last century.
Therefore. the newness of JIT and
its underlying principles is
questioned in the article. The
article describes parts of the
histone evolution of JIT during the
twentieth century in literature. It
is concluded that JIT is just a
reincarnation of past theory and
practice.

IIntroduction
Many of today's widespread managerial
concepts have been introduced and treated as
new-to-the-world.However, this is mostly
due to ignorance or a lack of knowledge.
Despite the fact that the accumulated
knowledge on the subject in literature is very
often enormous, for some reasons it is often
either forgotten or hidden. Sometimes, these
concepts have been heavily promoted by
busi ness people, consultants, consultant
agencies and so on. Unfortunately, the true
origin of managerial concepts is seldom
revealed.
There have emerged various managerial
concepts at different times in the past and
new ones are certain to emerge in the future.
Most of them are expressed as an
abbreviation of two or three letters, for
example just-in-time (JIT). JIT signifies a
continuous search for waste reduction and to
make only what is needed "just in time"
(Toyoda, 1987).It is a concept that has been
frequently promoted and has attracted firms
and their executives in many different
industries. Its underlying principles have
been widely implemented in the world-wide
automotive industry. By many practitioners,
and some scholars, JIT has been regarded as
an innovative and new-to-the-worldconcept.
Like many other recent managerial concepts,
JIT is suffering from the absence of roots in
literature. The objective of this article is
therefore to describe the historical evolution
of JIT in literature from the beginning of the
twentieth century. The contents of the article
are supported by references in literature
from the beginning of the twentieth century
until today.
Because of the keen competition in the
automotive industry, car manufacturers
have been searching for different means of

Management Decision

39/10 [2001] 866-879

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reducing costs. increasing productivity,

maintaining profitability, and so on. For
example, car manufacturers have been
striving to reduce, and in some cases
eliminate, inventories (e.g. sequence
deliveries which almost lack inventory
buffers between the supplier and the car
manufacturer's assembly plant), reducing
the number of subcontractors used (e.g. from
multiple sourcing to single sourcing per
component or material), and the sharing or
diffusion, partly or totally, of manufacturing,
assembling, research and development of
new materials and components (e.g.
outsourcing). These trends have to a certain
extent contributed to an increasing
interdependence between firms in the
marketing channels of the automotive
industry. The trends have also implicated a
movement of responsibility upstream, where
the different functions performed on the car
manufacturers' assembly line in the past
have now been transmitted to subcontractors. Rainnie (1991,p. 3) states: "JIT is
highly vulnerable to breakdown and relies to
a large extent on pushing responsibility for
quality control down the line to subcontractors" .
Much of the material published about JIT
focuses on the manufacturers' perspective
(John and Heriot, 1993),as joint ventures
between General Motors and Toyota
(Newman and Rhee, 1990),Toyota (Monden,
1983;Ohno, 1988),Ford (Deal, 1985)and others
(Ansari and Modarress, 1988)such as Buick,
Hewlett-Packard, Nissan and Kawasaki. A
number of reviews are published about JIT
(e.g. Sohal et al., 1988;Cheng, 1990;Goyal and
Deshmukh, 1992;Singh and Brar, 1992;
Waters-Fuller, 1995),which describe and
picture the meanings, applications and
models of JIT. Comparisons are also made
between JIT and conventional concepts.
Hence, publications about JIT may be
classified in several areas (Goyal and
Deshmukh, 1992),namely publications that
treat JIT as a philosophy (e.g. Sugimore et aZ.,

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Gbran Svensson
Just-in-time: the reincarnation
of past theory and practice

Management Decision

39/10[2001] 866-879

1977;Monden, 1981a,b; Schonberger, 1982;

Sohal et al., 1988),publications that treat the
implementation of JIT within different areas
and activities (e.g. Lee and Ansari, 1985;
Ansari, HJ86,)publications that present
mathematical models of JIT (e.g. Fellers,
1984;De Treville, 1987;Gupta and Gupta,
1989)and other areas within JIT. These latter
include set-up times (e.g. Lee and Seah, 1988),
quality aspects (e.g. Schonberger, 1982;
Monden, 1983),manufacturing units (e.g,
Monden, 1983;Ohno, 1988)and buyer/seller
synchronisation (e.g, Hall, 1983;Schonberger
and Gilbert, 1983;Manoochehri, 1984:Lee and
Ansari, 1985).There are also publications
that compare JIT with traditional systems
(e.g. Gelders and van Wassenhove, 1981;Rice
and Yoshikawa, 1982)and other JIT-systems
(e.g. Kim. 1985;Spearman et al., 1990).Thus,
implementation of JIT is well documented in
literature (Sohal et al., 1988).However, the
lack of a clear and concise definition of JIT
implicates a limitation in the ability to
develop mathematical models (Goyal and
Deshmukh, 1992;Sohal et al .. 1988).At the
same time, there are few publications that
focus on the interdependence between firms
in the marketing channels that JIT may
cause (Dp Treville, 1987).
Consequently, it may be stated once again
that JIT deals with the mi.nimising of waste
and the manufacturing of only what is needed
"just in time" (Toyoda,1987)in the marketing
channel and in the processes of
manufacturers (Greene, 1987).It does not
necessarily mean to speed-up the production
rhythm, but that the production contains
fewer disruptions, fewer disturbances,
improved quality, and so on (e.g, Porteus,
1986;Hay. 1987;The Industrial Robot, 1984).
JIT is a matter of achievi.ngan improved flowthrough in the processes of production (Hall,
1983)or as Stalk (1988,p. 41)expresses it:
Today, rime is on the cutting edge.The ways
leading companiesmanage time - in
production, in new product developmentand
introduction, in sales and distribution represent the most powerfulnew sources of
competitiveadvantage
However. there is a risk that the inventory
reduction increases the inventory volume
upstream in the supply chain (Berry, 1982),
and therefore it is of vital importance to
watch the totality of JIT. The marketing
channel should not only focus on isolated
parts (Manoochehri. 1984).There are a
number of studies that have shown great
savings within different areas as a result of
JIT (e.g. Lotenschtein, 1986:Hay, 1988),but
few of these studies, if any, consider the
totality of the marketing channel. The
manageri.al habit of using blinkers may

