The primary benefit of a JIT purchasing or production system is the reduction of inventory … ideally to zero. Reducing inventory will decrease the cost of handling and storing materials. It will also free up space that can be used for more cost effective activities.
In order to successfully implement such a plan, it is critical that you have strong relationships with your suppliers. JIT requires manufacturers and distributors to shift the activity of inspecting for defective products to your suppliers. As products are added to your inventory just when they are needed, it is essential that they are shipped in good working order. Shifting inspection activities helps to reduce your costs of inspecting and sending back defective inventory.
If suppliers do not deliver defect-free materials on time, stockouts and customer returns will occur and they will be more pronounced under the JIT system, since safe levels of inventory are not maintained. This is why building strong relationships and increasing communication with your suppliers and customers is so important. They placed orders for production parts only when a new order came in.
This method was born out of limited resources post-war. The lack of cash, inventory space, and natural resources forced Japan to seek lean methods of production. Just-in-Time requires all the stages of manufacturing to run without hiccups. The steady rate of production under JIT involves no machine breakdowns, no human errors, and a highly reliable supplier that can deliver parts on demand.
Just-in-Time is a great way to minimize inventory costs and space while improving responsiveness and flexibility. Since parts are only ordered when needed, this reduces long-term costs on raw materials, as well as allowing the producer to make changes to their product without being held back by dead stocks.
This means:. A comprehensive plan coupled with informed people can bring powerful results to the Just-in-Time method. Since JIT requires all stages of the manufacturing process to be ready-to-go at any moment, a disruption to a single supply chain source can throw off the entire production schedule.
Therefore, all stages have to be held accountable at all times. There is very little room for error. In order to secure the supplier side, manufacturers may seek to partner with suppliers that are close by or can supply even at short notice. From this information, we can generate an Inventory Model. More Planning Required - JIT inventory management requires companies to understand sales trends and variances in close detail.
Many companies have seasonal sales periods, meaning that a number of products will need a higher stock level to combat consumer demand. Therefore, you must plan ahead for instances like this and ensure that your suppliers are able to fulfill the requirements.
We're not building equipment to stock any longer - we're building to ship. With PlanetTogether APS you can: Create optimized schedules that balance production efficiency and delivery performance Maximize throughput on bottleneck resources to increase revenue Synchronize supply with demand to reduce inventories Provide company-wide visibility to resource capacity Enable scenario data-driven decision making The implementation of an Advanced Planning and Scheduling APS Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system.
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