What is just-in-time?
The concept of just-in-time (JIT) or production-synchronous delivery describes a type of delivery in procurement logistics. With this method, the components are delivered to the customer at the exact moment of need. The supplier ensures demand-oriented procurement of the preliminary products in the production process (supply chain).
Origin - Just-in-time
The JIT concept was developed by the Japanese Taiichi Ohno. The system is directly related to the Japanese car manufacturer Toyota and was part of the Toyota production system. The basic aim was to organise the flow of materials as optimally as possible with few natural resources. The decisive difference to the Just in sequence (JIS) concept is that the supplier does not have to pay attention to the correct sequence when packing the goods.
Companies that operate according to the just-in-time strategy coordinate the entire material flow with the production process. This reduces throughput times in production and minimises storage costs. This is because the products are delivered by the manufacturer only at the time when the customer reports the need and requires the components. Through this process, the supplier's manufacturing process can be seamlessly linked to the customer's production process.
This form of procurement logistics is made possible by well-organised transport planning, which is characterised by optimal delivery size and calculation of the correct cycle lengths and thus significantly minimises transport and inventory costs. For this, electronic data interchange (EDI) and information flow between buyer and supplier are indispensable. The automotive industry practices this type of logistics to perfection.
If a company decides to work according to the just-in-time principle, the entire material flow should be coordinated with the production processes. Throughput times are minimised, warehousing and stocks are reduced and thus storage costs are significantly reduced. In detail, the following advantages can be named:
- JIT ensures transparent processes.
- Work processes are verifiable and bottlenecks are visible.
- Material in stock is small; costs low.
- Quantities sufficiently available in production.
- A continuous improvement process increases productivity.
- Competitive advantage through resource optimisation and waste reduction.
Thedisadvantage of just-in-time procurement is certainly the increased communication effort between buyer and supplier and the current production status must be constantly exchanged. Other points are:
- Increasing dependency between buyer and supplier.
- Shortened lead times can have a negative impact on quality.
- Hardly any price competition due to long-term contractual obligations.
- Environmental influences (traffic) may hinder timely delivery.
The just-in-time concept ensures the minimisation of warehousing costs and shorter changeover and throughput times. Material stocks can be significantly reduced in the production process and made much more flexible. To implement the concept, it is important that as many prerequisites as possible are met so that the changeover and the effort are worthwhile. Notification is not required for the process."Back to Glossary Index