Just like the lean manufacturing strategy, JIT is aimed at improving productivity. However, this approach is primarily aimed at improving productivity via reducing the times within the manufacturing cycle. It also extends to reducing the response time from suppliers of raw materials and the time it takes for the product to reach the consumer.
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The just-in-time inventory system is a strategic production scheduling tool that equates raw material orders to pending customer orders. It’s a production strategy which hinges on production cycles that start and end when customers demand and procure the exact quantities of what they want, in the time and the place that they want it, without any delays or mix ups. By reducing inventory costs with this strategy, companies can curb wastage and increase efficiency in production.
However, a streamlined inventory system of that order requires absolute accuracy in the prediction of demand. Hence, the production cycle associated with the inventory system is initiated only beyond the point where customers place orders, not before, as per traditional inventory systems.
In this system, a manufacturer does not stack up inventories prior to orders, but rather after orders have been placed. Every process is designed to produce only what’s required for the next step of the production process leading up to the production to fill a particular client’s order. This is a perfect example of executing a manufacturing process when you know what you are doing.
This prevents companies from tying down their resources in inventories, as they get to cash in on inventories quite easily. It ultimately frees up resources that can be channeled into other aspects of the business to increase profitability.
There is a need for accurate predictions of future demands in both JIT and traditional manufacturing. But the need for accurate forecasting of demand is more pressing in JIT than in traditional manufacturing, as a company can forecast demands with a larger latitude in traditional manufacturing than in JIT. This later is commonly called Just In Case.
As the company predicts demand with less accuracy, it produces goods in batches in order to increase the efficiency of production process. This ultimately results in a longer time to market for the manufactured products. It also brings about larger Work In Process (WIP) stocks that will be used to produce large quantities of finished goods that are yet to be ordered by customers.
Also, in traditional manufacturing, manufacturers usually deal with customer’s orders that cannot be filled with the current stocks by either delaying to fill the order until the ordered products are manufactured, or by producing in a fast-tracked procedure which might disrupt the original production schedule.
To manage such scenarios, companies using traditional manufacturing often deploy Manufacturing Resource Planning (MRP2) software that helps them gain firm control over every step of the manufacturing process. But the use of the software still requires conscientious planning and monitoring.
However, in a JIT system, companies get to use an easy-to-use visual tool, to put through the production process the exact product that the customers order for. Not only does this slash down the quantity of finished goods, it also reduces the time to market for finished goods significantly, allowing producers to cash in on inventories quickly. However, the JIT system requires a high degree of predictability, discipline, streamlined movement of materials, and production processes free from defects.
In order to successfully implement a JIT system, a company need to deploy not only the visual tools that come with the system, but a lean manufacturing system that supports the JIT system. The things that must be put in place in order for JIT implementation to pan out well include:
The workflow in JIT must proceed seamlessly in order for customers to get what they want when they want it. This requires the company to create Total Productive Maintenance plans that curb the occurrence of defects and failures in the equipment and machinery.
To eliminate the need to fix mistakes in the finished product, it’s crucial for the layout of the manufacturing process to be clear and unambiguous, in order to minimize the margins of error that may occur due to misrepresentations. With a clear understanding of how the processes work by the employees, the system becomes more predictable and reliable.
The ideal production schedule for JIT system is one in which a single product is produced per time, as per the orders of customers. Although this isn’t feasible for many manufacturers, it should be adopted as the ultimate goal of the production process.
This might require the company to continuously cut down on the sizes of batches, and they can do this using the Single Minute Exchange of Die (SMED) technique. This technique is designed to significantly minimize the time taken to install a setup, requiring the use of smaller specialized machines and procedures rather than gigantic machines.
In manufacturing, time to market and cost of production are high-impact factors that determine success. And since the goal is to improve productivity as much as you can, JIT is an excellent way to do this.
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