create situations where executives suboptimise their business efforts (Kailash and
Campbell, 1991).
In literature, there are many
interpretations of JIT, some of which are
described later in this article. Initially, in
order to clarify its meaning to some extent,
one might state that JIT embodies a
philosophy of excellence to establish demandpulled inventory practices that produce
products to design specifications at a rapid,
smooth, delivery rate with no idle inventories,
no unnecessary lead-times, and increased
employee involvement in the marketing
channel (Fogarty et al., 1989).Thus, JIT is a
commonly used concept, whose significance is
normally referred to as the removal of waste
and to make just what is needed, in order to
add value through the supply chain. This may
lead to reduced costs, to improved quality and
to flexible companies, which in turn may
create competitive advantages in the
marketplace (Waters-Fuller, 1995).
It should be noted that JIT is not an
academic concept or a concept created by
consultants, but was a concept created at
Toyota Motor Company (e.g, 'I'oyoda, 1987;
Sohal et al., 1988;Singh and Brar, 1992;Ohno,
1988)in order to manage its internal
activities and the relationships to subcontractors as efficiently as possible (Heiko,
1989).An interesting comparison might be
made to two other managerial concepts,
namely "supply chain management" and
"efficient consumer response". The former
was founded in the beginning of the 1980sby
scholars (Oliver and Webber, 1982),the latter
being defined by a consultant agency (Kurt
Salmon Associates, 1993).This is a concept
widely promoted and used by them and
others in the grocery and retail industry (e.g.
Coopers & Lybrand, 1996;GEA Conulenti
Associati di Gestione Aziendale, 1994,).
The concept of "just-in-time" may also be
interpreted as "at the last minute", which is
well in accordance with the ideas of the
originator Kiichiro Toyoda (Toyoda, 1987).
Another similar concept is "just-in-case",
which should not be interpreted as JIT, but
as a precursor. It was the western world's
traditional approach to manage the supply
chains or the marketing channels (e.g.
Nelleman and Smith, 1982;Rajan and de
Treville, 1987).Thus, JIT is basically a kind
of stockless production technique or on-theroad inventory philosophy.

I Other

related managerial concepts

In order to broaden the perspective and to
position the concept of JIT in a wider context,
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G6ran Svensson
Just-in-time: the reincarnation
of past theory and practice

Management Decision

39/10[20011866-879

references to some other managerial

concepts that basically have the same
underlying ideas as JIT are made. These
concepts might also be seen as managerial
and pragmatic imitators to the concept of JIT
and its underlying principles.
A further development of the JIT
philosophy is quick response (QR), which is a
concept that has its origin within the
American textile industry. QR might also be
seen as an imitator of Jl'I'. QR is defined, for
example, by Stern et al. (1996, p. 176) as:
the application of just-in-time concepts
throughout the entire supply pipeline, from
the manufacturer to the final consumer,
provides the capability to reorder
merchandise as it is sold. The data-collection
and recording capabilities of bar-code
technology and the ability to communicate
those data throughout the supply pipeline via
electronic data interchange are the tolls
needed to build a Quick Response system.
Supply chain management (SCM) and supply
chains are two other concepts that have been
popularised in recent years. They are also
closely related concepts in relation to JIT.
Chri.stopher (1992, p. 12) writes about the
concept of the supply chain:
The supply chain is the network of
organisations that are involved, through
upstream and downstream linkages, in the
different processes and activities that
produce value in the form of products and
services in the hands of the ultimate
consumer.
Other authors use the word "pipeline" to
describe supply chains. Coyle
et al. (1996, p. 1) write:
. there is a recognition that companies are
usually part of a "pipeline" or supply chain
that brings a product to the ultimate user. In
its simplest context, the supply chain
involves a company's vendors and direct
customers. The supply chain perspective
ultimately recognizes that all three parties
are, in a sense, partners in bringing a product
to market.
Many years ago, Banbury (1975) used the
concept of supply chain:
The distribution system is the final link in the
chain of supply from generator to consumer,
but while it may be the last link it is by no
means the least important. An individual
supply may be small and insignificant in cost
itself, but to the consumer it is all important
with some 13 million consumers in Britain
the total expenditure on the distribution
system is highly significant.
Oliver and Webber (1982) might be seen as
the founders of the concept supply chain
management (SCM). In a study performed in
the US, Japan and Western Europe, they
concluded that traditional approaches to

