Brief Introduction of what is JIT

Just-in-time (JIT) inventory management, also known as lean manufacturing and

sometimes referred to as the Toyota production system (TPS), is an inventory strategy that
manufacturers use to increase efficiency. It involves ordering and receiving inventory for
production and customer sales only as it is needed to produce goods, and not before. It aligns
raw-material orders from suppliers directly with production schedules. Companies employ this
inventory strategy to increase efficiency and decrease waste by receiving goods only as they
need them for the production process, which reduces inventory costs. This method requires
producers to forecast demand accurately.
For JIT manufacturing to succeed, companies must have steady production, high-quality
workmanship, glitch-free plant machinery, and reliable suppliers.
JIT's main philosophy is to eliminate waste – wasted inventory, wasted stock and wasted time
because manufacturers do not have to pay storage costs. Manufacturers are also not left with
unwanted inventory, if an order is cancelled or not fulfilled.
ADVANTAGES DISADVANTAGES
 Production runs are short, which  It involves potential disruptions in the
means that manufacturers can quickly supply chain.
move from one product to another.  If a raw materials supplier fails to
 It reduces costs by minimizing deliver the goods on time, this could
inventory carrying costs, increasing conceivably stall the entire production
efficiency, and decreasing waste process.
 Companies also spend less money on  A sudden unexpected order for goods
raw materials because they buy just may delay the delivery of finished
enough resources to make the ordered products to end clients.
products and no more.

Some companies that have successfully implemented JIT include Toyota, Dell and Harley
Davidson.
Toyota

Toyota started using JIT inventory controls in the 1970s and took more than 15 years to
perfect its process. Toyota sends off orders to purchase production parts only when it receives
new orders from customers. Toyota is considered by many to be the poster child for JIT success.
The Toyota production strategy is highlighted by the fact that raw materials are not brought to
the production floor until an order is received and this product is ready to be built. No parts are
allowed at a node unless they are required for the next node, or they are part of an assembly for
the next node. This philosophy has allowed Toyota to keep a minimum amount of inventory
which means lower costs. This also allows Toyota to adapt quickly to customer’s demands,
significantly reducing the risk of having excessive inventory at its disposal.
Important factors to Toyota’s success
 Small quantities of raw material are kept at each station of production, assuring that there
is always enough inventory stock to start production of any product. This is also
replenished once used.
 A very accurate forecast of the raw materials required for upcoming demand so that they
can be stocked.
DELL
Dell is another good example of a manufacturing process that has demonstrated the efficiency of
this process. Dell’s approach to JIT is different in that they leverage their suppliers to achieve the
JIT goal. They are also unique in that Dell is able to provide exceptionally short lead times to
their customers, by forcing their suppliers to carry inventory instead of carrying it themselves
and then demanding (and receiving) short lead times on components so that products can be
simply assembled by Dell quickly and then shipped to the customer.
Important Factors to Dell’s Success:
 Dependable suppliers with the ability to meet Dell’s demanding lead time requirements.
 A seamless system that allows Dell to transmit its component requirements so that they
will arrive at Dell in time to fulfill its lead times.
 A willingness of suppliers to keep inventory on hand allowing Dell to be free of this
responsibility

HARLEY DAVIDSON’S

Harley Davidson’s use of JIT is mostly characterized by its transformation in the late
World War 2 era from an inefficient manufacturer that solved all of its problems with extra
inventory to a nimble manufacturer able to meet demand and provide short lead times. After
implementing JIT of Harley Davidson the inventory levels declined in 75 percent, but at the
same time productivity rose. With this, they were able to identify and solve the inefficiencies of
the process because it could no longer hide under a large amount of costly inventory.

Indeed, Just-in-time inventory management is a positive cost-cutting inventory management

strategy, although it can also lead to stockouts. The goal of JIT is to improve a company's return
on investment by reducing non-essential costs.

SOURCES:
 https://davidkigerinfo.wordpress.com/2016/02/22/analyzing-top-examples-of-just-in-time-
inventory-and-production-management/
 https://www.investopedia.com/terms/j/jit.asp
 https://www.brighthubpm.com/methods-strategies/71540-real-life-examples-of-successful-jit-
systems/
 https://www.unleashedsoftware.com/blog/3-successful-companies-practising-jit-systems