Just-in-time production, as the name suggests, is a lean approach used for inventory minimization and production based on customer order – when they want it, where they want it, and quantities ordered. Unlike traditional manufacturing, JIT production stores inventory at a minimum level enough to satisfy production and market needs.
JIT approach has many moving supply chain elements that need to be fixed first before jumping into JIT implementation. The supplier must agree to deliver small batches frequently or as needed to the plant so that the manufacturer takes only the needed level of inventory for production. In the production floor, the labor force should be utilized and cross-trained across workstations to ensure continuous production flow with the minimal workforce. Moreover, a shipping partner should agree to make frequent delivery from the warehouse to customers. Manufacturers should have a high performing supply chain infrastructure for a successful JIT implementation.
JIT approach leads to operational efficiencies including;
– Reduced inventory costs
– Improved quality
– Reduced lead time
– Reduced order to cash cycle time
There are also issues in JIT such as;
– Minimal inventory may not suffice spike in customer demand
– Increased transportation cost due to frequent delivery
– Inflexible to supply chain disruptions due to less inventory