integrate distribution channels did not work

well and stated:
We needed a new perspective and, following
from it, a new approach: supply-chain
management (Oliver and Webber, p. 64).
Oliver and Webber (1982, p. 66) also argue
that SCM is different to traditional materials
and production management in four respects,
namely:
... it views the supply chain as a single entity
rather than relegating fragmented
responsibility ... It calls for - and in the end,
depends upon - strategic making ... provides
a different perspective on inventories ...
management requires a new approach to
systems: Integration, all simply interface, is
the key.
Another more concise definition of SCM is
formulated by Ellram and Cooper (1993, p. 1):
An integrating philosophy to manage the total
flow of a distribution channel from supplier
to ultimate customer.
ECR is another concept which is used in the
world-wide grocery and retail industry. The
first existing definition of importance, in
literature, was originally established by Kurt
Salmon Associates (1993, p. 1):
The ultimate goal of ECR is a responsive
consumer-driven system in which
distributors and suppliers work together as
business allies to maximise consumer
satisfaction and minimise cost. Accurate
information and high-quality products flow
through a paperless system between
manufacturing line and checkout counter
with minimum degradation or interruption
both within and between trading partners.
Since the beginning of the 1990s, there have
been many proposed definitions. One of these
is from Coyle et al. (1996, p. 8), who define
ECR thus:
ECR is an attempt to increase the velocity of
inventory in the package goods industry
throughout the supply chain of wholesalers,
distributors, and ultimately to consumers. To
be successful, the ECR approach will have to
eliminate most of the forward buying
practices of large wholesalers and retailers,
which have led to large inventory
accumulations in that industry.
At the time of its arrival and diffusion to
Europe, other definitions started to appear.
For example, ECR Europe (1995), which is an
European association, working in favour of
the diffusion of ECR in the European retail
industry and amongst their executives,
defines the concept concisely as:
Working together to fulfil consumer wishes,
better, faster and at less cost.
These definitions contain a strong consumer
perspective and this is still the core idea of
ECR.

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Goran Svensson
Just-in-time: the reincarnation
of past theory and prac tice
Management

Decision

39/10[2001] 866-879

As a result of the definitions presented, one

might conclude that JIT. in some parts, is a
forerunner and related to other managerial
concepts like QR. SCM and ECR. Although
there are differences, the underlying core
ideas of the various concepts are very much
the same, as for example, in terms of a
holistic perspective, demand-driven systems,
market and consumer orientation, waste
reduction. and pull approach.

I Theoretical

framework

JIT is strongly associated to marketing

channel theory. A marketing channel and a
supply chain have a vertical emphasis, so
that horizontal matters are not usually
included. Therefore, the theoretical
perspective in this article of JIT in marketing
channels is supported by and limited to
channel theory (e.g. Weld, 1916;Bucklin,
1966).At the beginning of the twentieth
century, scholars utilised economic
foundations to analyse how a distribution
channel could be structured more efficiently
for the eventual benefit of the ultimate
consumer (Sheth et al.. 1988).Different
principles may dominate activities
performed in the marketing channel. For
example, the principle of postponement (e.g.
Alderson. 1950),which might be described as
a pull approach, and the principle of
speculation (e.g. Bucklin. 1965), which might
be seen as a push approach. However, the
holistic approach of the marketing channel
and sUPPlYchain is of major interest (e.g.
Culliton ct al., 1956;Brewer and Rosenzweig,
1961)in today's competitive marketplace in
many industries.
Different circumstances in the
environment may create dependences in a
marketing channel or a supply chain. In
literature, various theoretically paired
concepts are of interest, for example power/
dependence (e.g. Cartwright. 1959; Emerson,
1962),risk/uncertainty
(e.g. Knight, 1921;
Ganesan. 1994),and reliability lavailability
(e.g, Sandler. 1963;Frankel, 1988).There are
some other concepts too that could be of
interest, for example, conflict (e.g. Lusch,
1978;Rosenberg and Stern, 1971),control (e.g.
Pfeffer and Salancik, 1978),and exchange (e.g,
Blau, 1964).However, the essence of this
article is on the dependence between firms in
a marketing channel, that is, in a JIT context.
Traditionally, channel literature has
concentrated on vertical dependencies
between firms in the marketing channel. A
marketing channel consists of a number of
actors or intermediaries that take part in the
exchange process, since they may improve

the efficiency of the channel (Alderson, 1954).

The point of departure may also be what
creates independence for firms (Blau, 1964).
In a marketing channel, activities are
specialised and there is a functional
distribution between firms (e.g, Bucklin,
1966;Alderson, 1954).The dependence
between firms may be explained by the fact of
the division oflabour (e.g. Stigler, 1951;Stern
and El-Ansary, 1992).Nowadays, firms in a
marketing channel strive to satisfy the
ultimate consumer or as Steudel and
Desruelle (1992, p. 2) express it:
In essence, being world-class means being
capable of bringing products to the
marketplace that offer better value than the
competition ..
Generally, there is a mutual dependence
between firms in a marketing channel (e.g.
Alderson. 1957, 1965;McCammon and Little,
1965;Stern, 1969).Existing interdependencies
create a necessity for co-operation between
firms. in order to achieve individual and
sometimes mutual goals.
The supply chain which is a part of the
marketing channel should be regarded as a
single entity (Alderson, 1965),a superorganisation (Stern et al., 1996) or a social
system (Balderston, 1964)consisting of a
number of interdependent firms that are
involved in the task of the distribution of
products to the ultimate consumer. However,
the problem is not to design a marketing
channel or a supply chain theoretically, but
to make it work practically (Stern et al., 1996,
p. 281):
. .. the job of a channel manager is not done
when that optimal channel is designed; the
manager now has to make that channel work!
There is no guarantee that the optimally
designed channel will actually operate
successfully.
The selection of a marketing channel and its
logistic system becomes of vital importance
for the presence or absence of dependence in
a marketing channel (Magee, 1960).To put
the matter in a nutshell (Coleman and
Jennings, 1998, p. 63):
... management is only as strong as the
weakest link in its supply chain ...

