How does the just-in-time (JIT) production influence the supply chain management?

It is not a secret in the business world time plays a crucial role when suppliers and customers have a variety of options to pick off. Factories see time as something they must compete with in order to innovate as faster as they can. Furthermore, clients’ expectation forces companies to pass of time every time a new product will be on the world market. Before 1960’s, any reducing-time model was designed until the end of 1960’s when just-in-time production appeared in Japan, more specificity in Toyota company. They attempted to reduce time production while implementing a model they can follow not only for one specific product but for all kind of productions, and then other big companies followed them adapting this model to the product specific need, making industry more competitive as a result. Companies have found a set of benefits such as reduced setup time, the flow of good from warehouse to shelves improves, employees with multiple skills are used more efficiently, production scheduling and work hour consistency synchronized with demand, increased emphasis on supplier relationships, supplies come in at regular intervals throughout the production day, minimized storage and space needed, smaller change of inventory breaker.

On the other hand, industry development has been regulated through the supply chain that is a system of people, activities, organizations and resources involved in driving products or services from supplier to client. It depends on the nature of the product or service that supply chain includes or not some types of activities such as transformation of natural resources or services delivered to the customer. Therefore, supply chain management is the planning and management of all activities that are involved in the process of sourcing, transformation and logistic labors. An example of a simple supply chain follows, 1. Human extraction of raw material, 2. Moving and storage it, 3. Transformation, 4. Storage it or driving it to dealers.

Linking just-in-time production and supply chain management is not done by hazard but it is not the logistics manager’s job, it is necessary to understand this match or job does not belong to one single business function. This strategy requires a cross-functional team working with common goals and objectives. For a better understanding of the dependence of just-in-time production (JIT) with supply chain management, let’s make a contrast between a supply chain based on a JIT and a supply chain that is not based on a JIT.

Supply chain non-based on a JIT:

While the production step, goals and objectives are oriented time out. Goals such as equipment utilization or labor efficiency depend on the raw material but if the client wants, for example, another product people in charge of production must focused on operations not at expense of JIT. Then, when sourcing, purchasing managers have to negotiate the lowest per-unit cost and they are focused on getting the best price only. Finally, the transportation manager seeks to optimize the distribution network. Lowest cost on the logistics or transportation is also the main aspect this manager cares about.

Supply chain based on a JIT:

Planners and managers are focused in the previous operational performances but not with the same intensity. Other equal goals such as JIT operations are important. Process as follows require the same invest of time: changeover times, changeovers per shift, establishing other measures of process flexibility and finished goods inventory targets that support short-term customer demand and managing to them. In other words, JIT requires to fix production to short-term customer agreements and purchasing the lowest total cost is mandatory whereas in a non-based JIT per unit costs demand managers’ attention.  

There is not such a key that allow us to think of models that improve production but exploring the develop of models while they are being analyzed enables to optimize in time the supply chain.

Spend Management cycle_david kiger_chain management
Image courtesy of CTSI-Global at Flickr.com

In conclusion, JIT gives the customer the option to have in short-term products while the manufacturer produces more and hence he sells more. If this is the goal, changes and reduce-time process must be applied in the whole supply chain. It is mandatory managers of all areas commit with this. Saying which option is the best is not possible because it depends on the goals and objectives companies have. But if what a company pretends to do is to evolve from a non-JIT to a JIT production, departments as well as number of employees are suppose to be commitment from the beginning. Changes would be uncomfortable at the beginning but in long-term measurable improvements in production and customer satisfaction will worth discomfort emerged during the short-term.  If all areas and employees commit from the beginning, adaptation time will not be that long.

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