Many markets are highly competitive and many challenges await companies. In the long run, it is especially important to save costs. Only in this way can a company survive successfully on the market. In order to save costs, many have focused on warehouse management and storage , as there is a lot of potential for savings in this area.
Here, the indented Just in Time production more and more into focus. We’ll explain what that is in the following article.
What does just in time production mean?
Just in time (or JiT, see abbreviationfinder) is a term for a very specific logistics system . The primary goal is to minimize inventory levels and the associated storage costs. Just in time production means that material is only available when needed. By optimizing, companies try to shift storage to a large extent on the transport routes.
Just in time aims to ensure that delivery is synchronized with production. This means that delivery only takes place when the company needs it for its production. Storage of materials should be avoided completely and should go straight into production instead. The origin of this system lies in the Japanese Kanban system.
What does just in sequence mean?
Just in Sequence (JiS) is a type of delivery that is at home in procurement logistics. It is about delivering the required goods to the right place according to type, quantity and time . It then goes straight to production for processing. Just in Sequence is an extension of JiT. It is important with JiS that not only the delivery takes place on time. Above all, it is important that the delivery arrives in the correct order so that it can go straight to production. A very important prerequisite for the functioning of JiS is that the supplier must ensure that the required goods are packed in the correct order.
Comparison between just in time and just in sequence
The crucial difference between JiT and JiS lies in the packaging . As already described above, the required goods not only have to arrive in production on time, but also packaged in the correct order. This means that pre-sorting must take place at the supplier’s. Further aspects in comparison between just in time and just in sequence:
|Just in time||Just in sequence|
|Companies largely avoid stocks||Stocks are accepted as demand changes|
|Delivery of goods takes place on the desired day||Delivery on the desired day as with Jit, but also in the correct order|
Where does the just in time concept come from?
The JiT concept was developed by the Japanese Taiichi Ohno. It was directly related to the Japanese automobile manufacturer Toyota and was part of the Toyota Production System, also known by the acronym TPS. For Toyota, JiT represents a comprehensive principle and should not only be viewed as a logistics system. Rather, it is the second cornerstone of TPS alongside the Jidoka principle. Toyota was forced to develop this concept in 1954.
After the end of World War II, there were severe economic restrictions on Japan, then the country was a loser in the war. Even then, there were few natural resources available to the Japanese and the prices in the real estate sector were correspondingly high. The logical consequence was that unnecessary waste, for example due to high stocks , was impossible.
What is the economic goal of Just in Time?
The main economic goal of JiT is to save storage costs. These can be the following types of costs that arise within a company:
- storage costs
- personnel costs
- and costs of transportation
Further economic goals of just in time
- Increase flexibility: A company can increase flexibility on the procurement market and the sales market within production.
- Improve service: Just in time makes it possible to improve customer service. It is possible to react more quickly to specific requests from customers.
- Increased liquidity: With extensive storage, a company ties up a lot of capital. With JiT this is avoided and so much capital no longer has to be used for inventory. The capital gained in this way increases liquidity or can be invested in other profitable opportunities.
- Reduction of risk: With just in time, the timely provision of the goods required for production is the responsibility of the suppliers. If he cannot deliver on time, he faces contractual penalties. The same applies to the handling of hazardous substances.
- Higher productivity: With JiT, productivity can be increased significantly.
Just in Time – What are the advantages and disadvantages for companies?
If a company decides to work according to the just in time strategy, the entire flow of materials must be coordinated with production and its processes. In this way, of course, the throughput times and also the storage costs can be minimized significantly. For a company, this means that just in time also has an important role to play in supporting processes in the area of lean management. But what has its advantages , of course, also has disadvantages . The advantages and disadvantages of JiT at a glance.
With Just in Time, every company can optimize its resources, use them in other sensible ways and thus gain a competitive advantage.
Set up pull system
If a company uses JiT, a pull system can be set up. This can be adapted to your own needs and is to be designed according to the production processes. This means that only work is done that is absolutely necessary.
The pull system is important to avoid waste. This can vary depending on the industry. Lean management defines seven main types of waste. This is:
- Waste of time
- Waste through
- defective products
JiT ensures transparency
Anyone who introduces JiT needs a Kanban team board. This ensures that everyone in the team knows the current tasks and goals. This makes all current processes more transparent.
Workflow is smooth
The Kanban board makes it easier to have a better overview of all work processes. Each phase in the workflow is easier to observe and bottlenecks can be identified and resolved more quickly.
With production according to the just in time method, a continuous improvement process arises. Employees understand processes better and can analyze them better and give advice on optimization.
Management for just in time is easier in terms of the scope of the tasks than is the case with large projects. This means that you can work much more flexibly due to small areas of responsibility.
The higher flexibility also results in higher productivity. Members of the team only have to concentrate on their tasks.
When using just in time, there is a higher level of dependency. This can be, for example, the dependency between the company and the supplier.
Loss of quality
With JiT there is a risk of a loss of quality. With the aim of shortening throughput times, the incoming inspection is no longer necessary. You have to look for ways to ensure quality anyway.
Less price competition
Just in time is only possible for a company with an absolutely reliable supplier. This often requires long-term contracts. Purchasing from cheaper suppliers is only possible to a limited extent. Fixed prices for certain contract periods are possible here.