Just-in-time (JIT) manufacturing

Just-in-time (JIT) manufacturing, also known as just-in-time production or the Toyota Production System (TPS), was first developed and perfected within the Toyota manufacturing plants by Taiichi Ohno, is a methodology aimed primarily at reducing cycle times of various activities within production system as well as response times from suppliers and to customers. JIT is a common inventory management technique and type of lean methodology designed to increase efficiency, cut costs and decrease waste by receiving goods only as they are needed. Its origin and development was in Japan, largely in the 1960s and 1970s.

JIT is seen as a more cost efficient method of maintaining stock levels. Its purpose is to minimise the amount of goods you hold at any one time without compromising the production volumes. And this has numerous advantages such as less space needed, with a faster turnaround of stock; we don't need as much warehouse or storage space to store goods. Less stock levels also means lesser investment. 

Many other companies also have been using similar concepts although with different names. Motorola used the concept of short-cycle-manufacturing (SCM), IBM used the concepts of continuous-flow manufacturing (CFM) and demand-flow manufacturing (DFM). PMP course online will help you get the  best of JIT manufacturing.

In recent times, JIT has been replaced with the newer concepts of Lean-Manufacturing which also come from Toyota. Although it started from Toyota, but today it is much more widely adopted across companies worldwide. Some of the leading companies where that use JIT is Dell, HP, McDonalds to name a few.

JIT is closely associated with other concepts such as TQM, Kanban and Continuous Process Improvement etc. JIT aims at producing the exact quantities of items for the exact demand by maintaining just the exact amount of inventory both on the raw material side as well as on the finished good side. 

To achieve this kind of lean management, it requires extremely careful planning to manage the entire supply chain including raw material procurement to finished good delivery to the end customer. And such planning in turn needs the use of sophisticated technology and software solutions. 

Some of the advantages of JIT:

1. JIT aims at keeping the stock holding to bare minimum leading to much lower inventory cost and much lower storage and warehouse cost.
2. Minimum inventory at all stages of the supply chain means lesser expiry and lesser wastage for the organization
3. Lower inventory means lower investment for the same level of production. This reduces working capital investment to a greater extent. This in turn leads to better ROI and profitability for the organization
4. JIT manufacturing aims at producing items based on demand. Hence all items produced will be sold. So no obsolete items in the finished goods section. It helps the organization to adapt well to any changes in product specification from the market without the fear of having any kind of waste and obsolete stocks.
5. To achieve JIT production, there is a need for very close communication between all the parties involved in the entire supply chain. This communication technique is often referred as “Kanban”. 
6. In JIT, immense focus is on quality of the final product and companies work to achieve “first time right” for all goods.

Disadvantages of JIT:

1. JIT production can be very sensitive to any kind of error. Since bare minimum inventory levels are maintained, there is no room for any kind of error.
2. JIT production will not be able to adapt well to sudden increase in volume of demand from the market, since the inventory levels are maintained at much lower level.
3. Just-in-time manufacturing is a philosophy which is achieved only when all the parties involved in the whole supply chain will work in great tandem and coordination. JIT may fail sometime if any of the suppliers will fail to fulfil their obligations and respond to the requirements in a timely manner.
4. JIT focuses on lean inventory; hence there is not much buffer in stock levels. For any reason, if there is any kind of failure that happens in the supply chain, that can lead to sudden downtime in production leading to huge losses for the organization.

Conclusion:

JIT is a philosophy that proposes to achieve the maximum with minimum inputs. This can be achieved only if all the parties involved in the entire ecosystem of the supply chain will be committed to achieving this and work cohesively with a great amount of coordination. JIT will need very careful planning and timely communication in the chain. The whole organization must be committed to this philosophy.