What Does “Just-in-Time” (JIT) Mean?

Just-in-time (JIT) inventory systems are a way to handle inventory that makes sure that orders for raw materials from suppliers are in sync with production plans. Companies use this inventory strategy to cut down on waste and improve efficiency. This strategy lowers inventory costs by only getting goods as needed for production. With this method, makers have to predict what people will want adequately.

In what ways does just-in-time inventory work?

The just-in-time (JIT) stocking method cuts down on stock and boosts productivity. With just-in-time (JIT) production methods, makers only buy the parts and materials they need for their projects and don’t have to pay for storage. This saves them money on inventory costs. Also, manufacturers don’t have to keep stock they don’t want if an order is stopped or not completed.

A company that makes cars and keeps little stock on hand because it relies on its supply chain to get the parts it needs to build cars as needed is an example of a JIT inventory system. Because of this, the company that makes the cars doesn’t buy the parts they need to assemble until they get an order.

Companies need steady production, high-quality work, plant machinery that doesn’t break down, and dependable sources for JIT manufacturing to work.

On the other hand, just-in-case plans have makers keep enough goods in stock to meet the highest market demand. This is different from the just-in-time inventory system.

What are the pros and cons of JIT?

JIT inventory methods are better than standard ones in several ways. People who make things can quickly switch from one product to another because production runs are short. This method also saves money because it reduces the need for a building. Also, businesses spend less on raw materials because they only buy what they need to make the goods that customers have bought.

One problem with just-in-time (JIT) stocking systems is that they could cause problems in the supply chain. If a provider of raw materials breaks down and can’t get the goods to the factory on time, the whole production line might have to stop. If there is an unexpectedly large order for goods, it could cause finished goods to be delivered later than planned.

An example of JIT

Toyota Motor Corporation is known for its just-in-time (JIT) inventory method, which means that it only buys parts when it gets requests for new cars. The business put this method in place in the 1970s, but it took them 20 years to make it work perfectly.

In February 1997, a fire at Aisin, a Japanese company that makes car parts, destroyed most of its ability to make P-valves for Toyota’s vehicles. This almost put an end to Toyota’s just-in-time (JIT) inventory system. Being the only company that makes this part, Aisin’s weeks-long shutdown stopped production for a few days at Toyota.

This meant that other companies that made parts for Toyota had to temporarily close because the car company didn’t need their parts during that time. Because of this, the fire cost Toyota 160 billion yen in sales.

Things like paper medical masks, toilet paper, and hand sanitizer had trouble getting to stores at the start of the COVID-19 pandemic and its effects on the economy and supply chain. This was because supplies from factories and stores abroad could not get there in time to meet the massive demand that the pandemic caused.

Unique Things to Think About

Japanese planners use Kanban a lot with lean production and just-in-time (JIT). Taiichi Ohno, an industrial engineer at Toyota, devised Kanban to make the manufacturing process run more smoothly.

By keeping track of lead and cycle times throughout the production process, the Kanban system finds trouble spots and helps set top limits for work-in-process inventory to avoid having too much of it.

What Does “Just-in-Time” Really Mean?

Just-in-time (JIT) stocking systems are a way for businesses to get the things they need as close to when they are needed as possible. If a company that puts together cars needs to add airbags, it doesn’t keep airbags on hand; instead, it gets them as the cars come off the assembly line.

Is it risky to use just-in-time manufacturing?

One of the best things about a just-in-time (JIT) system is that it reduces the amount of material that a company has to keep. This makes the business more efficient and saves a lot of money. But if there is a shock in either supply or demand, everything can stop.

For example, at the start of the economic crisis in 2020, everything from ventilators to medical masks had problems because supplies from other countries couldn’t reach where they needed to go in time to meet the high demand.

When does a company use JIT?

Both small companies and large corporations like the just-in-time (JIT) stocking system because it improves cash flow and lowers the amount of capital a business needs to run. Businesses that have used just-in-time supplies have included stores, restaurants, on-demand publishing, tech manufacturing, and car manufacturing.

Who came up with JIT inventory management?

JIT comes from Toyota Motor Corporation, a Japanese car company. People in charge at Toyota in the 1970s thought that the company could respond more quickly and effectively to changes in fashion or customer requests for new models if it didn’t keep any extra supplies on hand.

Conclusion

• The just-in-time (JIT) inventory method is a way to run a business that cuts down on stock and boosts performance.
• Another name for just-in-time manufacturing is the Toyota Production System (TPS). Toyota started using it in the 1970s when they made cars.
• You can avoid having too much work in progress by using the scheduling method Kanban along with just-in-time (JIT).
• For the JIT production process to work, output must be steady, work must be of high quality, machines must not break down, and sources must be dependable.
• The JIT method is the same thing as short-cycle manufacturing, which is what Motorola does, and continuous-flow manufacturing, which is what IBM does.