Just-in-time (JIT) production: part of the supply chain management process

Just in time is a production method used within the supply chain management domain. This manufacturing process is driven by a series of indicators that are known as Kanban. These signals inform manufacturers when the next required part needs to be manufactured. Kanban commonly takes the form of ‘tickets’. When the system is optimally implemented, the Just-in-Time method can dramatically improve a manufacturer’s quality and efficiency. In addition, it can also increase the levels of return on investment.

When this supply chain management method is employed, stocks are not replenished until current levels drop below a predetermined level. This means storage remains uncluttered and any available space can be put to best use. The main drawback to this style of operation is that order levels are always determined by previous demand levels. Therefore, if there is a sudden increase in demand, the stock may end up depleting as a consequence. This can have a very negative effect on customer service and lead to dissatisfied customers. It is vital that the Just-in-Time system is managed well so that it reaps rewards. Another term related to this manufacturing method is ‘Kaizan’. This means ‘continuous improvement of a process’.

One of the first companies to implement the Just in time strategy was Ford Motor Company. They used a ‘dock to shop’ concept, whereby incoming materials went directly to the production area and were never stored idle on site. This meant there was a massive dependency on the reliability of the shipping or logistics company supplying the parts. The Japanese automobile company Toyota was also one of the first to use this process. Just-in-time strategy has its roots in Japan and is very popular there due to the high premium required for any type of warehouse or storage space.