I The essence

of JIT

Based upon the theoretical framework

described in the previous section, JIT applies
to a certain extent to the principle of
postponement (e.g, Alderson, 1950;Bucklin,
1965). For example, activities are postponed
to latest possible point in time to reduce costs
(e.g, Alderson, 1950).Alderson (1957, p. 424)
states;
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G6ran Svensson
Just-in-time: the reincarnation
of past theory and practice

Management Decision

39/10[2001] 866-879

One general method which can be applied in too late. Monden (1981a,b) defines JIT as the
promotingthe efficiencyof a marketing
idea of producing the necessary units in the
system is the postponementof differentiation necessary quantities at the necessary time.
the principle of postponementrequires that
Rao and Scheraga (1988)comment that JIT is
changesin form and identity to the latest
an approach to production management that
possiblepoint in the marketing flow;
can yield enormous productivity increases,
postponechanges in inventorylocationto the
inventory reductions, and quality
latest possiblepoint in time.
improvements. Schonberger (1982)states that
This principle is based on the fact that a firm JIT is manufacturing without inventories,
outsources activities to others in the
and the elimination of waste. Shingo (1984)
looks at it slightly differently. JIT is a system
marketing channel (Stigler, 1951),without
to eliminate everything that is not necessary,
affecting the total outcome of the channel
and JIT signifies that each process should be
negatively. These functional
provided with the right components, the
interdependencies might be seen as the
foundations of the holistic approach (Culliton right quality and at the right time. Vollmann
et al. (1988)focus on JIT as a philosophy of
et al., 1956;Brewer and Rosenzweig,1961).
pursuing zero inventories, zero transactions,
From time to time interdependencies are
and zero disruptions. Finally, De Treville
emphasised in terms of JIT. Culliton et al.
(1987)identifies four categories of JIT,
(195Gp, p. 64-5)use "the total cost concept"
and Brewer and Rosenzweig(1961,p. 70)use namely:
1 JIT flow control only;
the concept of "rhochrernatics'', which
2 flexible resource allocation;
means:
the scienceof product or materials flows. 3 disruption and learning; and
The term is connotedto mean scientificor
4 all JIT elements.
systematic approachesto the managementof
In literature, the richness of different
materials flows(Brewerand Rosenzweig,
definitions is overwhelming. Thus, published
1961, p. 70).
definitions of JIT are often given different
A JIT system should be regarded as a holistic meanings. However, two main components of
vertical approach or system.
the definitions seem to appear repeatedly,
namely, a continuous search for waste
reduction and to make only what is needed
Definitions
just in time. This is well in accordance with
the concept's original definition (Toyoda,
In order to catch a more profound and
1987).
comprehensive picture of JIT, some

definitions are presented. In literature, there

are many interpretations of JIT, and in order
to clarify its meaning different definitions of
JIT are reviewed. For example, Christopher
(1992)comments on JIT that it is both a
technique and a philosophy. He also writes:
It is basedupon the simpleidea that wherever
possibleno activity should take place in a
systemuntil there is a demandfor it. Thus no
products should be made, no components
ordered, until there is a downstream
requirement (Christopher,1992p
, . 153).
Hence, JIT applies to a so-calledpull strategy.
Another definition is collected from Ballou
(1992,p. 153),who defines JIT as:
A philosophyof schedulingwherein the
entire supply channel is synchronizedto
respond to the requirements of operations or
customer.
He sees JIT as a synchronised consumerdriven system. Aggarwal (1985)regards JIT
as an approach for providing smoother
production flows and making continual
improvements in processes and products.
Hall (1983)writes that JIT is a philosophy
where all goods are to arrive exactly when
they are needed, that is, neither too soon nor

I Objectives
In the same way that the meaning of JIT is
unclear and ambiguous in literature, the
objectives of JIT are nevertheless very much
dependent upon the author. For example,
Aggarwal (1985)sees JIT's core objectives as
obtaining low-cost,high-quality, and on-time
production. Hall (1983)writes that the
objectives of JIT are a stockless production
and an elimination of waste. Monden (1981a,
b) defines the goals as the reduction of costs
surrounding production processes, and the
system also helps to increase the turnover
ration of capital. Rao and Scheraga (1988)
comment that the purpose is to eliminate all
waste. Waste refers to any incurred cost,
such as inventory, set-up, scrap, and rework
that does not add to the value of the product.
Schonberger (1982)states that the objectives
are to produce and deliver all kinds of goods
only at the time needed. Shingo (1984)looks
at its goals as achieving stockless
manufacturing, that is, each process should
be provided with the right components, the
right quality and at the right time. Vollmann

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Gbran Svensson
Just-in-time: the reincarnation
of past theory and practice
Management

Decision

39/10 [2001J 866-879

et al. (1983)state that it is about the reduction

of the slack to zero in a firm's activities.
Finally, De Treville (1987)argues that the aim
of JIT is quite simply success.
The objectives of JIT are hard to interpret
due to the lack of homogeneity in literature.
However, two objectives seem to be common
denominators: a continuous search for waste
reduction and to make only what is needed in
time. This is also well in accordance with the
concept original objectives (Toyoda, 1987).

