What Is Just-in-Time (JIT)?

The just-in-time (JIT) inventory system is a management strategy that aligns raw-material orders from suppliers directly with production schedules. Companies employ this inventory strategy to increase efficiency and decrease waste by receiving goods only as they need them for the production process, which reduces inventory costs. This method requires producers to forecast demand accurately.♒

How Does Just-in-Time Inventory (JIT) Work?

The just-in-time (JIT) inventory system 🐼澳洲幸运5官💞方开奖结果体彩网:minimizes inventory and increases efficiency. JIT production systems c🍰ut inventory costs because manufacturers recei♒ve materials and parts as needed for production and do not have to pay storage costs. Manufacturers are also not left with unwanted inventory if an order is canceled or not fulfilled.

One example of a JIT inventory system is a car manuf✤acturer that operates with low inventory levels but heavily relies on its supply chain to deliver the pꦍarts it requires to build cars on an as-needed basis. Consequently, the manufacturer orders the parts required to assemble the vehicles only after an order is received.

For JIT manufacturing to succeed, companies must have steady product🌼ion, high-quality workmanship, glitch-free plant machinery, and reliable suppliers.

Advantages and Disadvantages of JIT

JIT inventory systems have several advantages over traditional models. Production runs are short, which means that manufacturers can quickly move from one product to another. Also, this method reduces costs by minimizing warehouse needs. Companies also spend less money on raw materials because they buy just enough resources to make the ordered products 💝and no more.

The disadvantages of JIT inventory ꦯsystems involve potential disruptions in the supply chain. If a raw-materials supplier has a breakdown and cannot deliver the goods promptly, this could conceivably stall the entire production line. A sudden unexpected order for goods may delay the delivery of finished products to end clients.

Example of JIT

Famous for its JIT inventory system, Toyota Motor Corporation orders parts only when it receives new car orders. Although the company installed this method in the 1970s, it took 20 years to perfect it.

Toyota's JIT inventory system nearly caused the company to come to a halt in February 1997, after a fire at Japanese-owned automotive parts supplier Aisin decimated its capacity to produce P-valves for Toyota's vehicles. Because Aisin is the sole supplier of this part, its weeks-long shutdown caused Toyota to halt production for several days. This caused a ripple effect, where other Toyota parts suppliers likewise had to temporarily shut down because the automaker had no need for their parts during that time period. Consequently, this fire cost Toyota 160 billion yen in revenue.

Special Considerations

Kanban is a Japanese scheduling system that's often used in conjunction with 澳洲幸运5官方开奖结果体彩网:lean manufacturing and JIT. Taiichi Ohno, an industrial engineer at Toyota, developed kanban in an effort to improve manufacturing efficiency.

The kanban system highlights problem areas by measurꦛing lead and cycle times across the productiཧon process, which helps identify upper limits for work-in-process inventory to avoid overcapacity.

The Bottom Line

The just-in-time (JIT) inventory system is a management strategy that minimizes inventory and increases efficiency. It's popular with 澳洲幸运5官方♈开奖结果体꧂彩网:small businesses and major corporations alike because it enhances cash flow and reduces the capital needed tಞo run the business. However, if there's a disruption in the supply chain, the system might fail to get things done on time.