The following article is a guest post.
History of the JIT System
Also known as the Toyota Production System, just-in-time (JIT) manufacturing is a model of production in which items are created to meet demand. Rather than building up a surplus of an item or preparing orders in advance of when they are needed, manufacturing companies create products as they receive orders.
One of the earliest mentions of the just-in-time concept was by Henry Ford in his book My Life and Work of 1923. He stated materials were to be bought only for immediate needs. His company would purchase enough for the current plans and then any future plans that needed to be completed before more materials could be transported. Ford believed that the system would save money because the amounts that had to be paid out for materials would result in a quick turnover. The method was later adopted by the Ford Motor Company and other various businesses.
Since then, advances in computer systems and automated storage and retrieval systems have allowed this practice to be applied more readily and effectively to a wider array of businesses and industries. Vertical lift modules like those supplied by Vertical Storage USA can allow for the better use of warehouse space for the storage and retrieval of parts and materials along any stage of the production process.
Advantages of JIT Manufacturing
There are a number of cost-saving benefits. When you use just-in-time production, you do not have to hold valuable company money in low-liquidity assets like inventory and materials. Additionally, you do not have to pay for as much warehouse space, and equipment such as vertical lift modules can allow you to more efficiently use the space you have. These benefits free up company money, allowing for reinvestment in the business or an expansion of the bottom-line.
There is a lower risk of damage to goods. When products remain in storage for a long time, it is not uncommon for at least some of the inventory to become damaged. When you do not have products sitting in storage, you reduce the risk that the products will be damaged before they are sold.
JIT manufacturing results in fewer defective products. Making each item individually allows each product to be inspected at each stage in the production process. Errors are spotted more quickly, resulting in faster repairs and fewer defects.
There is a lower risk for product obsoletion. When you have tons of inventory on hand, what do you do with it if it loses popularity? When sales slow and you’re maintaining a large inventory, you may have to sell it at a lower price and accept the loss. JIT manufacturing virtually eliminates this risk. Additionally, companies can quickly and easily shift their focus if the demand for their product changes.
Disadvantages of JIT Manufacturing
The late delivery of materials can significantly impact the production process. Since JIT eliminates reserve products and materials, problems in the supply chain can cause a delay between the completion of current orders and the production of new orders.
The dangers of a natural disaster are more severe. Any company can face setbacks from a natural disaster that occurs in their local area. When you choose a JIT manufacturing system, however, you also put your company at risk of negative effects when natural disasters occur anywhere along the transportation route of your materials since every step of the supply chain could potentially be affected and cause issues with production down the line.
You must invest in more advanced computer systems. In order for the ordering and transportation of materials to go smoothly, it is wise to invest in information technology to link the computer systems between your company and your suppliers. Since the supply chain is so critically important, you need to make sure that your production process is intelligently responding to production orders in real-time, allowing for the routing and tracking of materials and equipment to manufacturing centers as quickly as the orders come in.
Mass orders are more difficult to complete. When you have little to no finished products on hand, large and unexpected orders can throw your entire company out of balance. Unless your production process can scale extremely well or your supply chain is extremely robust, a sudden influx of production orders can spell unforeseen delays.