Lean manufacturing is sometimes referred to as just-in-time manufacturing, or sometimes simply as JIT, meaning a production system set to streamline all processes and logistics from supplier to customer. Although the approach will take many forms that vary by organization and individual goals, JIT’s definition is rooted in maximizing productivity and efficiency and eliminating waste wherever possible, thereby reducing overhead and operational costs to increase profit.
Just In time manufacturing is a concept with origins in the Toyota Production System (TPS) operating model from the late 1940s. TPS aimed to improve production and value by eliminating waste, inconsistency, and other burdens that bog down manufacturing and delivery.
Throughout the mid to late 20th century, these management and engineering principles spread to other parts of the world, where they were expanded and enhanced on case-by-case bases. Rebranded as “lean manufacturing” in the 1980s, JIT fundamentals are still in use today and by more than just the manufacturing industry.
Just In Time Inventory, Delivery, And Other Principals
Just in time logistics can take many forms, depending on the company, but the main goal is to eliminate waste and promote optimal efficiency. For manufacturers, a major component of this is matching inventory to delivery with as little variation as possible. This means that a company will maintain an inventory that strictly accommodates actual production flow. This reduces overhead, lead time, and logistics requirements while streamlining the flow from production to delivery and then payment.
In other words, just in time inventory management is carefully paired to customer demands, with as few steps, variables, and expenses as possible. Manufacturers and other goods providers can accomplish this through systems that accurately account for market needs and trends. When this is achieved, resources can be tightly focused on fulfilling orders rather than building stock based on in-precise expectations and operational buffers.
There are no hard and fast rules for a just-in-time inventory system–as successful implementation can vary greatly from one organization to another–but the principals aim to shorten all aspects of production and resource use, starting from the customer order to finally receiving payment.
Just In Time Benefits And Criticisms
The main benefits of successfully implementing a just-in-time approach include more direct cash flow by shortening the time between orders and fulfillment. This is done by reducing the operational steps, mainly through variable reduction and inventory that’s driven by customer demand rather than forecasting. This helps reduce space requirements, equipment handling, and other costs associated with inventory stocking and management.
This also frees up resources that can then be devoted to design and production that’s an active part of revenue generation rather than those that are speculative or projected. This then can make companies more profitable and in a position to grow according to actual market shifts and other changes.
While JIT manufacturing has been widely adopted and delivered favorable results for companies of all sizes, the approach is not flawless and has received some criticism on different fronts. For example, finding responsive materials suppliers to consistently support a lean, essential-quantity inventory can be challenging when order minimums are common or when companies are serving varied market requirements.
Slimed-down inventories and lean resources may create a situation that limits or hinders employees when it comes to problem-solving and necessary but unexpected adjustments. JIT delivery systems can also be majorly hobbled by supply chain disruptions caused by all manner issues, from natural disasters, to industry-specific upsets, to geopolitical crises. For these reasons and others, the JIT approach to production is not seen as a universal solution for all companies or even all manufacturers.