I Means
Firms may, according to the literature, take
many different actions to achieve the main
objectives of JIT, which certainly vary to the
same extent as the definitions and the
objectives. For example, Aggarwal (1985)
states that to achieve the objectives of JIT the
system strives to eliminate stock or buffers
between rhe successive processes, and to
minimise any idle equipment, facilities, or
workers. Hall (1983)writes more concisely
that it is a matter of reducing inventories.
Monden (1981a,b) argues that the JIT ideal is
achieved through the smoothing of
production, the design of processes, and the
standardisation of jobs. Rao and Scheraga
(1988)state that it is to design product
structures so that a small number of
materials and parts can be purchased,
fabricated and assembled into components, to
install pull signals on the shop floor, and
improved reporting of quality performance.
Schonberger (1982)says that it is about total
quality management and continuous
improvements. Shingo (1984)argues for a
shorter manufacturing run-through.
reduction of machine failures, diminished
set-up times, flexible manufacturing, and so
on. Vollmann et al. (1988)state that it is about
changes in physical systems. the reduction of
set-up times, and a drive towards lot sizes
that are constantly smaller, as well as the
reduction of inventory levels et cetera.
Finally, De Treville (1987)argues that it is to
reduce buffer size, and to use disruption to
cause learning in order to remove
organisational slacks.
The potential in literature through the
implementation of JIT is regarded as
substantial (Kellock, 1985).There are
however differences between, for example,
American and English companies in their
implementation of JIT (Billesbach et al.,
1991).In developing countries, other
problems appear (Msimangira, 1993).It
should be remembered too, that inventory
reduction in Japan was not an objective in
itself, bur rather a necessity since the

economy was ruined by the second world

war, which forced the Japanese economy to
maintain a strict control of the scarce
domestic resources of the country
(Bartholomew, 1984).
Consequently, the means to achieve the
objectives of JIT vary between authors, as do
their definitions and objectives. As the
illustrated examples in literature have
shown, published definitions, objectives and
means of JIT are often given different
meanings and interpretations, but there is an
agreement concerning the benefits that may
be obtained through the implementation of
JIT such as: reduced inventory, lowered unit
costs, improved quality, more rapid reaction
to changes in design, and increased
productivity. I believe that the essence of JIT
might be summarised as a holistic vertical
pull approach.

I JIT -

a historic review

This section of the article describes the

evolution of JIT during the twentieth century
by means of a sample of different sources in
litera ture.
The Japanese business philosophy of JIT is
argued, by the author, to be built upon
existing thoughts in the western world. The
difference is that Japanese firms have
implemented and introduced additional and
improved solutions (Ramsay, 1990).
Therefore the underlying ideas, thoughts,
and principles of JIT are in themselves longstanding. JIT also has a strong focus on the
final customer, that is, a so-called pull
approach, which is a strategy that has been
known for many decades. For example,
Copeland (1923,p. 288)writes:
One of the first steps to be taken by a
manufacturer, who is seekingto effect
economiesin selling his product, is to make
an elementary analysis of the habits of
consumers in buying articles of the sort he is
producing.
Accordingly, customer orientation is nothing
new. Shaw (1912,p. 736)comments:
Goodsare being madeto satisfyrather than to
sell ... Todaythe more progressive
businessman is searching out the
unconsciousneeds of the consumer,and is
producingthe goodsto gratify them.
Ford's inventory of finished and completed
cars was non-existent, because the demand of
their products was higher than their capacity
to produce (Arnold and Faurote, 1919).In the
1950s,the Japanese shipyards applied JIT in
their steel deliveries from steel mills
(Schonberger, 1982).Consequently, the pull
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G6ran Svensson
Just-in-time: the reincarnation
of past theory and prec (ice

Management Decision

39/10 (2001J 866-879

approach of JIT has been applied for almost a

century.
During the twentieth century there have
been other systems of vertical flows such as
group production. Gallagher and Knight
(197:3,p. 7) refer to a Swedish manufacturer
that in the 1940s used a group production
system:
The principles of group production are an
adaptation of line production to machineshops working on batch production. . this
implies radical decentralisation into small
independent production units or groups, each
comprising the machines and everything
needed for the complete manufacture of a
special category of parts.
This was implemented again in the 1990s by
Volvo, but did not work out well in a JIT
context The company did not achieve
sufficient profitability.
In the beginning of the depression in the
1920s a phenomenon called "hand-to-mouthbuying" appeared (McGill, 1927), which
basically is similar to JIT, in the sense of
inventory reduction and an improved rate of
turnover in the inventory management. The
same concept was used in the mid-1970s
(Baily and Farmer, 1977), and referred to
what the Japanese companies, at the time,
called JIT (Ansari and Modarress, 1988).
Originally, the concept of JIT was founded in
1937 by Toyoda (1987, p. 58), whose basic
thought was:
Just make what is needed in time, but not
make too much.
In ]929, he had been visiting Ford's plant at
River Rouge (Womack et al., 1990), which
might have inspired him.
Since the mid-1970s. when the first
contributions were published about JIT
(Sugimore et al., 1977),many books and
articles have been written on the subject (e.g.
Monden, 1983; Schonberger, 1982). At the
time, the concept of JIT was not used in the
western world, but it was called the "Toyota
manufacturing system" (Sohal et al., 1988).In
the western world even the name "Kanban
System" was used, which was misleading,
because Kanban is just a part of a JIT system.
The fundamental and underlying ideas of
JIT have their origins at least at the
beginning of the twentieth century. Within
agriculture and road construction, the
principles of JIT have been implemented for
generations (Arnold and Bernard, 1989).In
literature, the impression is transmitted that
JIT is a new and modern phenomenon, whose
true origin is seldom revealed, but, as stated
above, that is not the case (e.g, Cheng, 1990;
Hartley, 1981). Wilson (1995, p. 75) states:
The parallels between the JIT approach and
Ford's Model T production system are

