JIT or Just-In-Time, what is it?
Just in time, JIT, is a logistics concept that has become popular since the 1980s. After success in Japan it has spread to the western world. The just-in-time production system was originally set up by Toyota Motor Company under Taichi Ohno and is therefore also referred to as the ?? Toyota production system ?? mentioned. JIT is all about limiting organizational costs, especially in the primary business process. It’s part of Kaizen: that’s Japanese for “continuous improvement”.
Just-In-Time Definitions of Just-In-Time
- Below “jit“(in small letters) is literally meant to produce and deliver the minimum required quantities at the latest possible time.
- Below “JIT“(in capital letters) is understood to mean the goal of preventing any form of waste. After all, everything that is more material, machines and manpower is unnecessary costs.
“jit” can actually be seen as part of “JIT”. This is because delivering and producing products as late as possible saves money. This is mainly because stocks can then be limited. Stocks cost money due to the factors of the 3 r’s: risk, space and interest.
- You run a risk because if you produce in stock, something can happen to the product during storage and because it can be uncertain whether the product will actually be sold there.
- The space to store stocks costs money in the form of rent or construction costs and in the form of maintenance and employees. People are needed to keep the storage tidy and to put everything in its place or to take it off.
- Finally, you have the interest factor that has to do with money value. The money on which there are stocks could also have been invested and thus yielded interest.
JIT focuses on it primary process (also called the core bussiness This is the origin of the company in terms of manufacturing the product or providing a service). This can be optimized, so that the process runs smoothly with small production sizes and without fluctuating processing times. JIT is all about continuously striving for improvements. Continuity is important because an organization must start from the demand from the market and this is developing strongly in the areas of:
- an increasing product diversity (for example: there are many more types of televisions now than 30 years ago);
- a shorter product life cycle (for example: a mobile phone of 4 years old is really not hip anymore);
- higher quality requirements;
- greater international competition.
Origin of JIT
Toyota in Japan is the first adopter of the JIT concept. This concept originated in Japan, because it is a very densely populated country where limited natural resources should be used sparingly. Many raw materials have to be imported and in order to afford this, companies from Japan must be able to produce at competitive prices. In order to accomplish this, the Japanese have studied and refined Western theories. This is where the idea of JIT arose. JIT has its origins in a production company, but can be applied anywhere, because it concerns eliminating waste. This can also be a waste of time at the office, such as entering data twice in different computer programs in the office. The import of ERP software thus also helps to achieve the underlying goal of JIT. What is ERP software?
The JIT philosophy
The basis of the JIT philosophy is that if a company wants to continue to exist, it must meet the ever-changing demands from the market and that a company must distinguish itself from its competitors. A company must continuously strive for greater flexibility, higher quality and lower costs. Sub-objectives arise from these main objectives, such as:
- short lead times (zero lead time): long lead times makes a company less flexible and makes a company more dependent on the demand forecast. In addition, time = money. When the lead times become shorter, more can be produced in one day and the expenses of, for example, the employees can be divided over more products. Either you have a lower one cost price and you can make more profit with a constant asking price.
- low stocks (zero inventories): why stocks cost unnecessary money has already been explained in the definition of JIT. Stocks are also undesirable, however, as they disguise the real problems, as stocks act as a buffer for when things go wrong. JIT is all about tackling the real problems so that buffers are no longer needed.
- zero error production (zero defects): No failure rate accepted: a company must strive for the process to be set up in such a way that everything goes well in one go. This is about the whole business processs, not just about production.