Definition - 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 demand. The supplier ensures that the preliminary products are procured according to demand 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 material flow as optimally as possible with few natural resources. The decisive difference to the concept Just in sequence (JIS) is that the supplier does not have to pay attention to the correct sequence when packing the goods.
Requirements
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 minimizes storage costs. This is because the products will only be delivered by the manufacturer when the customer reports the 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 transport planning, which is characterized by optimal delivery sizes and calculation of the correct cycle lengths, thus significantly minimizing transport and inventory costs. Electronic data interchange (EDI) and information flow between customer and supplier are indispensable for this. The automotive industry practices this type of logistics to perfection.
Advantages Just-in-time
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 stock levels are reduced and thus storage costs are significantly lowered. The following advantages can be named in detail:
- JIT ensures transparent processes
- Work processes can be checked and bottlenecks are visible
- Material in stock are small; costs are low
- Quantities sufficiently available in production
- A continuous improvement process increases productivity
- Competitive advantage through resource optimization and reduction of waste
Disadvantages Just-in-time
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. Further points are:
- Increasing dependence between buyer and supplier
- Shorter throughput times can have a negative effect on quality
- Hardly any price competition through long-term contractual obligations
- Environmental influences (traffic) can impede timely delivery
Conclusion
The just-in-time concept ensures a minimization of storage 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 conditions as possible are met so that the changeover and the effort are worthwhile.
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