Just-In-Time (JIT)

Just-in-time also is known as JIT is an inventory management method whereby labor, material, and goods (to be used in manufacturing) are re-filled or scheduled to arrive exactly when needed in the manufacturing process.

JIT approach has the capacity, when adequately applied to the organization, to improve the competitiveness of the organization in the market significantly by minimizing wastes and improving production efficiency and product quality.

Why JIT concept matter?

The main focus of JIT is to identify and correct the obstacles in the production process. It shows the hidden problems of inventory. Just In Time method prevents a company from using excessive inventory and smoothens production operations if a specific task takes longer than expected or a defective part is discovered in the system. This is also one of the main reasons why the companies (which are opted for JIT) invest in preventive maintenance; when a part/equipment breaks down, the entire production process stops.
The prime objective of JIT is to increase the inventory turnover and reduce the holding and all connected costs. This concept was made applicable again by the Japanese firms, placing an order for the material, the same day for the production of the product.
Thus, the Just In Time approach eliminates the requirement to carry voluminous inventories and incur heavy carrying other related costs to the manufacturer. In order to avail of the benefits of the JIT system, there should be an optimum synchronization between the manufacturing cycle and delivery of material. Just In Times requires a good understanding of the supplier and the manufacturer in terms of the quantity and delivery of the material. In the event of any misunderstanding between the manufacturer and supplier of the material, the entire production process may come to a halt.
One example of JIT system is a car manufacturer, a manufacturer of the cars operates with bare minimum inventory levels, as there is a strong reliance on the supply chain to deliver the parts required to manufacture cars. The parts required in the manufacturing of cars do not arrive before or after they are needed; rather, they arrive only when they are needed.
Successful JIT implementation wholly depends on how the manufacturer manages its suppliers. A lot of pressure is exerted on them, as the supplier of the materials has to be ready with ample quality material, as the need arises.

Elements involved in JIT

Continuous improvement:

• Attacking fundamental problems and anything that does not add value to the product.
• Devising systems to identify production and allied problems.
• Simplicity:  Simple systems are simple & easy to understand, easily manageable and the chances of going wrong are very low.
• A product: oriented layout for less time spent on materials and parts movement.
• Quality control at source to ensure every worker is solely responsible for the quality of their own produced output.

Eliminating waste: There are seven types of waste:

1. Waste from product defects.
2. Waste of time.
3. Transportation waste.
4. Inventory waste.
5. Waste from overproduction.
6. Processing waste.

Waste minimization is one of the primary objectives of the Just In Time system. This needs effective inventory management throughout the whole supply chain. Initially, a manufacturing entity will seek to reduce inventory and enhance operations within its own organization. In an attempt to reduce waste attributed to ineffective inventory management, SIX principles in relation to JIT have been stated by Schniededans and they are:

1.       Reduce buffer inventory.
2.       Try for zero inventory.
3.       Search for reliable suppliers.
4.       Reduce lot size and increase the frequency of orders.
5.       Reduce purchasing costs.
6.       Improve material handling.

Advantages & Disadvantages of Just-In-Time Systems

Advantages of Adopting Just-In-Time include:

• Just-in-time approach keeps stock holding costs to a minimum level. The released capacity results in better utilization of space and bears a favorable impact on the insurance premiums and rent that would otherwise be needed to be made.
• The just-in-time approach helps to eliminate waste. Chances of expired or out of date products; do not arise at all.
• As under this management method, only essential stocks that are required for manufacturing are obtained, thus less working capital is required. Under this approach, a minimum re-ordering level is set, and only when that level is reached, order for fresh stocks are made and thus this becomes a boon to inventory management too.
• Due to the abovementioned low level of stocks held, the ROI (Return On Investment? of the organizations be high in general.
• As this approach works on a demand-pull basis, all goods produced would be sold, and thus it includes changes in demand with unanticipated ease. This makes JIT appealing today, where the market demand is fickle and somewhat volatile.
• JIT emphasizes the ‘right-first-time’ concept, so that rework costs and the cost of an inspection is minimized.
• By following JIT greater efficiency and High-quality products can be derived.
• Better relationships are fostered along the production chain under a JIT system.
• Higher customer satisfaction due to continuous communication with the customer.
• Just In Time adoption result in the elimination of overproduction.

Disadvantages of Adopting JIT Systems

• JIT approach states ZERO tolerance for mistakes, making re-work difficult in practice, as inventory is kept to a minimum level.
• A successful application of JIT requires a high reliance on suppliers, whose performance is outside the purview of the manufacturer.
• Due to no buffers in JIT, production line idling and downtime can occur which would have an unfavorable effect on the production process and also on the finances.
• Chances are quite high of not meeting an unexpected increase in orders as there will be no excess inventory of finished goods.
• Transaction costs would be comparatively high depending upon the frequency of transactions.
• JIT may have certain negative effects on the environment due to the frequent deliveries as the same would result in higher use and cost of transportation, which in turn would consume more fossil fuels.

Just-In-Time (JIT) Manufacturing is a philosophy rather than a technique. By eliminating all waste and seeking continuous improvement, it aims at creating a manufacturing system that is a response to the market needs.

The phase just in time is used to because this system operates with low WIP (Work-In-Process) inventory and often with very low finished goods inventory. Products are assembled just before they are sold, subassemblies are made just before they are assembled and components are made and fabricated just before subassemblies are made. This leads to lower WIP and reduced lead times. To achieve this organizations have to be excellent in other areas e.g. quality.

According to Voss, JIT is viewed as a “Production methodology which aims to improve overall productivity through the elimination of waste and which leads to improved quality”.

JIT in Production and Operation Management

JIT provides an efficient production in an organization and delivery of only the necessary parts in the right quantity, at the right time and place while using the minimum facilities”.

Seven Wastes
Shiego Shingo, a Japanese JIT authority and engineer at the Toyota Motor Company identifies seven wastes as being the targets of continuous improvement in the production process. By attending to these wastes, the improvement is achieved.

1. 1. Waste of overproduction eliminates by reducing set-up times, synchronizing quantities and timing between processes, layout problems. Make only what is needed now.
   2. Waste of waiting eliminate bottlenecks and balance uneven loads by flexible workforce and equipment.
   3. Waste of transportation establishes layouts and locations to make handling and transport unnecessary if possible. Minimize transportation and handling if not possible to eliminate.
   4. Waste of processing itself question regarding the reasons for the existence of the product and then why each process is necessary.
   5. Waste of stocks reducing all other wastes reduces stocks.

Wastes in operations

1. Waste of motion study for economy and consistency. Economy improves productivity and consistency improves quality. First, improve the motions, then mechanize or automate otherwise. There is a danger of automating waste.
2. Waste of making defective products develop the production process to prevent defects from being produced, so as to eliminate inspection. At each process, do not accept defects and make no defects. Make the process fail-safe. A quantify process always yield a quality product.

Benefits of JIT

The most significant benefit is to improve the responsiveness of the firm to the changes in the market place thus providing an advantage in competition. Following are the benefits of JIT:

1. Product cost—is greatly reduced due to the reduction of manufacturing cycle time, reduction of waste and inventories and elimination of non-value added operation.
2. Quality —is improved because of continuous quality improvement programs.
3. Design—Due to a fast response to engineering change, alternative designs can be quickly brought on the shop floor.
4. Productivity improvement.
5. Higher production system flexibility.
6. Administrative and ease and simplicity.