Blog 3: Inventory Management through Just in Time
The concept of Just in Time (JIT) is a manufacturing process methodology aimed at reducing throughput time and costs in production systems and material distribution. Just-in-time is an inventory management tool used by businesses to increase efficiency, reduce waste, and save inventory costs by receiving goods only when needed. This is a great technique that should only be used if the company’s future forecasts are accurate.
A just-in-time (JIT) inventory system is a management strategy in which a company receives goods as close as possible to the time it actually needs. Therefore, when an automobile assembly plant needs to install airbags, they receive the airbags when they arrive at the assembly line, rather than stocking them on the shelves.
This concept became popular in Toyota’s manufacturing plants in the early 1970s due to the productivity of the Japanese industry. It responds to consumer demands with the minimal delay with a people, factory, and system-focused approach.
JIT’s main goal is to have zero inventory across the organization and its supply chain. This will take full advantage of your organization’s capabilities and maximize your ROI. This system was so successful in Japan that it was copied by many US companies, especially Hewlett-Packard.
How does Just In Time work?
The JIT production system reduces inventory costs because manufacturers receive the materials and parts needed for production and do not have to pay inventory costs. If an order is canceled or not fulfilled, the manufacturer will not have unnecessary inventory left.
An example of a JIT inventory system is an automaker that operates in low inventory but relies heavily on the supply chain to provide the parts needed to build a car on demand. Therefore, after receiving an order, the manufacturer orders only the parts needed to assemble the vehicle.
For JIT manufacturing to be successful, companies need to have stable production, high quality workmanship, trouble-free equipment, and reliable suppliers. For a successful implementation, you need to develop company-wide initiatives, promote employee involvement, and develop policies and strategies that can be mobilized.
The elements of Just In Time are:
- Continuous improvement.
- Attack on the underlying problem – something that doesn’t add value to the product. o Development of a system to identify the problem.
- Pursuit of simplicity – A simple system is easy to understand, manage, and less likely to fail. o Product-oriented layout – Reduces the time it takes to move materials and parts.
- Quality control at the source-Each worker is responsible for the quality of his production.
- Pokayoke-“Absolutely reliable” tools, methods, devices and more prevent mistakes
- Preventive maintenance, comprehensive productive maintenance – ensure that machines and systems function properly and are continuously improved as needed.
- Eliminating waste. There are seven types of waste.
- Waste due to overproduction.
- Waste of waiting time.
- Transport waste.
- Waste disposal.
- Waste of inventory.
- Waste of movement.
- Waste due to product defects.
- Good Housekeeping-Workplace cleanliness and organization.
- Reduced setup time – Increases flexibility and allows for smaller batches. The ideal batch size is one item. Multi-process processing – A multi-skilled workforce is more productive, flexible, and job-satisfying.
- Staggered / Blend Production – Smooths the flow of products in the factory.
- Kanban – A simple tool for eliciting products and components through a process.
- Jidoka (Autonomization) – Provides machines with autonomous capabilities that use judgment, allowing workers to do things that are more convenient than monitoring their work.
- Andon (Troublelight) – Notifies you of a problem to take corrective action. Just-In-Time (JIT) How can I use JIT normally?
- Establish a stable work schedule.
- Build long-term supplier-customer relationships.
- Create a shopping philosophy that supports frequent and small purchases.
- Encourage and ensure employee discipline.
- Identify value-added and non-value-added items in your manufacturing activities.
- Ensure top management commitment to effectiveness and successful implementation.
Advantages of JIT:
The advantages of JIT are:
- Reduce inventory costs
- Reduction of labor costs
- Space reduction
- Increase production
- Improved quality
Drawbacks of JIT:
The drawbacks of Just-in-time are:
- JIT systems do not respond well to sudden changes in supply and demand.
- Implementing the system can be difficult and time consuming.