What is Just in Time (JIT) Manufacturing?
Just in Time (JIT) manufacturing, also known as lean manufacturing, is a management strategy used to control the flow of a business's inventory to reduce inventory levels and improve manufacturing processes.
The strategy is designed to arrange the orders of raw materials such that they are only ordered when needed for production. It is achieved by aligning customer orders with the orders made for raw materials. For JIT to be efficient, a company must accurately predict customer demand in the market, have steady production, abled staff, operating machinery, and consistent suppliers.
How Just in Time Manufacturing Works
JIT works by cutting down inventory and increasing efficiency in a company. It reduces inventory because manufacturers only order raw materials when they need them, eliminating storage and other related costs. Manufacturers also reduce the risk of remaining with excess raw materials if an order
For instance, a car company using JIT has low inventory levels and uses the supply chain model to receive the raw materials required to manufacture vehicles. The company only orders the parts needed to manufacture a car after receiving an order.
Another example is a fast food restaurant can implement JIT to eliminate unneeded raw materials in restaurants and reduce the time required to place an order. It can further refine its method of making food by storing frozen food and only cooking them after receiving orders and payment. It can also be incorporated in procurement activities, whereby a restaurant buys raw materials depending on their demand.
Advantages of Just In Time Manufacturing
JIT has numerous advantages for companies that adopt it. Here are some of the benefits:
- JIT minimizes loss and waste of materials, preventing companies from losing invested capital. With JIT, there are minimized inventory losses and destruction of raw materials.
- The concept is easy to understand, making it an effective philosophy for all types of businesses specializing in producing goods. The cost of implementing JIT is also affordable.
- JIT reduces the need for storage space. Since there is a continuous flow of raw materials and inventory to and from a company, there is less need for storage space. This implies that a business doesn't have to build, rent, or lease storage space.
- It helps improve the overall performance of a company because of the need to improve other areas of a business to make and maintain the strategy.
- JIT enables companies to improve customer satisfaction. Since companies wait for order placement before starting production, they can tailor their products based on customers' needs, preferences specifications.
- There are few inspection activities in companies using JIT because of the production of high-quality customized products based on customer specifications. Fewer inspections help save time.
- There is no room for overproduction of finished goods because they are prepared based on received orders.
- The return on investment (ROI) is relatively high because of reduced inventory loss and raw materials destruction. Production based on placed orders also ensures a company sells all its inventory.
Disadvantages of Just In Time Manufacturing
Besides being advantageous, JIT has a couple of disadvantages. The following are some of them:
- A company needs to have a robust and consistent supply chain to implement JIT in its operations successfully. That's because any issue with a single party in the supply chain can interrupt the entire production process.
- While the JIT philosophy is easy to understand, it is challenging to implement and use in real life. This is primarily because of the lack of defined rules guiding the strategy, meaning each business can implement its own version of JIT.
- Predicting the demand for finished products is difficult. Since companies need to accurately predict customer demands to order raw materials, the projection can be wrong sometimes, and the strategy can seriously fail in case of changes in demand.
- It is costly in terms of labor. A company using JIT has to employ a large pool of permanent and temporary employees based on their needs and demand since work is only done after receiving an order. Hiring numerous permanent and temporary employees can be very costly for a business.
- JIT significantly impacts the environment by increasing the use of fossil fuels due to frequent deliveries of raw materials and finished products.
- The transaction costs in a business using JIT are very high because of making numerous transactions to facilitate production.
JIT is a productive strategy used in many manufacturing companies. It ensures optimal production by reducing inventory and increasing efficiency. Nevertheless, the philosophy has its disadvantages and should be implemented with care and oversight.
If you’re looking to implement a Just In Time production strategy, having the right management software is key to ensuring success. Manufacturing Execution Systems are designed to give plant managers and manufacturing engineers the knowledge and control needed to make sure the process works effectively.
Contact us today to learn more about our MES products and how they can help make your JIT strategy a reality.