Just-in-time (JIT) manufacturing minimizes inventory and increases efficiency. It is designed to minimize the waste produced due to overproduction, waiting and excess inventory, three of the seven waste categories of the Toyota Production System. The main purpose of JIT production is to meet the demand, without creating a surplus or wasting it. JIT adopts methods that reduce flow times within production systems as well as response times from suppliers to customers.
JIT manufacturing is very similar to lean manufacturing. This manufacturing technique helps to increase productivity at low costs. JIT manufacturing processes were first started by Japanese manufacturers to overcome the change in an economic scenario during the post-World War II era. They 'leaned out' their processes by building smaller factories, which mainly focused on turning small batches of raw materials into small batches of finished products. This reduced the risk of financial problems while generating sustainable levels of working capital. Today, this system is popularized in western media, popularly known as Toyota Production System.
Methods used in a JIT system
Just-in-time systems require structured, disciplined and explicit processes which is difficult to achieve considering the current market scenario. However, a true JIT system consists of the following techniques:
● Elimination of defects
● Small lot sizes
● A balanced flow of batches
● Physical organization of products
● Setup reduction
● Flexible approaches
● Use of visual tools to improve communication
● Cellular manufacturing
● Designing for the system
● Controlling the whole mechanism
● Pull system
● Kanban
Importance of JIT or Just-in-time manufacturing
This special manufacturing process requires careful planning of the entire supply chain and using modern technologies to carry out the whole process till the end. Here are some of the important effects of JIT:
● The manufacturer has more control
In the JIT model, the manufacturer has control over the whole process. They can respond to customers' queries by quickly increasing the production process for an in-demand product. This makes the model more efficient and flexible to meet the market needs.
● Inventory waste is minimized
A just-in-time strategy reduces waste production and eliminates overproduction, which usually happens when the supply of an item exceeds the market needs. In this system, you order only what you need, so that there's no risk of gathering unusable produce.
● Smaller investments to get higher profit
In the JIT model, only essential stocks are produced and therefore it requires less capital investment. These models use the "right first time" concept which means that the product is obtained right the first time it's done, thereby reducing inspection and rework costs.
● Reduces warehouse holding cost
Excess inventory can double your holding costs. A Just-in-time system solves this problem as it works only when a customer places an order and the item is sold just after it is manufactured which decreases the storage costs. Companies following this technique invest less in warehouse costs which save working capital.
Conclusion
Companies that use this JIT model get maximum profit from less investment and produce less waste. Just-in-time manufacturing is a great way to save the working capital of your business.