The author examines the simple but profound hypothesis that reducing throughput time (the length of time between the arrival of raw materials at the factory and the shipment of the finished product) is the single most important determinant of improved factory productivity. He concludes that focusing on throughput time forces managers to reduce inventories, setup time, and lot sizes; in addition, it encourages improved quality, revamped factory layout, stabilized production schedules, and minimized engineering changes. The three research studies on which this article is based indicate that, of all the possible techniques for improving productivity, only the JIT-related ones are statistically, demonstrably effective.
1. R.W. Schmenner, “Comparative Factory Productivity” (Washington, DC: research report for the Research and Evaluation Division, Economic Development Administration, U.S. Department of Commerce, July 1986);
R.W. Schmenner, “An International Examination of Factory Productivity” (Lausanne, Switzerland: Summary findings for IMEDE, June 1987).
2. In some industries, particularly those using continuous flow processes, machine utilization figures may still make considerable sense.
The author wishes to acknowledge comments on a draft of this paper from his colleague Robert Hall.