What is Just In Time manufacturing?
Just In Time (JIT) manufacturing is a method that involves producing goods to meet demand instead of producing them ahead of when (or if) they will be needed.
Each stage of the manufacturing process produces only what the next stage of the process requires. It prevents waste, cuts storage requirements and costs, and avoids wasting resources on unnecessary production. Embracing the philosophy of Just In Time can benefit your productivity and your bottom line.
No more second-guessing
The alternative to Just In Time manufacturing is trying to second-guess what customers want. This traditional approach is often based on sound logic – research, recent history, market trends, existing relationships with customers etc – but it remains a forecast rather than a cast-iron guarantee.
If the forecast proves accurate, all well and good – and with bulk production often meaning cheaper costs per unit produced, it can end up looking like an appealing move.
But if the forecast proves inaccurate, you are left with unclaimed products that have cost money to produce and take up space. Furthermore, if a different order is received in the meantime, a decision has to be made whether to abandon your Plan A or ask the customer to wait until you have sufficient capacity to meet the new requirement (and as a result risk losing that order to a competitor).
Sometimes referred to as Just In Case manufacturing, it can leave you with higher costs, inventory you don’t need, stock you can’t shift and a lack of flexibility for new orders.
The benefits of Just In Time manufacturing
Because you are producing goods with a short lead time (you know that as soon as they are produced you have a buyer waiting), you will be paid sooner for your work, and you won’t have unwanted stock lying around while you wait for someone to come along and place an order for it. This is Just In Time stock control.
At the other end of the process, you won’t need to spend money on materials and components to make things that you don’t have a buyer for. You need to purchase materials only when you receive an order. This is the concept of Just In Time inventory.
Both of these factors help with your cashflow and cut your costs. (Read more in our article dedicated to stock control and inventory management.)
You will be more nimble and able to adapt quickly to new orders as your production capacity won’t be tied up making stock that is as yet unclaimed. Accepting a new order from a customer won’t cause disruption because your facilities will be ready and waiting to spring into life rather than being tied up producing Just In Case goods.
Production problems can also be spotted more easily. Although it might not feel like good news at the time, it’s better for a problem to arise while you are fulfilling an order: once identified, you can take the appropriate action immediately. If, on the other hand, you over-manufacture a certain product with an unseen defect that is then left on the shelves until a buyer comes along, discovering the problem at that late stage might result in you having to throw out an entire product line. You’ll have wasted significant resources, in terms of materials, labour and time.
In summary, the benefits of Just In Time manufacturing include:
- Lower inventory costs
- Faster production times
- Lower labour costs
- Smarter storage requirements (and costs)
- Less unwanted stock
- Tighter control over errors and defects
- Better cashflow, at both ends of the production process
The successful adoption of Just In Time manufacturing will boost your productivity and cut your operating costs.
Just In Time and ‘lean manufacturing’
Just In Time is not a synonym for ‘lean manufacturing’, but the two are closely linked as they share the same broad philosophy.
Lean manufacturing is based around the idea of reducing waste within the manufacturing process. Embracing Just In Time can help with this.
Of the types of waste that lean manufacturing aims to cut, Just In Time tackles:
- the waste of time
- waste resulting from unwanted inventory
- waste from overproduction
- the waste caused by unnoticed production errors and defects
Things to be aware of with Just In Time manufacturing
It’s important to find suppliers who can reliably provide you with what you need at short notice, and in the quantities you require. However well you have adapted your processes internally, Just In Time won’t work if you are unable to coordinate satisfactorily with your supply chain.
It’s also worth considering the location of your suppliers – if there are going to be delays with shipping, that can undermine the timing of the process.
The general philosophy behind Just In Time is the same regardless of the size of your operations, but smaller businesses might have a few extra hurdles to clear when they adopt it. For example, if a supplier insists on a minimum order, it might make doing business with that supplier impossible. And even if it does allow smaller orders, the cost per unit might be higher than for a bulk-buy purchase.
This in itself should not deter a small business from embracing Just In Time. Although that particular aspect of things might prove slightly more expensive, there will still be significant savings elsewhere within the production process.
It is important, though, that you maintain a close relationship with all parts of your Just In Time supply chain, and that you are confident they can always deliver for you – both figuratively and literally – on demand.
And make sure you have a back-up plan in place because the failure of a single part of the supply chain can have immediate knock-on effects further down the line.
If your business uses Just In Time processes, or is keen to explore these options, read more about how our manufacturing software can improve your supply chain and stock management systems.