Just in Time (JIT) has often been considered as a survival strategy for the manufacturing industry against fierce global market competition. The three words say it all, everything happens just in time. For example, consider my journey to college this morning, I could have left my house, just-in-time to catch a bus to the college, just-in-time to arrive at my college, just-in-time to pick up my lecture notes, just-in-time to walk into the lecture room, just-in-time to attend the lecture. Theoretically there is no problem about this; however achieving this in practice is likely to be difficult.
Similarly in a manufacturing process materials could theoretically arrive just-in-time to be picked up by a worker and used. This eliminates any inventory of materials; they would simply arrive just-in-time. In the same way finished goods could be produced just-in-time to be handed to a customer who wants them. So, at a conceptual extreme, JIT has no need for inventory or stock, either of raw materials or work in progress or finished goods.
Obviously this is not as easy as it sounds. It might well be difficult, or impossible, or extremely costly affair, in real-life. However we could move an existing system towards a system with more of a Just in Time element. For example, consider a manufacturing process – in terms of handing finished goods to customers, we would still require some inventory of finished goods. It might be possible to arrange raw material deliveries so that, for example, materials needs for one day’s production arrive at the start of the day and are consumed during the day – effectively reducing/eliminating raw material inventory.
Just in time is a dream for the low information availability organization. Still back to your example, if you dont know the bus schedule, you have to wait at the stop, right? I am working in China, and we have to face the unsolidated market, which means more than 10,000 customers direct sales! Then, our life is more like fire fighting – everything is urgent and important and even burning. Furthermore, the wastage is definietly higher than other developed country.
Hi. The question that comes to mind is where does the JIT chain stops ? For example, consider a Company which buys lot of steel fabricated components from its vendors. Assume this COmpany works on JIT. WHich means the Vendors carry some inventory. Vendor’s vendor may also carry some inventory. Based on the Financial strength of these Vendors, meaning their credit rating, Banks would probably finance them at a rate higher than our original Company. SO they need to build in that cost in their product price. So does JIT really works ? Sure, you may not have inventory, but is the inventory carrying cost built in by the Vendor in his price ? So where is the davantage then ?
I agree with Karen. JIT is a dream for many organizations. Could JIT ever work for a company that has highly volatile demand? It would also seem unlikely to work with slow moving parts like the aerospace industry due to the long manufacturing times. Just In Time would need perfect forecasting in order to be effective.
Hi Karen,
well it’s true that if I don’t know the bus schedule, much time will be spent at the bus stop. But coming to the real aspect of it, it is the reponsibility of each organisation or company to implement technological innovation and update their employees due to the dveloping world. It is my duty to to check the bus timetable electronically or check the bus timetable with the bus station before proceeding to the bus station if I really want to implement just in time strategy.
Regarding the customer demand I think most organisations/companies should try and implement the capacity planning methods as well as forecast their needs in order to avoid spike demand pattern. My advice to your management is to adopt the maximum staff model, in order to meet up with the demands of your customers.With all this in place I believe just in time can be a survival strategy.
Hi Steve.
You’ve said it all that just in time need perfect forecasting in other to be effective as well as adopting appropriate capacity planning method in other to meet up with the volatile demand. To achieve a goal in life there must be a sacrifice for it that is the case of implementing just in time strategy although it might take a while before perfection but we will surely get there with consistency.
Hi Anand,
I think just in time might be a continuos process for some companies especially large comapanies that their demands fluctuates frequently for readjustment and forecating of their supply and demand.
Well i presume it is the duty of the vendors and their customers to avoid carring inventories as much as they can by forecating their demand and supply as well as applying capacity planning method. I feel it is better to have exact or less product supplied than to have much inventories and high cost.
I like this way of sharing, indeed!
I like this topic as well. Now I am doing a big ERP project for one multinational company. And during the cut over period, the whole chain (I mean for my own company and almost ALL of the customers) need pre build 7 – 8 days of stocks, which is a huge effort to align all of them. I know this is just a special case, while for most of the normal cases which are bothering the planners often are the fluctuating demands. In China you can imagine, we dont have very innovative/smart technology to capture thousands of stores’ real demands since we dont have very solid quick response system and we need rely on ‘estimation’ which really create a lot of chaos in our life.
I do wanna get your sharings from your company or even your industry in your country about how to manage the ‘real demand’ if no robust system can really help?
My email is 13764533912@139.com (better copy to my business account – karen.yip@unilever.com)
Your article has helped me a lot for my job.
Hey! Can I ask what’s this template you are using in your blog? thanks.
It is an adaptation of Atahualpa 3.4.4