JIT (JUST IN TIME)
- JIT is an inventory management concept which refers to the elimination of manufacturing wastes by receiving the right quantity of raw materials, producing and supplying the right quantity of products at right time.
- It is a Japanese philosophy based on the principles that manufacturer should receive the raw materials only when they are needed for production, produce the products what are demanded exactly and supply the finished products instantly so as to avoid the inventory stock.
- This concept was originally developed in japan during 1970's by TAIICHI OHNO (father of JIT).
- It is also known as Toyota Production System (TPS) because it was first adopted by car manufacturer i.e. Toyota Motors.
- Just like zero defects, zero inventory is also impossible but theoretically it is considered as zero due to negligible amount.
Advantages of JIT
- It eliminates the waste in terms of inventory, transportation, overproduction, defects etc.
- It reduces inventory costs because manufacturer purchase the raw materials enough as needed for production and do not have to pay storage costs.
- It reduces the production cost by eliminating defects, scraps and inventory.
- It fulfils the customer's demand exactly.
- It improves the product quality.
- It improves the productivity.
Disadvantages of JIT
- Manufacturer may not be able to supply the extra products if there is sudden increase in demand because all products are made to meet the actual demand of customer.
- Production schedule may be delayed if raw materials are not received on time because there are no extra inventory stock.
- Manufacturers have zero margin to make errors.
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