What is just-in-time?
The Just-in-Time (JIT) concept, also known as production-synchronized delivery, describes a delivery method used in procurement logistics. Under this process, components are delivered exactly when the customer needs them. The supplier ensures that intermediate products are procured in accordance with demand within the production process (supply chain).
Origin – Just-in-time
The JIT concept was developed by the Japanese engineer Taiichi Ohno. The system is closely associated with the Japanese automaker Toyota and was part of the Toyota Production System. The fundamental goal was to organize the flow of materials as efficiently as possible while using minimal natural resources. A key difference from the Just-in-Sequence (JIS) concept is that the supplier does not have to ensure the correct sequence when packaging the goods.
Requirements
Companies that operate according to the just-in-time strategy align their entire material flow with the production process. This reduces production lead times and minimizes inventory costs. This is because the manufacturer delivers the products only when the customer reports a need and requires the components. This process allows the supplier’s manufacturing process to be seamlessly linked to the customer’s production process.
This form of procurement logistics is made possible by well-organized transportation planning, which is characterized by optimal order sizes and the calculation of the correct cycle lengths, thereby significantly minimizing transportation and inventory costs. To achieve this, electronic data interchange (EDI) and the flow of information between customers and suppliers are essential. The automotive industry has perfected this type of logistics.
Advantages of Just-in-Time
If a company decides to operate on a just-in-time basis, the entire material flow should be aligned with the production processes. Lead times are minimized, warehousing and inventory levels are reduced, and storage costs are thus significantly lowered. Specifically, the following benefits can be identified:
- JIT ensures transparent processes.
- Work processes are verifiable, and bottlenecks are visible.
- We have a small amount of inventory; costs are low.
- Sufficient quantities are available in production.
- A continuous improvement process increases productivity.
- Competitive advantage through resource optimization and waste reduction.
Disadvantages of Just-in-Time
One drawback ofjust-in-time procurement is certainly the increased communication effort between the customer and the supplier, as the current production status must be constantly updated. Other points include:
- Growing interdependence between buyers and suppliers.
- Shorter turnaround times can have a negative impact on quality.
- Little price competition due to long-term contractual obligations.
- Environmental factors (traffic) may delay delivery.
Conclusion
The just-in-time concept ensures that inventory costs are minimized and changeover and lead times are reduced. Material inventories can be significantly reduced and made much more flexible within the production process. To implement this concept, it is important that as many prerequisites as possible are met so that the transition and the effort involved are worthwhile. Notification is not required in this process.
« Back to Glossary Index