Just-in-Time

    The term Just-In-Time (abbreviated "JIT") refers to a strategy within a company's production in which materials are delivered to the place where they are currently needed at a specific time.

    Definition of Just-in-Time

    Just-in-time is a process in production in which the goal is for the supplier to deliver the right material in a specific quantity at the specified time. This is also called demand synchronous production. To achieve this, the ordering of raw materials from suppliers must be directly coordinated with production schedules. 

    What are the requirements for just-in-time?

    In the just-in-time strategy, close cooperation must be ensured along the entire supply chain. In particular, communication between suppliers and employees along the transportation planning process must be very precise in order to apply the Just-in-Time system at all. The exact quantity must be delivered at an exact time target because with "JIT" the goods are immediately scheduled and used in production. Detailed planning or an exact forecast of sales as well as long-term delivery and acceptance contracts must therefore be in place. 

    Requirements for JIT at a glance

    • There must be no or only minimal fluctuations in production demand - there must be continuous demand.
    • Fast set-up times (the ability to set up operations quickly) are necessary and equipment must have high availability.
    • Capacity reserves should be flexible.
    • To ensure that the production sequence is maintained, there must be continuous quality assurance.
    • Depending on the range of parts, the scheduling procedure should vary between plan-driven (centralized) or consumption-driven (decentralized).
    • Only selected suppliers may be involved.

    What are the advantages and disadvantages of Just-in-Time?

    Advantages

    Due to the exact quantity and the specific time at which the materials must be delivered with Just-in-Time and the direct use, the costs for warehousing are lower. In contrast to traditional methods, materials are rarely stored and if so, only for a short period of time. Companies thus use this type of inventory strategy to increase efficiency and reduce waste or depreciation by receiving goods only when they need them for the production process. By reducing lead times and capital commitment, a company's economic success increases.

    Disadvantages

    First of all, the dependency on the supplier is very high. In addition, communication must run smoothly throughout a company's logistics operations. The increased communication effort between the company and the supplier can quickly become costly due to errors. There must be constant documentation of how far production has progressed. Just-in-time organization can otherwise lead to production and delivery delays due to the delivery of incorrect parts or late delivery of urgently needed parts. Environmental influences such as snow, heavy rain or subsequent storm damage can also lead to problems on the part of the supplier and ultimately become a problem for the manufacturing company.

    History of the Just-in-Time principle

    Just-in-time production originated with the Japanese Taiichi Ohno. Due to the increasing diversification of equipment and models, the production manager of the automobile manufacturer Toyota noticed that the system of inventory management was quickly reaching its limits. In order to reduce warehouse utilization, keep the material flow suitably high and still satisfy customers, he developed the Just-in-Time concept, which has proven its worth in the automotive industry to this day. Another goal of the JIT principle was to minimize storage costs. JIT delivery is one of the concepts that resulted from this and is also still accepted today.

    JIT delivery and just-in-sequence (JIS)

    JIT delivery is a call-off and delivery procedure in logistics in which the required materials are only delivered when actually needed. These are then delivered by the supplier directly to the customer's production facility. A more advanced form of the JIT concept is just-in-sequence production. Both processes have their origins in the automotive industry. JIT production was no longer sufficient due to the increase in individualized vehicle configurations.

    Just-in-sequence was therefore developed. In contrast to the Just-in-Time principle, the Just-in-Sequence process focuses on the exact phase of production. The required material is ordered and delivered with the right quantity, at the right time (e.g. time of final assembly), in the right sequence. Due to the non-existent stock, there must be no delivery delays, wrong deliveries or quality defects, otherwise they will lead to an immediate interruption in production. The entire supply and production process must therefore be planned and executed in detail.

    Kanban

    Another subsystem of Just-in-Time is the Kanban system (Kanban = shield/card). In the Kanban system, low inventory levels are targeted. With the help of a card-based instrument, material and information flows are controlled at the shop floor level. Production is divided into self-controlling control loops, therefore adherence to deadlines and short lead times must be guaranteed along the entire logistics of the company. By means of a "Kanban", an order is placed with the respective supplier with a predetermined quantity and a specific arrival date from the consumer. In today's age, classic Kanbans are often replaced by so-called "e-Kanbans". Here, the data transfer takes place via EDI or WebEDI.