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JIT Business

JIT

Just In Time (JIT) is an inventory management approach that involves coordinating quantities of supply with levels of demand to ensure the fastest time to customer and the shortest time in inventory. The key to controlling inventory with JIT is knowing how long an item will last (shelf-life or actual use) and how long it will take from the time of order for the item to arrive from the supplier. Understanding these two factors allows the business to establish procedures for ordering items so that they arrive JIT for use without the need to store them for any length of time.

The JIT manufacturing process involves seven principles:

  1. Produce to exact demand
  2. Eliminate waste
  3. Produce one at a time
  4. Achieve continuous improvement
  5. Respect people
  6. Allow for no contingencies
  7. Provide long-term emphasis

These principles are aimed at improving customer satisfaction by emphasizing flexibility and simplicity in manufacturing. Moreover, they encompass a new attitude regarding manufacturing aimed at improving processes in order to complete in the global marketplace.

The JIT strategy enables companies to realize potentially significant savings from reduced inventory costs associated with ordering, storing, maintaining and distributing goods. JIT methods also help businesses improve customer and supplier relations through faster response times and quality enhancements. However, the JIT approach is not without risks. Perhaps the greatest danger lies in the degree to which a company relies on specific suppliers to fill JIT orders. With little to no inventory buffer to fall back on, relying on a few or even single supplier sources makes the business vulnerable to supplier difficulties and demands, such as distribution delays and overcharging, that may diminish the intended time and cost savings derived from JIT inventory management.

The Just In Time (JIT) inventory system revolutionized inventory control and manufacturing processes. Up until Japan gained a significant amount of the manufacturing market share, U.S. manufacturers depended on strategies that involved keeping huge inventories and many suppliers in order to ensure there was no lag in the manufacturing process. The JIT system of manufacturing made a majority of American manufacturing philosophies obsolete. Organizations that utilize the JIT strategy operate under a philosophy of continuous improvement, benefit from improved relationships with suppliers, better employer-employee relationships and reduced cost structures.

JIT is a manufacturing approach that stresses the production of parts when needed, in the quantity needed, and where needed. JIT originated in Japan, a land with almost no natural resources. Japan imports approximately ninety-five percent of the raw material used in manufacturing and ninety-nine percent of its energy. In order to complete effectively, Japanese manufacturers had to come up with a new manufacturing strategy.

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