striking. Henry Ford was one of the foremost

proponents of JIT systems .
Toyota's production system is usually
referred to as the origin of JIT. Wilson (1995,
p. 75) also states that:
The key difference between the two systems
follows from Ford's strictly and purposefully
limited product line. The environments that
the two faced were immeasurably different
but their approaches are more alike than is
generally recognized.
Faurote (1928, p. 302) comments on Ford's
refined manufacturing:
stock will be forthcoming when needed,
that no surplus will be allowed to pile up at
any point along the process line, that both the
department supply of raw materials and
finished parts shall be adequate at all times
and in their right places.
The Ford manufacturing system used at the
beginning of the twentieth century is now
called J1T (Johnson, 1992).Also, Weld (1916,
p. 6) realised the importance of the different
parts of a system:
At each step an increment of value is added
by those who handle or transform the
product.
Since the beginning of the twentieth century,
disruptions in the supply chain have been an
ever present phenomena (Faurote, 1928), as
well as waste reduction (Bornholt, 1913).
Thus, the importance of the supply chain is
long since recognised. Arnold and Faurote
(1919, p. 25) comment on the subject:
Handling of materials and work in progress of
finishing is now the principal problem of
motor-car cost-reduction, as the machine
tools and the assembling processes and
methods are now highly specialized
However, the success of JIT requires wellfunctioning communication between firms
(Richeson et al., 1995). Helms (1990) argues
that communication is the key to the
successful implementation of J1T. Waller
(1991) states that electronic data interchange
is information that is delivered in J1T! The
fundamentals of JIT are simple, but hard to
implement practically (Heiko, 1989).
Schonberger (1982, p. 17) describes the
complexity of JIT:
Produce and deliver finished goods just in
time to be sold, sub-assemblies just in time to
be assembled into finished goods, fabricated
parts just in time to go into sub-assemblies,
and purchased materials just in time to be
transformed into fabricated parts.
The supply chain cannot work satisfactorily
and optimally if all the various components
do not work together. On the one hand, JIT is
a matter of reducing inventories, sometimes
to achieve so-called zero inventory. On the

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G6ran Svensson
Just-in-time: the reincarnation
of past theory and practice
Management

Decision

39/10[2001] 866-879

other hand, it is not just a system to be

installed, but a different lifestyle and
business culture that strives to achieve
simplicity throughout the company and the
rest of the supply chain (Hall, 1983).
The point of departure for the rest of this
article is a brief historical review of three
widespread and well-known trends that have
been implemented in many industries, and
that have been intensified in the last decade.
These are inventory optimisation (i.e.
inventory reduction), sub-contractor
optimisation (i.e. from multiple to single
sourcing). and outsourcing optimisation (i.e.
buying instead of making).
One of three significant trends in the
context of JIT is that firms strive to minimise
their inventories between actors and
processes in the marketing channel or the
supply chain. In the seventeenth and
eighteenth century, the well-being, strength
and richness of factories and trading houses
was judged in terms of their inventory sizes.
The higher inventory levels the richer,
stronger, more influential and attractive
were the factories and trading houses.
Pappilon (1937, p. 20) stated:
The stock or riches of kingdom doth not only
consist of our money, but also in our
commodities and ships for trade and
magazines furnished with all necessary
material.
Not until the beginning or the twentieth
century did executives become aware of the
inventories and the supply chain as
influential factors for the availability of cash
and the flexibility of a company (McGill,
1927).Arnold and Faurote (1919, p. 33) studied
the supply chain at Ford and concluded:
The Ford shops are minutely systemised, and
all accounts are carefully and accurately kept;
no purchase order is issued without what
amounts to a complete inventory of the
component under replenishment.
Many recent authors (e.g. Hall, 198~1s)tate
that JIT is a philosophy where all goods are
to arrive exactly when they are needed, that
is, neither early nor late. The importance of
inventory size has been acknowledged for a
long time. For example, Bornholt (1913,
p. 1672) states:
The first machine set" the pace and the
operators of the other machines must keep
their machines moving at a similar rate so
that the stock will not run short or
accumulate.
In the 1920s, traditional supply chains were
discovered as causing problems for
prosperous companies. At the time, many
supply chains contained great amounts of
buffers that caused the emergence of a
phenomenon called "hand-to-mouth-buying"

in the US economy. McGill (1927, p. 344)

