Just in Time Business Studies Definition

What is Just-In-Time (JIT)?

The Just-In-Time (JIT) concept is a manufacturing workflow methodology aimed at reducing flow times and costs within production systems and the distribution of materials.

The concept was popularized by the productivity of Japanese industry in the early 1970s within the Toyota manufacturing plants that would meet consumer demands with minimum delays using an approach focused on people, plants and systems.

The prime goal of JIT is for zero inventories across the organization and its supply chain. This completely utilizes the organizational capabilities and maximizes ROI. The system was so successful in Japan it was copied by many US companies, notably Hewlett-Packard.

Successfully implementation is dependent on creating a business wide initiative, encouraging staff engagement and formulating a policy and strategy that can be mobilized.

How can Just-In-Time (JIT) JIT be applied successfully?

• Create a stabilized work schedule.
• Establish long-term supplier-customer relationships.
• Create a purchasing philosophy on supporting frequent small purchases.
• Encourage and ensure employee discipline.
• Identify value-added and non-value added items in shop floor activities.
• Ensure top management commitment for effectiveness and successful implementation.

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Not all items in an inventory are of the same value, therefore these items are broken down into three categories A, B and C. Class A consists of most valuable items, although these items constitute only 10% of quantity they account for 70% – 80% of consumption value. Class B consists of items with moderate importance accounting for 10% – 20% of revenue. And class C consists of least valuable items that contribute to only 10% of revenue.

What are the advantages of Just In Time (JIT)?

• JIT can be applied to a wider variety of business processes including HR, accounting, supply chain, operations management and relationship management.
• JIT can achieve better product quality through elimination of waste in production.
• The JIT approach can reduce the cost of inventories and inventory requirements.

What are the disadvantages of Just In Time (JIT)?

• The JIT system does not cope well with sudden changes to demand and supply.
• Implementing the system can be challenging and time-consuming.

Can a Just In Time manufacturing process prove effective?

In order to make supply chains more effective the concepts of Lean and Agile have been adopted by many organisations, which incorporate a Just-in-time approach.

The lean and agile paradigms, though distinctly different, can be and have been combined within successfully designed and operated total supply chains.

• Lean means developing a value stream to eliminate all waste, including time, and to enable a level schedule. Waste is defined as any activity which does not add value, but becomes integral to the production. This is an example of supply chain cooperation in action.
• Agility means using market knowledge and a virtual corporation to exploit profitable opportunities in a volatile market place, and the focus is on customer responsiveness and time-based competition.

Is Just in Time (JIT) right for my business?

The Just in Time process is not a solution for all organisations and determination if this is the best fit for your organisation is essential, it may be that this process can only be applied to certain areas of category management.

To find out more about this subject read the full knowledge paper: Just In Time (JIT)

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For addition reading on this topic visit Operations Management

Related Topics

Capacity

Manufacturing

Stock & Inventory

Warehousing

Just in Time Business Studies Definition

Source: https://www.cips.org/knowledge/procurement-topics-and-skills/operations-management/just-in-time/

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