Just-in-time manufacturing (JIT) is a manufacturing philosophy based on producing what your customer needs and when they need it. In this article we will define JIT, describe its benefits and best practices for implementing it in your organization.
Overview: What is just-in-time manufacturing?
Just-in-time manufacturing, or JIT, is a management philosophy focused on what the customer wants, when they want it, in the quantities they want, and where they want it. Instead of building large inventories of what you think the customer might want, you only make and deliver what the customer asks for.
JIT seeks to eliminate some of the 7 Wastes of Lean, specifically the wastes of waiting, overproduction, and excessive inventory. This is the opposite of how most organizations handle production, where they produce with a philosophy of JIC (just in case).
JIT was developed as a Japanese management philosophy in the early 1970s. It was first developed and perfected within the Toyota manufacturing plants by Taiichi Ohno, a Japanese industrial engineer and businessman. He is considered to be the father of the Toyota Production System.
While you might think Ford was the role model for Ohno’s development of JIT, the truth is, they were just starting to implement the concept of just-in-time. The Toyota representatives visiting the U.S. were impressed during a visit to the supermarket chain Piggly Wiggly and how they handled their inventory. They observed that products were only replenished and ordered from suppliers when the customer actually removed items from the shelves. That created a balance between keeping the shelves from being empty and carrying excessive inventory.
The graphic below shows the overall concept of JIT.
The initial intent of JIT was focused on manufacturing and the reduction of waste associated with waiting, overproduction, and excess inventory. It has since expanded to include many other factors that would allow the elimination of waste in a broader context.
It has now come to mean producing with minimum waste. “Waste” is taken in its most general sense and includes time and resources as well as materials. Elements of JIT include:
- Continuous improvement
- 5S for workplace cleanliness and organization
- Set-up time reduction with SMED (single minute exchange of dies)
The table below contrasts the difference between JIT and a traditional manufacturing system.
|Tries to predict what the customer will want, creates a forecast, then produces against that forecast||Bases production on actual customer demand and usage|
|Large batches and long runs to optimize set-up time||Small batches and short runs|
|Long lead times||Short lead times|
|Large amounts of work in process (WIP)||Minimal WIP|
|Large amounts of finished goods||Minimal if any finished goods inventory|
|Customer wait time if product not in stock||Product made and ready to deliver|
|Expedited orders disrupt schedule||Limited (if any) expedited orders|
|Based on a push system||Based on a pull system|
4 benefits of JIT
There are many benefits of using a JIT manufacturing approach. Here are a few.
1. Reduce overproduction
A major benefit of JIT is the reduction of overproduction. If a product is produced in the right quantity and on time, there should be no overproduction. When there is overproduction, inventory has to be stored, which incurs labor, storage, and utility costs.
2. Reduced inventory
The concept of JIT is to keep your inventory levels low, which is advantageous for your company’s inventory costs and expenses.
3. Meet customer requirements
Meeting your customer’s requirements for quantity, timing, quality, and cost will improve your relationship with your customers.
4. Cost reduction
JIT manufacturing aims to produce products in the required quantity and only when needed, resulting in lower costs and less wasted production.
Why is JIT important to understand?
While JIT involves a number of technical aspects, the concepts behind JIT are important to understand.
Philosophy of manufacturing not a specific procedure
The underlying philosophy is to produce what the customer needs, when they need it – and not before. Producing more or before they need it will result in overproduction and inventory.
Can be applied to non-manufacturing as well as manufacturing
Recall we said the Toyota representatives from Japan were impressed not with Ford, but with a small chain of Piggly Wiggly convenience stores and how they managed the inventory on their shelves.
Large inventories of raw materials and finished goods are not always a good thing
In most cases, the need for large inventories is not really needed. Shortening the supply chain and reducing inventories will be a big cost reduction for most organizations.
An industry example of JIT
A major consumer products company had a philosophy of scheduling long runs and big batches of its primary products. This was intended to optimize the sometimes long set-up times for their manufacturing equipment. Unfortunately it also required large warehouses to store finished goods. The added warehouse space and costs along with the obsolescence and shrinkage of product, increased their unit costs and sometimes made their product non-competitive because of price.
Senior leadership made a decision to switch to a manufacturing philosophy of Just-in-time. In analyzing customer demand profiles, it was discovered that since the sales force visited customers’ stores every day to take orders and promised 48-hour delivery, manufacturing knew what the customers needed and when.
The company’s Lean Six Sigma Black Belts were tasked to find ways to reduce equipment set-up time and shorten turn-around time. The schedule was revised to produce to the customers’ orders rather than build to inventory. A system of live loading was implemented, which had cases of product come off the manufacturing line and put directly into the trucks for delivery.
Since demand was relatively stable, the warehouse was reconfigured to only hold 48 hours of product rather than the previous 3-4 months of inventory. The additional space was used to build another production line for a very profitable product that had been recently introduced.
3 best practices when thinking about JIT
Here are a few tips to help make JIT successful in your organization.
1. Focus on the high-cost components first
Tying up your capital in high-cost components is not a good financial strategy. Identify the big ticket items and seek to reduce those first.
2. Reduce transportation distance and time
In many JIT implementations, the organization will try to set up distribution centers either at the customer’s site or very close in order to reduce the distance and time for delivering product.
3. Smooth customer demand
Work with your customer to try and smooth their demand to help you provide a more predictable production schedule.
Frequently Asked Questions (FAQ) about JIT
1. What is the basic concept behind JIT?
To produce what your customer wants, when they want it. This will reduce or eliminate excessive inventories and overproduction. Do not build to stock unless you must.
2. What are the main elements of JIT?
The three elements of JIT are Takt Time, Flow, and Pull.
3. What is needed for a successful JIT implementation?
For JIT manufacturing to be successful, you must have a smooth demand, high-quality product, and reliable equipment and suppliers.
Again, what’s JIT?
JIT is a manufacturing philosophy based on the concept of only producing in response to your actual customer demand. Let the customer pull your product through the process. By only producing the quantity needed to replace items – and only when they are needed – you will reduce your inventories and overproduction. This will result in cost savings, improved customer satisfaction, and a more efficient process.