Just-in-Time (JIT)

What Is Just-in-Time (JIT)?

The just-in-time (JIT) inventory system is a management strategy that adjusts raw-material orders from providers straightforwardly with production plans. Companies utilize this inventory strategy to increase productivity and abatement squander by receiving goods just as they need them for the production cycle, which decreases inventory costs. This method expects producers to precisely forecast demand.

How Does Just-in-Time Inventory Work?

The just-in-time (JIT) inventory system minimizes inventory and increases effectiveness. JIT production systems cut inventory costs since manufacturers receive materials and parts on a case by case basis for production and don't need to pay storage costs. Manufacturers are likewise not left with undesirable inventory in the event that an order is canceled or not satisfied.

One illustration of a JIT inventory system is a vehicle manufacturer that works with low inventory levels however intensely depends on its supply chain to deliver the parts it expects to build cars dependent upon the situation. Thusly, the manufacturer orders the parts required to gather the vehicles solely after an order is received.

For JIT manufacturing to succeed, companies must have consistent production, top notch workmanship, misfire free plant machinery, and dependable providers.

The JIT inventory system appears differently in relation to just-in-case strategies, where producers hold adequate inventories to have an adequate number of products to retain maximum market demand.

Benefits and Disadvantages of JIT

JIT inventory systems enjoy several upper hands over traditional models. Production runs are short, and that means that manufacturers can rapidly move starting with one item then onto the next. Likewise, this method decreases costs by minimizing warehouse needs. Companies likewise spend less money on raw materials on the grounds that they buy just an adequate number of resources to make the ordered products and no more.

The hindrances of JIT inventory systems involve possible disruptions in the supply chain. In the event that a raw-materials provider has a breakdown and can't deliver the goods expeditiously, this might possibly slow down the whole production line. A sudden surprising order for goods might defer the delivery of finished products to end clients.

Illustration of JIT

Well known for its JIT inventory system, Toyota Motor Corporation orders parts just when it receives new vehicle orders. Albeit the company installed this method in the 1970s, it required 20 years to perfect it.

Unfortunately, Toyota's JIT inventory system almost made the company come to a screeching halt in February 1997, after a fire at Japanese-claimed automotive parts provider Aisin devastated its capacity to create P-valves for Toyota's vehicles. Since Aisin is the sole provider of this part, its weeks-long shutdown made Toyota halt production for several days. This caused a ripple effect, where other Toyota parts providers similarly needed to briefly close down on the grounds that the automaker had no requirement for their parts during that time period. Therefore, this fire cost Toyota 160 billion yen in revenue.

Toward the beginning of the COVID-19 pandemic and its ripple effect on the economy and supply chain, things like paper careful veils, bathroom tissue, and hand sanitizer experienced disruption. This was on the grounds that inputs from overseas production lines and warehouses couldn't be delivered in time to fulfill the flood in need brought about by the pandemic.

Special Considerations

Kanban is a Japanese scheduling system that is many times utilized related to lean manufacturing and JIT. Taiichi Ohno, an industrial engineer at Toyota, developed kanban with an end goal to further develop manufacturing productivity.

The Kanban system features problem areas by measuring lead and cycle times across the production cycle, which recognizes upper limits for work-in-process inventory to keep away from overcapacity.

Features

• Kanban is a scheduling system frequently utilized related to JIT to stay away from overcapacity of work in process.
• The progress of the JIT production process depends on consistent production, great workmanship, no machine breakdowns, and solid providers.
• The just-in-time (JIT) inventory system is a management strategy that minimizes inventory and increases effectiveness.
• Just-in-time manufacturing is otherwise called the Toyota Production System (TPS) in light of the fact that the vehicle manufacturer Toyota adopted the system in the 1970s.
• The terms short-cycle manufacturing, utilized by Motorola, and continuous-flow manufacturing, utilized by IBM, are inseparable from the JIT system.

FAQ

What Exactly Do You Mean by Just-in-Time?

A just-in-time (JIT) inventory system is a management strategy that has a company receive goods as close as conceivable to when they are really required. In this way, on the off chance that a vehicle assembly plant necessities to install airbags, it doesn't keep a stock of airbags on its racks yet receives them as those cars go onto the assembly line.

Doesn't This Sound a Bit Risky? Imagine a scenario in which Things Don't Arrive in Time.

A chief benefit of a JIT system is that it minimizes the requirement for a company to store large amounts of inventory, which further develops effectiveness and gives substantial cost savings. Nonetheless, in the event that there is a supply or demand shock, it can bring everything to a halt.For instance, toward the beginning of the 2020's economic crisis, everything from ventilators to careful veils experienced disruption as inputs from overseas couldn't arrive at their destinations in time to satisfy a flood in need.

What Types of Companies Use JIT?

The JIT inventory system is famous with small businesses and major corporations the same since it improves cash flow and decreases the capital expected to run the business. Retailers, eateries, on-demand publishing, tech manufacturing, and automobile manufacturing are instances of industries that have benefited from just-in-time inventory.

Who Invented JIT Inventory Management?

JIT is credited to the Japanese automaker Toyota Motor Corporation. Executives at Toyota in the 1970s contemplated that the company could adjust all the more rapidly and effectively to changes in trends or demands for model changes on the off chance that it kept no more inventory in-store than was quickly required.