Importance of Just-In-Time Inventory System

In today's competitive world shorter product life cycles, customers rapid demands and quickly changing business environment is putting lot of pressures on manufacturers for quicker response and shorter cycle times. Now the manufacturers put pressures on their suppliers. One way to ensure quick turnaround is by holding inventory, but inventory costs can easily become prohibitive. A wiser approach is to make your production agile, able to adapt to changing customer demands. This can only be done by JUST IN TIME (JIT) philosophy.

Taiichi Ohno, a former shop manager and eventually vice president of Toyota Motor Company, is the individual credited most for the with the development of just-in-time. It is a term used to describe the Toyota production system, is widely recognized today as the one of the most efficient manufacturing system in the world. In simple words we can explain JIT only required necessary units be provided in necessary quantities at necessary times. Producing one unit extra is as bad is being one unit short. Completing one day early is as bad as finishing one day late. Items are supplied "just-in-time". Ohno describes the development of JIT as

* By actually trying, various problems become known. As much problems become gradually clear, they taught me the direction of the next move. I think that we can only understand how all of these pieces fit together in hindsight.

The concept is very simple, if you produce only what you need when you need it, then there is no room of error. JIT has truly changed the face of manufacturing and transformed the global economy. JIT is both a philosophy and collection of management methods and techniques used to eliminate waste (particularly inventory). In JIT workers are multifunctional and are required to perform different tasks. Machines are also multifunction and are arranged in small U-shaped work cells that enable parts to processed in a continuous flow through the cell. Workers produce pars one at a time within cells and transport those parts between cells in small lots. Environment is kept clean and free of waste so that any unusual occurrence are visible. Schedules are prepared only for the final assembly line, in which several different models are assembled at the same line. Requirements for the component parts and subassemblies are then pulled through the system. The "PULL" element of JIT will not work unless production is uniform and lot sizes are low. Pull system is also used to order material from suppliers (fewer in numbers usually). They make be requested to make multiple deliveries of the same item in the same day, so the manufacturing system must be flexible.

Just-in-time inventory is viewed as the waste of resources and considered as obstacle in improvement. As there is little buffer inventory between the workstations, so the quality must be high and efforts are made to prevent machine breakdowns. When all these things are taken into consideration, system produces high-quality goods, quickly and at low cost. This system is also being able to respond to changes in customer demands. These elements of JIT can also be applied to the almost any operation, including service operations. * K.Suzuki, The Manufacturing Challenge (New York: Free Press, 1985), p250