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 procedure the supply of the construction units takes place exactly in the moment of the need with the customer. The supplier guarantees a 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 organize the flow of materials as optimally as possible using few natural resources. The decisive difference to the Just in sequence (JIS) concept here 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 align the entire material flow with the production process. This reduces throughput times in production and minimizes 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-organized transport planning, which is characterized by optimal delivery size and calculation of the correct cycle lengths and thus significantly minimizes 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 minimized, warehousing and inventories 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; cost is low.
- Quantities sufficiently available in production.
- A continuous improvement process increases productivity.
- Competitive advantage through resource optimization and waste reduction.
Disadvantage of the procurement Just in time is certainly the increased communication expenditure between customer and supplier and the current production status must be constantly exchanged. Further points are:
- Increasing dependence between customer 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 minimization of inventory costs and shorter changeover and throughput times. Material inventories 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