Modern Supply Chain Management: Just In Time

Supply Chain Management expert David Kiger emphasizes the importance of cleansing the supply chain by adopting the Just In Time (JIT) philosophy. This stresses out the importance of optimizing every production system. It all comes down to delivering either raw materials or components to the production line, as the title says, Just In Time once they are required. It is important to also point out that the Just In Time philosophy does not mean that every supplier will be delivering the goods in a timely manner so that the existent stock remains low — or, better said, to avoid the excess of stock and stock accumulation —. Instead, Just In Time refers to how can a company handle and manage high volumes of raw materials, components, goods and stock efficiently — by adapting the production to the existent demand.

The competitive advantage a company gains comes from the capacity of delivering the required goods to the market in a short period of time — punctually —. By avoiding and cutting out the costs that do not add any value whatsoever, a company can also attain competitive prices. Although this concept of this philosophy might seem simple at first sight, its application is rather complex, and its implications rather extensive.

Just In Time Principles

The Just In Time philosophy stresses out three essential objectives:

Problem recognition: To describe this principle, the Japanese have come up with the analogy where the existent stock is depicted as a river whereas the company and its operations are depicted as a boat. When a company strives to lower the river level — meaning, striving to lower the existent stock — it finds rocks at the bottom, or better said, problems. Until recently, every time a company would find this type of issues, the immediate response consisted in increasing the stock existences to cover the issue.

Eliminate Waste: Eliminating waste implies getting rid of the all the activities associated with production that do not add value to the product. This also provides the company with a competitive advantage as it allows it to attain more competitive prices by reducing and cutting out extra costs, enhancing quality and shortening production times.

Aim for simplicity: A company should strive to eliminate complex production lines and aim to establish rather unidirectional ones. It also should separate products by families produced in the same lines so that these are managed easier. The simplicity of Just In Time is also applicable to this type of lines. An example of this is seen in the Kanban system.

simple-personal-kanban-board_modern-supply-chain-management_ust-in-time
Image courtesy of Kanban Tool at Flickr.com

How to implement it?

In order to implement the Just In Time philosophy, a company should start by establishing a solid base that will serve as the foundation of the system. Just In Time demands an attitude change at a corporate level, thus, this initial phase is key to achieving that. Having a good mentality is the success factor here. This means that a company must educate all employees around the philosophy so that the message is embraced by the personnel. It is important to point out the relevance of educating the employees because, if otherwise, the expected result might be compromised. This educational phase should aim to provide workers and managers an easy and proper understanding of that Just In Time means so that they start applying it to their daily activities. By creating the proper environment for this philosophy to be implemented, the company can now aim to improve its current production processes in order to enhance and cleanse the work loads and the sequence of activities — reducing operational times and ordering preventive maintenance for all units.

Having an excess of operational times is counterproductive for a company. First, it ends up becoming an inefficient time — a machine could be producing something during such excess — and, second, the longer the operational times are, the bigger the batches that are to be produced since it would be pointless to produce small batches of products during a long operational time. With bigger batches come the inconvenient since production times become longer as well as the existent stock. Just In Time helps companies to avoid these issues by implementing unidirectional production lines where the workload flows rapidly from one process to another, thus, operational and production times end up being shorter.

The Just In Time philosophy extends to the relationship between external suppliers and customers. It is important to discuss with these two so that the implementation of the philosophy is not compromised. By letting them know the changes that are to occur within a company, a company can adapt easier to their availability and conditions. Bear in mind that suppliers should be also chosen accordingly by not forgetting the logistic demands a company may have. Thus, the net result will be shown in the remarkable high product quality, attained thanks to the changes made, a lower cost supply and a more effective delivery time from suppliers and for customers.

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