comments on the topic with the following
words:
It is considered the purchase of stocks of
merchandise by the retailer or the purchase
of raw and semi-finished materials by the
manufacturer in limited quantities encourage
more rapid turnover and reduce inventories.
The roots of one of the recent trends (i.e.
inventory reduction) within JIT had
definitely emerged. During the depression
that followed in the US society, firms began
to put emphasis on the inventory levels and
their supply chains, that is, as the name
indicates, "hand-to-mouth-buying". Thus, the
awareness of the importance of supply chains
was discovered and commenced to influence
firms' business activities. Whitin (1957,
p. 219) expresses himself rather harshly:
Inventories are often referred to as the
"graveyard" of US business, as surplus stocks
have been a principal cause of business
failures. Inventories are also considered a
destabilising influence in business cycles ..
Businessmen have developed an almost
pathological fear of increasing inventories.
Nowadays, firms that keep high levels of
inventories are regarded as less prosperous
and more vulnerable. However, inventory
may restrict capital flexibility, which in turn
may limit the firm's liberty to use its
resources in the most suitable way. There are
companies that have involved the
importance of lean supply chains in their
business mission. For example, Metsa Serla
Tissue is a manufacturer and market leader
in the Scandinavian consumer goods market,
that produces toilet paper and kitchen rolls.
The company has the following phrase in
their business mission:
Strive to achieve a smooth flow of goods and
information in the whole supply chain.
This is due to the fact that the information
technology has made it possible to implement
it practically (Silver et al., 1998). Some
reasons that might explain the past behavior
are that product life cycles were longer
(Kotler, 1997), innovations were diffused
slowly on narrow and limited markets
(Rogers. 1962, 1982),competition was less
keen (Porter, 1985), and the complexity of
technology, production, and product was less
developed.
Rainnie (1991) argues that JIT is highly
vulnerable to breakdown and relies to a large
extent on pushing responsibility for quality
control upstream to sub-contractors. The
interdependence between firms in a
marketing channel has been of interest since
at least the beginning of the twentieth
century. For example, Faurote (1928, p. 303)
writes:
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Just-in-time: the reincarnation
of past theory and practice
Management

Decision

39/10 [2001J 866-879

- --

Like other shops, the Ford Motor Company

has its problems of material supply,
shortages, transportation of raw and finished
parts.
He also states (Faurote, 1928, pp. 303-4):
Summed up briefly, Ford Management would
seem to consist of having a clear ideal of the
product to be manufactured, knowing
beforehand exactly what materials will be
needed in its structure, where these are to be
found, how they are to be transported from
the source to the plant, when and how they
can be stored, how they are to be fabricated,
what machines and tools will be needed, how
many workmen will be required, and of what
mental calibre.
The automotive industry has been strongly
influenced by the underlying principles of
JIT. Ford (1923) pointed out fundamental
conditions required for the well-functioning
of the marketing channel or the supply chain.
Comparing Hall's (1983)definition with Ford,
many decades earlier, interesting parallels
are revealed. Henry Ford was a man that had
early thoughts related to JIT (Ford, 1923,
p. 143):
We have found in buying materials that it is
not worth while to buy for other than
immediate need. We buy only enough to fit
into the plan of production, taking into
consideration the state of transportation at
the time. If transportation were perfect and
an even flow of materials could be assured, it
would not be necessary to carry any stock
whatsoever. The carloads of raw materials
would arrive on schedule and in the planned
order and amounts and go from the railway
cars into production. That would save a great
deal of money, for it would give a very rapid
turnover and thus decrease the amount of
money tied up in materials.
Thus, Ford pointed out some fundamental
conditions required for the well-functioning
of the supply chain. His thoughts of almost a
century ago are nowadays called JIT!
Silver and Peterson (1985,p. 2) comment on
the importance of the supply chain and its
economic consequences for the firm:
According to Statistics Canada the total
inventories owned by Canadian
manufacturers are in the neighbourhood of
$30 billion. Furthermore, on average, 34
percent of the current assets and 90 percent of
the working capital of a typical company in
t he USA are invested in Inventories. In
addition, considerable labor costs (clerical
and managerial) are incurred in the control of
inventories.
Nowadays,
knowledge
inventory
situations
reduction

it is common and recognised

that the existence of high
levels may create critical
for a firm. Therefore, the
of inventories has gained

popularity in the last decades. Though, as

Coleman and Jennings (1998, p. 63) state:
Inventory reduction increases reliance on all
members of the supply chain, particularly the
distribution and the transportation functions.
One of the trends dealing with inventory
reduction within a JIT context might be
argued as well-known and implemented in
the past. Therefore, it is argued that this part
of .JIT is definitely not new-to-the-world.
Another of the three significant trends in
the context of JIT is that firms in many
industries (e.g. the automotive industry)
strive to move from multiple sourcing
towards dual or single sourcing per
component or group of components. This is
done due to the keen competitive
environment in the marketplace (Ramsay
and Wilson, 1990). In other circumstances
where companies have only one available
source, so-called sole sourcing becomes
necessary, due to geographic location,
exclusive rights, customer preferences, lack
of alternatives or monopoly (e.g.
Bartholomew, 1984; Hall, 1983; Trevelen,
1987). A reduced supplier base fits well in
terms of a JIT system. However, at the
beginning of the twentieth century, the
necessity for fewer sub-contracting
intermediaries was alerted. Weld (1916, p. 14)
writes:
.. the popular opinion is that subdivision of
the marketing process into a number of
successive steps has been carried too far - in
other words, that there are too many
middlemen between producer and consumer.
At the time, Shaw (1912, p. 730) concluded
from some of his empirical observations that:
The tendency to decrease the number of
middlemen is one of the most characteristic
features of modern distribution. It promises
to show much greater development in the
future if present economic conditions
substantially continue.
Reduced sub-contractor sourcing implies that
fewer suppliers are in charge of the
responsibility to perform a set of functions
that were previously performed by others. It
might be seen as a kind of vertical
integration. Weld (1916, p. 20) states:
When one dealer undertakes to combine and
to perform functions formerly performed by
two or more successive middlemen, we have
what might be called integration ...
The diminishment of the sub-contractor base
is encouraged by those benefits that may be
achieved, but at the same time implicates
costs (Porter, 1980).The risk that a company
may be exposed to when using single
sourcing is often argued as less

