Just in time supply chain manufacturing, or JIT is also often called the Toyota Production System or TPS because it was developed by Toyota plants located in Taiichi Ohno. The idea is aimed at reducing the cycle times for activities within a production system. Above all, the goal is to also reduce the response times from the supplier to their customers. That is to say, just in time is an inventory management technique that can help to improve efficiency, reduce costs, and lower wastes as goods are only received as they are needed.
Just in time supply chain is seen as one of the most cost-efficient methods in terms of keeping stock levels. The purpose is to minimize the number of items that you are holding at a given time without compromising the volume of production. As a result, this method has many advantages as there is not as much space needed to hold items, a faster turnaround of inventory, and with less stock, there is less of an investment.
Just-In-Time Supply Chain Advantages And Disadvantages
In order to get this type of lean management, careful planning is necessary as the entire supply chain including any raw material procurement, finished product delivery, to the final customer has to be carefully managed. This planning is often completed with the help of sophisticated software solutions and technology.
Advantages of Using JIT
As mentioned, the main focus of just in time supply chain is to keep stock at a minimum, which will lower inventory costs, as well as warehouse and storage costs. Keeping a minimum amount of inventory will affect all areas of the supply chain, which means less waste for the entire organization. With a lower amount of inventory, there is lower investment, but the same levels of production. This helps to reduce the amount of working capital investment, which leads to a better ROI, resulting in higher profits for the company.
Since the focus of JIT is on producing items based on consumer demand, all of the items that you manufacture will then be sold. There are no obsolete items sitting in the finished goods section. This helps a company easily adapt to any type of specification from the market without having to worry about waste. In order to achieve and maintain
JIT production, communication is extremely important. An open line of communication throughout the entire supply chain is necessary for this to work. The focus is on the high quality of the product and the companies will work to achieve getting the product right the first time for all of the goods that are being produced.
Disadvantages of JIT
As with anything, there are some downfalls to using JIT as well. One of the biggest issues is that JIT is sensitive to any errors. In fact, since only the minimum inventory levels of products are being kept, there is no room for mistakes.
Another issue with JIT is that if there is a sudden increase in demand, JIT does not adapt well. Since you only keep the bare minimum, sudden higher demand for a product causes issues.
Finally, JIT can only work when every party involved works with coordination and in tandem with each other. Due to this, one break down in the chain and the system will fail. Since there is no buffer in the level of stock, if a failure along the supply chain occurs, there can be downtime in the production process, which can lead to large losses for the business. Overall, the goal of JIT is to achieve the maximum profit for the minimum input. The only way that this works is if everyone involved in supply chain management does their part.
The Junction LLC | Truckload Shipping
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