Just-in-time (JIT) inventory management, also know as lean manufacturing and sometimes referred to as the Toyota production system (TPS), is an inventory strategy that manufacturers use to increase efficiency. The process involves ordering and receiving inventory for production and customer sales only as it is needed to produce goods, and not before. Show
This type of inventory management provides many benefits, but is not without its downsides, and relies heavily on factors such as a strong, fast and efficient network of suppliers. The Purpose of JITOrdering inventory on an as-needed basis means that the company does not hold any safety stock, and it operates with continuously low inventory levels. This strategy helps companies lower their inventory carrying costs, increase efficiency, and decrease waste. JIT requires manufacturers to be very accurate in forecasts for the demand for their products. Just-in-time inventory management is a positive cost-cutting inventory management strategy, although it can also lead to stockouts. The goal of JIT is to improve a company's return on investment by reducing non-essential costs. Some competing inventory management systems exist, including short-cycle manufacturing (SCM), continuous-flow manufacturing (CFM) and demand-flow manufacturing (DFM). The JIT inventory system represents a shift away from the older "just-in-case" strategy, in which producers carried much larger inventories of stock and raw goods, in case they needed to produce more units because of higher demand. History of the TechniqueThe management technique originated in Japan and is often attributed to Toyota. However, many believe that Japan's shipyards were the first to develop and successfully implement this approach. Its origins are seen as three-fold: Japan's post-war lack of cash, lack of space for big factories and inventory, and Japan's lack of natural resources. Thus the Japanese "leaned out" their processes, and JIT was born. News about the process and success of JIT/TPS reached Western shores in 1977 with implementations in the U.S. and other developed countries beginning in 1980. Benefits of the SystemJIT offers advantages such as allowing manufacturers to keep production runs short and move on to new products quickly and easily if needed. Companies using JIT no longer need to maintain a huge expanse of warehouse space to store inventory. A firm also no longer needs to spend large amounts of money on raw materials for production, because it only orders exactly what it needs, which frees up cash flow for other uses. The Strategy in Use at ToyotaToyota started using JIT inventory controls in the 1970s and took more than 15 years to perfect its process. Toyota sends off orders to purchase production parts only when it receives new orders from customers. Toyota and JIT manufacturing will succeed as long as the company maintains a steady production rate, with high-quality workmanship and no machine breakdowns at the plant that could stall production. Additionally, it needs reliable suppliers that can always deliver parts quickly, and the ability to efficiently assemble machines that put together its vehicles. Potential RisksJIT inventories can bring about disruptions in the supply chain. It only takes one supplier of raw materials who has a breakdown and cannot deliver the goods on time to shut down a manufacturer's entire production process. A customer order for goods that surpasses the company's forecasted expectations may cause parts shortages that delay the delivery of finished products to all customers. An Example of DisruptionIn 1997 a fire that took place at a brake parts plant owned by the company Aisin destroyed its capacity to produce a P-valve part for Toyota vehicles. Aisin was the sole supplier of this part for Toyota, and the company had to shut down production for several weeks. Because of Toyota's JIT inventory levels, it ran out of P-valve parts after just one day. This situation could have devastated Toyota's supply line. Fortunately, one of Aisin's suppliers was able to retool and start manufacturing the necessary P-valves after just two days. Nevertheless, the fire cost Toyota nearly 16 billion yen in lost revenue and 70,000 cars. The problem trickled through to other suppliers for Toyota, as well. Some suppliers were forced to shut down because the auto manufacturer didn't need their parts to complete any cars on the assembly line. Most manufacturing facilities are looking to lower the costs associated with their production in order to maximize their profits. Over time, many scheduling techniques have emerged as a way to help these manufacturing facilities meet their production goals and increase their efficiency. Just-In-Time manufacturing was designed to help manufacturers reduce inventory-related costs by receiving materials and producing goods only when they are needed. Just-In-Time scheduling is used to accommodate last-minute changes to orders and prevent damage or spoilage of inventory by preventing jobs from starting too early.  When the techniques are implemented, production facilities are able to align their raw material orders directly to their production schedules so that these items do not have to be stored for long periods of time. Just-In-Time production scheduling prevents jobs from being scheduled much before they are needed, which requires WIP items to be held in inventory. JIT means that your production operations start with just enough time to be completed by the need date so that your goods are being produced to ship, not to be stored. There are many benefits associated with Just-In-Time production, but the main goals of this method is to increase the efficiency of production while decreasing waste to ultimately lower the production costs and increase profits. On the flip side, implementing JIT methodology requires producers to be able to accurately forecast their demand to avoid running into material shortages. Before implementing Just-In-Time strategies, it is essential to understand the advantages and disadvantages of the process. Advantages of Just-In-Time (JIT) ManufacturingThe advantages of Just-In-Time (JIT) manufacturing include the following:
While there are many advantages to the Just-In-Time manufacturing methodology, there are also some drawbacks to it as well. Listed below are some of the disadvantages of Just-In-Time (JIT) manufacturing. Disadvantages of Just-In-Time (JIT) ManufacturingThe disadvantages of Just-in-Time (JIT) Manufacturing include the following:
A software that can aid with Just-In-Time (JIT) manufacturing is PlanetTogether’s Advanced Planning and Scheduling software (APS). PlanetTogether’s APS software will automatically schedule your production operations so that they start with just enough time to be completed by their needed dates. For example, if an operation has a work content of one hour, the Just-In-Time start date will be set to one hour before the operation’s need date. Release rules can be applied to allow operations to schedule before their JIT start dates. Slack days provide some additional time between the end date of the operation and its need date to accommodate last-minute variations. The flexibility of PlanetTogether APS allows manufacturers to set different scheduling rules on different machines. APS software has become a must for operations that are seeking to take their production to the next level and can easily aid with efficiency increase, inventory control, waste elimination, and cost reduction. PlanetTogether’s APS software will take your production facility to the next level and turn your shop floor into a goldmine. The shift to PlanetTogether is saving us about 15% in inventory overhead and about 20% in overtime labor expenses. We're not building equipment to stock any longer - we're building to ship. Advanced Planning and Scheduling (APS) SoftwareAdvanced Planning and Scheduling Softwares have become a must for modern-day manufacturing operations as customer demand for increased product assortment, fast delivery, and downward cost pressures become prevalent. These systems help planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans. APS Systems can be quickly integrated with an ERP/MRP software to fill the gaps where these systems lack planning and scheduling flexibility, accuracy, and efficiency. With PlanetTogether APS you can:
The implementation of an Advanced Planning and Scheduling (APS) Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system. APS is a step in the right direction of efficiency and lean manufacturing production enhancement. Try out a free trial or demo! Related Lean VideoAPS ResourcesTopics: just in time What are the objectives of justJust-in-time, or JIT, is an inventory management method in which goods are received from suppliers only as they are needed. The main objective of this method is to reduce inventory holding costs and increase inventory turnover.
What is just`Just-in-time' is a management philosophy and not a technique. It originally referred to the production of goods to meet customer demand exactly, in time, quality and quantity, whether the `customer' is the final purchaser of the product or another process further along the production line.
How can a justThe just-in-time (JIT) inventory system minimizes inventory and increases efficiency. JIT production systems cut inventory costs because manufacturers receive materials and parts as needed for production and do not have to pay storage costs.
What is justJust-in-time (JIT) inventory control reduces the amount of inventory that a company maintains. The concept is based on a cluster of lean manufacturing activities that are designed to only manufacture enough products to meet customer demand.
|
