The concept of just-in-time (JIT) manufacturing originated in Japan in the1950s. As the name suggests, a product is manufactured just in time for it to be delivered. This strategy aims at improving return-on-investment of a business by reducing inventory and the related carrying costs. A JIT system works on a demand-pull basis as opposed to a production-push basis.
Implementation of a successful JIT system requires elaborate planning in both material procurement and the manufacturing process. It also makes use of support systems like production scheduling software. The Ford Motor Company introduced JIT manufacturing to the United States.
Disadvantages and advantages
Perhaps the biggest disadvantage of a JIT system is that it is very unforgiving to mistakes. The system is also highly dependent on suppliers, who are not under the manufacturer’s control. Lack of sufficient demand can lead to under-utilization of company resources. The small inventory hampers servicing an unexpected spike in the demand of a product.
The advantages, however, of JIT systems are many, if implemented properly. A reduced inventory (containing mainly of only essential stock) leads to lesser storage space requirement and working capital; it also makes for easier inventory management as new stocks are ordered only after reaching a minimum level in the inventory. Since products are manufactured only according to the need, companies do not have to worry about expired or out-of-date goods or overproduction. The low error tolerance not only promotes ‘”first time right” manufacturing, it also reduces costs of rework and inspection, and achieves greater efficiency.
Points to note during implementation
For a successful implementation of a JIT system, the following are indispensable:
- Acquire any required support systems (like software) to ensure smooth running
- Identify and develop good relationships with reputed suppliers
- Adopt a new design flow process or redesign old ones.
- Increase delivery frequency, reduce lead time, lot size, setup time
- Reduce motion waste (by including a conveyor belt, for example)
- Restructure layout
- Incorporate preventive maintenance to reduce the incidences of machine breakdowns
- Provide sufficient time and commitment to adopt the new way of production
When properly implemented, this strategy provides excellent results for the company. It has been successfully used by several companies, including Toyota, Dell, and Harley-Davidson, to achieve significant improvements in their manufacturing processes. As any system, a JIT manufacturing system also has pros and cons. The trick is to be aware of the disadvantages and to overcome them during the implementation stage.