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G6ran Svensson
Just-in-time: the reincarnation
of past theory and practice

Management Decision

39/10[2001] 866-879

recommendable. Arnold and Faurote (1919.

p. 33) come to the conclusion that:
It is the policy to deal with several suppliers
of the same component, to ensure supply by
drawing from several sources (which
certainty of supply could not be had from any
single producer) and also to make possible
avail of competitive advantages not to be had
if the total orders were placed with a single
producer only.
A phenomenon implemented in the
automotive industry is the creation of subcontractor parks nearby the assembly plant
of a car manufacturer. In these parks the subcontractors perform assembling activities
that were previously done within the
manufacturer's assembly plant. This is a
trend that has reinforced the outsourcing of
activities to sub-contractors in the
automotive industry. At the beginning of the
twentieth century, Ford strove to incorporate
and own as many functions as possible
within the company, in order to satisfy the
need of different components and materials.
Drucker i 1990, p. 100) writes:
In the early 1920s,when the Model T was in
its full glory, Henry Ford decided to control
the entire process of making and moving all
the supplies and parts needed by his new
plant, the gigantic River Rouge. He built his
own steel mill and glass plant. He founded
plantations in Brazil to grow rubber for tires.
He bought the railroad that brought the
supplies to River Rouge and carried away
finished cars. He even toyed with the idea of
building his own service centres nationwide
and staffing them with mechanics trained in
Ford owned schools, but Ford conceived all
this as a financial edifice held together by
ownership. Instead of building a system, he
built a conglomerate, an unwieldy monster
that was expensive, unmanageable and
horrendously unprofitable. In contrast, the
new manufacturing system is not controlled
at all. Most of its parts are independent
suppliers at one end, customers at the other.
Thus, this form of complete control and
ownership of the different processes involved
in the car manufacturing, from raw
materials to finished car, did not produce any
real benefits for the company. The necessity
for outsourcing was empirically confirmed
and for a car manufacturer was a necessity to
survive and to stay in business. However, the
well-functioning of distribution is of
substantial importance for the
competitiveness of a firm (Davis, 1994),
because it only lead to reduced costs,
improved quality and increased flexibility
(Waters-Fuller, 1995).
The underlying ideas and early origin
during the twentieth century behind
outsourcing might be traced in the literature.

(e.g. Shaw, 1912;Weld, 1916).Weld (1916,p. 20)

states:
But the tendency in many trades has been for
dealers to restrict their operations by
specialising on a narrower and narrower set
of functions, thus bringing about a greater
subdivision of processes and larger number of
successive middlemen.
He also writes (Weld, 1916, p. 21):
.. it is at least true that there is ample
economic justification for a subdivision of the
marketing process among specialised classes
of dealers; that in some cases lower costs and
greater efficiency may be gained by further
specialization
Shaw (1912, p. 7:32)comments on outsourcing
of the distribution to third party logisticians:
The transportation companies and the
express companies are in a true sense
middlemen in distribution, tho they perform
but one of the functions formerly shared by
successive middlemen who took over
functions by area.
Already at the beginning of the twentieth
century, marketing channels were dedicated
to their core competence and core activities.
Ford's factories bought ready-made from
others, rather than manufacturing parts
themselves. Arnold and Faurote (1919, p. 33)
writes:
The Highland Park shops are very far from
manufacturing the entire Ford car. A long list
of components. both rough and finished, are
purchased from outside suppliers.
Accordingly, outsourcing
for a long time.

has been with us

I Conclusions
The main message in this article is that JIT is
not new-to-the-world, but a suitable and
attractive etiquette or name that has gained
world-wide acceptance in the last decades.
However. its underlying thoughts and
principles are long since documented in
literature. For example, optimisation of
inventory management, supplier sourcing,
and outsourcing have been well known for
many years. Ford was a man of visions.
According to Faurote (1928, p. 305) he said:
We know very little about the smallest thing,
the atom, and practically nothing about the
largest thing, the universe ... There is plenty
of room for thinkers.
In some aspects he was a man of modern
thoughts. At the time, he knew the
importance of the holistic approach. The
principal question of whether JIT had any
novelty value at the time it was introduced,
namely that it was new-to-the-world, has
been answered. However, the author of this
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Goran Svensson
Just-in-time: the reincarnation
of past theory and practice
Management

Decision

39/10[2001] 866-879

article argues that JIT only has cosmetic

novelty value. Therefore, it is highly
overestimated. The theoretical evidence that
is brought forward in the paper supports the
questioning of the novelty value of JIT. It is
argued that JIT is nothing more than a
similarity to the reincarnation of past theory
and practice!

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