05 Nov Just In Time
Just in Time (JIT) is a manufacturing approach that is also relevant in retail, which attempts to improve a company’s return on investment (ROI) by decreasing in-process inventory and accompanying carrying costs. To meet JIT objectives, the method relies on signals or Kanban between different points that are involved in the process, which tell production when to make the next part, or in retail, this means having the products delivered on the specific day sales will take place. Kanban are usually ‘tickets’ but can be simple visual signals, such as the presence or absence of a part on a shelf. Implemented correctly, JIT centers on continuous improvement and can improve a manufacturing organization’s ROI, quality, and productivity. To achieve continuous improvement key areas of focus could be flow, employee involvement, and quality.
JIT is dependent on other essentials in the inventory chain also. One instance, its effective application cannot be independent of other key components of a lean manufacturing system or it can result with undesirable results. In recent years manufacturers continue to improve forecasting methods such as applying a trailing 13-week average as a better predictor for JIT planning; however, research demonstrates that basing JIT on the assumption of stability is inherently unreliable.
The philosophy of JIT is simple: the stowing of idle inventory is a waste of resources. JIT inventory systems expose the unseen cost of keeping inventory, which is not a simple solution for a company to adopt. The business must follow an array of new methods to manage the consequences of the change. The ideas in this way of working come from many different disciplines including statistics, industrial engineering, production management, and behavioral science. The JIT inventory philosophy outlines how inventory is seen and how it relates to management.
Inventory is perceived as incurring costs, or waste, instead of adding and storing value, contrary to traditional accounting. This does not mean to say JIT is implemented without awareness that removing inventory exposes pre-existing manufacturing issues. This way of working encourages businesses to eliminate inventory that does not compensate for manufacturing process issues, and to constantly improve those processes to require less inventory. Secondly, allowing any stock habituates management to stock keeping. Management may be tempted to keep stock to hide production problems. These problems include backups at work centers, machine reliability, process variability, lack of flexibility of employees, equipment, and insufficient capacity.
In short, the JIT inventory system focus is having the correct material, at the right time, in the designated location, and in the exact amount, without the safety net of inventory.