Just in Time (JIT) Inventory Management

Just in Time (JIT) Inventory Management:
Just-in-time also identified is a technique used in the manufacturing process of products in such a way that the labor, raw material and goods used in this process are managed to be available at the exact time they are needed in the manufacturing process.
Additionally, it is generally considered to describe inventory that arrives or is produced just in time for the next process or for shipment. It improves processes of manufacturing by removing all waste process comprising of excess inventory, wasted materials and steps. JIT also defines lean manufacturing that depends on systems of Just-in-time inventory. The systems of JIT inventory relies on logistics that comprise of: warehousing, transportation, and a number of other strategies for dealing with other possible uncertainties of supply chain. To understand better one can to grasp it in a literal manner that everything is happening just in time its needed.
History of the Technique
The Just in Time inventory process was first established and applied in the manufacturing plant of Toyota with the aim of meeting clients’ needs without delays. The Japan Taiichi Ohno organization is considered the founder of Just in Time management system. Toyota solved the growing survival challenges via a management tactic that was wholly concentrating on organizations, systems and workforce. Toyota recognized that the technique of JIT was to be effective if each individual in the company was dedicated and involved, when the organization and the processes remained organized properly for maximum productivity and effectiveness, as well as if the quality of products and the tools of production remained organized to fulfill the exact client’s demands.
The Purpose of JIT/ Company Use
The key purpose of JIT is to recognize and correct the challenges in the process of production by showing the problems that are hidden in the inventory process. The technique makes it possible for the organizations to avoid using excessive inventory as well as smoothening the operations of production if a certain task takes too much time than it was anticipated or a faulty part is recognized in the system. This also explains why the companies that have opted to implement JIT inventory system invest in preventive maintenance so that when there is a mechanical problem the process of production will still continue.
The main aim of Just-in-time process is to increase the turnover inventory and reduce the holding and other costs associated with the process. The inventors of the technique made this concept applicable in such a way that when a company places an order for raw materials they can still receive them the same day they are producing the final product such that there is no waiting time. In addition, this process helps most companies avoid carrying out voluminous inventories which end up making most of them incur other manufacturers related costs. However, for most users of JIT o enjoy its benefits, optimum synchronization is expected between the material delivery and the manufacturing cycle.
Just-in-time (JIT) managements system needs a good understanding of manufacturers and suppliers in terms of the quantity of the product and delivery. In case there is a misunderstanding between the two parties, the whole production process may be compromised. A notable example of a JIT system is a vehicle making company which that operates with minimal inventory levels as it strongly relies on the supply chain to deliver the component needed to make cars. The required components cannot arrive prior to or after they are required; they only get to arrive at the exact time they are needed.
Whether or not JIT is successfully implemented largely depends on how a manufacturer deals with suppliers. Such suppliers are usually under intense pressure as they have to be on standby with enough quality products in case an order is made.
Advantages of Adopting a JIT System
• The JIT approach helps minimize or altogether do away with wastage. The likelihood of out-of-date or expired products is almost zero.
• The approach maintains stock holding costs at a minimum level. The process of ordering materials only when needed results in better space utilization and has a favorable effect on rent and insurance costs that would otherwise have to be made.
• Since only the essential stock needed for manufacturing is ordered under this management approach, less working capital is needed. The manufacturer sets a minimum re-ordering level and only orders more stock when that particular level is attained. Such an arrangement also presents a boom in inventory management.
• Thanks to the low stock level, a manufacturer’s ROI (return on investment) can be quite high.
• The JIT approach puts emphasis on the ‘right-the-first-time’ concept, meaning it cuts on inspection and re-work costs.
• The demand-pull strategy that characterizes this approach means all goods manufactured will be sold, while also factoring in changes in demand. Hence, the strategy is quite appealing in the modern business environment characterized by fickle and volatile demand.
• By adopting the JIT approach, manufacturers can achieve greater efficiency and come up with high quality products.
• There is a higher level of customer satisfaction as communication with customers is constant.
• The approach fosters better business relations within the production chain.
• Adopting a JIT system does away with overproduction as only the products orders get to be made.
Disadvantages of Adopting JIT Systems
• Lack of buffers in Just in Time inventory, the production process downtime can happen which can have negative consequence to the process of production as well as in finances.
• Just-in-Time process is not beneficial to the environment as the frequent transportation of raw materials results and deliveries to higher amount of fossil fuels that are burnt thus more greenhouse gases to the environment that causes global warming.
• Lack of excess inventory of finished products limits the organizations from enjoying the benefits of unexpected increase in request of orders from clients.
• The technique does not have any tolerance for mistakes thus making the practice of re-working hard because the inventory is maintained at a minimum degree.
• However much the JIT cuts on cost, sometimes the frequency of transactions ends us making the tractions cost a bit higher than planned.
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