Just-in-Time (JIT) is an inventory strategy that became popular in the 70s through the Toyota Motor Company. JIT was basically and originally about getting the right quantity of goods at the right place and at the right time. Nowadays, it has come to imply producing with minimum waste.
This collection of practices is based on eliminating “waste” (anything that does not add value but unnecessary cost to the business) and has been adopted by businesses or industries to improve quality and reduce operative costs to support customer need. Also, it includes the whole logistics flow of materials, from purchasing through production and distribution. Its benefits are considerable and can translate into lowering total system costs and improving the quality of products when it is implemented at optimal levels.
A major aspect of JIT is its view of inventory. Safety stock has these inefficient processes which add hidden cost to your business and the idea is to gradually reduce inventory to expose problems. This management philosophy represents a change of perspective away from the former “just in case” strategy where producers kept large inventories in case higher demand required it or a possible eventuality came about. This is where a company’s culture must be addressed and effect change. It is also true that people might be resistant to change. But it takes a strong leadership team to motivate the necessary changes and, in the long run when the work force embraces the changes your business performance will be improved, which translates into greater rewards for everyone involved.
Its key components are:
- Elimination of waste: in JIT, this means the removal of unnecessary costs of business. The main types of waste are: waste from overproduction, transportation waste, processing waste, waste from product defects, waste from waiting, inventory waste and waste of motion.
- A Broadview of Operations: JIT is team and goal oriented. Everyone must see the big picture to understand that all employees are responsible for serving the customer. The implementation starts with the company’s shared vision of its actual state and where it wants to be. Every worker, tool and process is aimed at one purpose: gaining and keeping customers.
- Simplicity: Simple is better. JIT encourages simple and thus, more efficient solutions, it’s cost effective and understandable for the company. Complexity often causes confusion and rises cost and risk.
- Continuous Improvement: Kaizen – JIT is based on the Japanese belief that people and organizations are never perfect and consequently they can always be improved. The best businesses are those that regularly assess, simplify and improve their human resources, their processes and products.
- Visibility. Hidden waste creates problems. This is why JIT requires all the areas of waste be made visible, and then removes what is causing inefficiency. JIT encourages clean, organized and efficient areas with very little inventory.
- Flexibility: it means being capable of producing a wide range of products through a flexible production system. Japanese manufacturers, for example, have given priority to cross-train workers in order to perform different functions as needed instead of using them exclusively for a particular process or machine.
When is carefully planned, properly adjusted and systematically executed in a business, JIT manufacturing has the power to enhance the company’s competitiveness considerably in the marketplace by reducing wastes and heightening the product quality and the efficiency in production. Of course, for this management philosophy to work, several structural elements must be ready to use: a steady production, flexible resources, high quality, no machinery failure, trustworthy suppliers, easy machinery configuration and discipline to work out other elements. Employees can be cross-trained to work at different stages, workstations, duties and positions, according to the shifts and the company’s demand. A well-trained, quality oriented and more flexible workforce can mean effective processes, closer relationships, customized service, lower defect rates which will be visible in the reduction of costs and greater customer satisfaction.
On a practical level JIT would look like this: through JIT resources are freed up to be utilized anywhere else in the company. Warehouse space can be remodeled and adapted to be used for more retail sales by using JIT. Companies can free workforce to focus on essential tasks, instead of being dedicated to stocking, staff can interact with customers and work on production of goods.
There are cultural aspects of JIT connected with the Japanese character, orientation and work ethics and its concepts. Consequently, some criticism has emerged concerning the adoption of this Japanese manufacturing philosophy in the western world on the grounds that JIT is only appropriate for its original culture. However, this strategy is widely and increasingly recognized as effective and successful in its promises of cost reduction, production efficiency and customer satisfaction.