What does JIT Mean?
JIT stands for Just In Time, and is a philosophy of production that requires goods to arrive at their destination just as they are needed, to reduce overall costs and enhance customer satisfaction. In a JIT system, producers only make and deliver goods when they are needed, avoiding wasted time and cost associated with storing, shipping and other logistics related to carrying inventory.
The History of JIT
The JIT system was first developed by Japanese industrialist Taiichi Ohno in the late 1940s and 1950s. Ohno’s work was a cornerstone of the Toyota Production System (TPS), which later became known as lean manufacturing. The introduction of Just in Time Manufacturing (JITM) allowed Toyota to reduce costs and increase quality, while most other production companies were relying heavily on bulk processes that involved carrying high levels of inventory and warehousing.
The Benefits of Adopting JIT
Since its introduction, JIT has become one of the most popular manufacturing philosophies due to its numerous advantages. Some of the most important benefits are:
• Lower inventory costs – By only ordering components when they are needed, JIT minimizes the amount of inventory that needs to be kept for a production run, cutting down on the costs associated with storage and the possibility of waste due to products reaching their “best before” date.
• Greater flexibility – Since production only happens when components are needed, JIT allows producers to quickly adjust a production run to cater to a customer’s exact requirements. This can mean product customization or boosts in production as demand dictates.
• Improved quality – By reducing the reliance on mass produced components, manufacturers can find specific components that work better for their specific production. This also reduces the need for costly re-tooling.
• Reduced waste – With less reliance on bulk production and warehousing, producers utilizing JIT methods generate less waste, both in terms of time and physical components.
The Challenges of JIT
Of course, implementing JIT can come with its own set of challenges. The main ones are:
• Long procurement lead times – While regular warehousing helps cover supply chain issues, relying solely on JIT means components can take longer to come through, leading to potential delays.
• Higher purchasing costs for components – When producers rely on JIT, costs associated with purchasing components spikes as costs from storage, warehousing and mass ordering are removed from the equation.
• Limited budget flexibility – Since JIT puts the majority of a production budget into purchasing components, companies relying on it don’t have much naturally occurring flexibility when unexpected issues arise.
• Loss of bargaining power – When producers become dependent on JIT sourcing, suppliers can start to drive the terms of business, decreasing margins.
Overall, the philosophy of Just in Time manufacturing has allowed producers to drastically reduce costs, increase flexibility, and improve the quality of their product while also reducing waste within their production chains. That said, there are certain challenges associated with relying solely JIT, so it’s important to consider the business implications before implementing it.