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The Just-in-Time Inventory Management

Within any manufacturing process, there is a big dependency on quality infrastructure and timing. This includes efficiency in the flow of raw materials and a reliable workforce. Also known as lean manufacturing, the Just-in-Time (JIT) inventory management is a strategy focused on increasing efficiency and decreasing inventory carrying costs for a company. First introduced in Japan in the 1970’s, the JIT manufacturing method started being put into practice by Taichii Ohno, a Toyota employee. Based on a principle of producing only what is needed, the JIT technique was introduced by producing only the necessary units in a determined quantity and time, resulting in decreased excess inventory, workforce, and waste.

According to The Economist, “if you produce only what you need when you need it, then there is no room for error. For JIT to work, many fundamental elements must be in place—steady production, flexible resources, extremely high quality, no machine breakdowns, reliable suppliers, quick machine set-ups, and lots of discipline to maintain the other elements.”

In order to adapt a successful and error-free JIT manufacturing process, it is important to consider a few elements, starting from inventory and timing. Whether your business is handling raw materials or finished goods, it must count with the right amount of inventory. Also, having strong relations with your suppliers is critical. For example, by applying the JIT method you must be able to count on your suppliers at any given moment with the assurance that your goods will arrive on time.

Secondly, it is important to consider efficiency and reliability within your workforce. In order to optimize time, which is your main resource of action, you must be able to incorporate certain guidelines and procedures for your employees. According to an article by the QuickBooks Canada Team, “an employee must know exactly what to do prior to the receipt of an order. Once an order has been placed, it is the responsibility of the well-trained employees to know exactly what needs to be done”.

The benefits of following a JIT inventory management are numerous, considering that storing and waiting for materials can increase costs. However, a poor handling of such strategy may result in potential risks in the supply chain. For example, if a certain supplier fails to deliver the goods on time, it may cause a disruption in the entire production process. Nonetheless, when applied correctly, any business should be able to save costs in inventory storage, boost efficiency, and costumer response regarding production operations.

As part of a complex, efficient, and thriving logistic chain, in Woodward Logistics we are determined to integrate these strong principles in our services as your leading experts in logistics simply because our customers require of an efficient, cost-savvy and error-free logistics process. With this said, when it comes to solve complex supply chain problems, the JIT is just one of numerous systems that work as a part of a bigger lean strategy. When practiced correctly, it can contribute to a more efficient and cost-savvy supply chain process.

 

Sources:

The Economist (2009, July 6) Just-in-Time. Retrieved from: https://www.economist.com/news/2009/07/06/just-in-time

Investopedia. Just in time – JIT. Retrieved from: (https://www.investopedia.com/terms/j/jit.asp

QuickBooks Canada Team. How to Implement a Just-in-Time (JIT) Inventory System. Retrieved from: https://quickbooks.intuit.com/ca/resources/inventory/how-implement-jit-inventory-system/

Peavler, R. (2018, May 15) Just in time (JIT) Inventory Management. Retrieved from: https://www.thebalancesmb.com/just-in-time-jit-inventory-management-393301