Just in time supply

by Admin
Updated: July 27, 2018

JIT - Just In Time supply chain management provides benefits of efficiency and agility

JIT - Just In Time - is a supply chain management approach that attempts to maximize efficiency by making sure that raw materials are fed into the system at exactly the rate they are ultimately converted into delivered sales. It requires that all intermediate stages are rate-matched.

A common approach to supply chain management is to have buffers: If a production process requires one-hundred units of materials per day, you attach a storage facility containing several hundred units at any given time.

The obvious benefit is that the production process is not sensitive to the storage level going down (or up). The main disadvantage is that a storage facility - which doesn’t contribute value - has to be paid for. An additional disadvantage can occur when what is being stored might spoil.

If the storage can only be replenished every few days, this buffer is necessary. If it can be topped-up incrementally, it becomes more feasible to reduce or eliminate it entirely as the top-up rate reliably matches consumption. This is “Just in time.”

JIT was coined in the 1980s and is derived from TPS (Toyota Production System) from the 1970s. It is a core concept of Lean.

Ideal JIT

Just In Time can be an on-demand process. It does not require production (or demand) to be continuous.

An ideal JIT process will be instantaneous: At the precise moment a product is needed, the raw materials are obtained & processed and the product is delivered.

Perfect JIT (inline buffering)

Even though some individual production processes do function as instantaneous events, the entire process almost never does.

The supply of raw materials may match the rate of final production but there might be a long pipeline.

When this is the case, an interruption in the supply further up the chain doesn’t immediately affect the production of finished items.

If it’s possible to increase processing rates as soon as upstream supplies are restored, there might be no ultimate effect on the production of finished items at all.

Imperfect JIT (lot sizes and batch processing)

The ideal lot size is one unit but in practice maximum efficiency is often obtained in batch processing.

If materials can only be consumed in a strictly linear way but are supplied in batches then, technically, this is not JIT because the unused batches are storage.

In practice, unless extra expenses is involved in holding these supplies, it can usually be treated as inline buffering.

Agility

The shorter and narrower the pipeline, the less will be lost if the pipeline is stopped or if it needs to be changed.

Efficiency

One-at-a-time production is often not efficient. Neither is having an excessively long pipeline.

Robustness

If the pipeline is short and intermediate processing rates are not easily adjusted, a single interruption can bring the entire production line to a halt.

More info

“Just In Time - JIT” at investopedia.com.

“How to Determine Your Lot Size” at allaboutlean.com.

“Equations for Inventory Management” at wiley.com (PDF, 58 kB).

“Toyota Production System (TPS) & Lean” at strategosinc.com.

“Differences Between JIT & Lean Manufacturing” at smallbusiness.chron.com.

Internal links

Show more to sell more Diminishing returns Opportunity cost Compromise Go to Articles
Agree? Disagree? Questions? Answers?
Please post a comment...
Log in