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Just in Time (JIT)

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The term Just in Time refers to a production and delivery strategy in which suppliers deliver the right products in the correct quantity to the right place at the right time. The English term can consequently be translated as on time or on schedule.

Definition: Just in Time (JIT)

Demand-synchronized delivery is used particularly in the area of mass production and series production, for example by automobile manufacturers. There, deliveries are specifically coordinated with production processes, thus keeping storage costs low. Deliveries are made directly to the assembly plant or to distribution centers located in its vicinity in order to guarantee flexible and short delivery times. This can significantly simplify the procurement process, as internal logistics are relieved by the external supplier and service provider.

Emergence of Just in Time

The just-in-time concept was first used by a Japanese car manufacturer in the 1950s in order to work more economically and minimize overproduction and stock-outs. However, the concept was only given the name "Just in Time" after the fact, when it was discovered that the concept's efficiency had ensured the company's profitability in times of crisis. This led to outsiders becoming aware of the special organizational and control concept and subsequently starting to implement it themselves. 

Just in Time and Just in Sequence in comparison

In connection with the Just-in-Time concept, the Just-in-sequence process called. Both methods are not only similar in their naming, but also originate from the same areas, namely production and procurement logistics.

Just in Sequence, or JIS, is an extension of the just-in-time concept. In this process, goods are not only delivered just in time, but also in the sequence in which they are to be processed in production. Delivery therefore takes place synchronously with production. This avoids on-site sorting processes and thus saves time and capacity. In addition, there is less need for staging space, which is normally required for sorting.

Compared to the just-in-sequence method, the just-in-time method can be implemented for a wider range of production companies. This is because it is easier to apply in practice due to the lower requirements.

Requirements for the use of Just in Time

Various prerequisites are required for the use of the just-in-time concept in order to be able to guarantee a steady production flow. First of all, smooth communication between production and the supplier must be ensured. The basis for this is a production planning system that enables exchange with the supplier, either directly or via an interface.

In addition, companies should specifically address the following areas:

  • Process optimization
    Is there an efficient internal communication structure and an adequate technical infrastructure? Are required production materials available?
  • Quality assurance
    Is cross-process quality assurance possible? To what extent can problems or defects be rectified without major interruptions?
  • Constant utilization
    Is there a continuous utilization of the production processes or are there fluctuations depending on the season?
  • Suppliers
    Are there qualified suppliers with sufficient capacity that could supply the production facility just in time?
  • Disposition procedure
    Is central disposition control on demand feasible?

Application areas of Just in Time

Just-in-time production is particularly suitable for companies with mass and serial production, such as automobile or aircraft manufacturers. The individual parts required often vary in these sectors, which is why on-site storage would be very extensive. The following example from the automotive industry shows how producers benefit from Just in Time.

Just-in-time example from the automotive industry

If a particular car model is produced, the respective version can vary greatly. With or without heated seats, different colors, technical equipment - these features are usually individually adapted to customer requirements within a model. In order to ensure smooth production, many different individual parts must be available on time.

These goods, e.g. seat heating and navigation system, are ordered for the respective production site with a certain lead time. The supplier then takes care of procuring the parts, inspecting them, and stocking and transferring them. The car manufacturer has constant access to the current status of the orders thanks to EDI-supported data exchange.

The supplier is responsible for delivering relevant goods at the right time and in the right quantity to the right location. For example, cars with different versions are produced in the same production facility within one week. For this, seat heating is delivered on Monday so that it can be installed in the vehicles in the following days. On Wednesday, navigation systems are delivered so that they can be installed from Thursday.

Advantages and disadvantages of the Just in Time process

Advantages

The introduction of Just in Time pursues economic goals in particular. Among other things, companies benefit from:

  • Reduction of storage and personnel costs
    Since internal warehousing is overdue with Just in Time, immense costs are eliminated in these areas. Both physical storage facilities and labor can be saved in the context of warehouse logistics.
  • Increase productivity
    The total throughput time of an end product in production is efficiently minimized. In addition, overproduction is prevented and changeover times can be reduced because all processes are coordinated on schedule.
  • Reduction of transport costs
    There is no intermediate storage, thus eliminating expenses for transport.
  • Increase liquidity
    By saving on storage costs, there is no need to tie up a lot of capital. In addition, procurement only takes place after an order has been received. This has a positive effect on the liquidity and flexibility of the business.

 

In order to benefit from these advantages, the previously mentioned requirements must be met.

Disadvantages

Despite the great potential, Just in Time also poses problems that should be considered. These include:

  • Strong Dependence on the supplier, as there are no own stocks available
  • Intensive data exchange is neededso that producer and supplier always have a synchronized view of current orders, current transports and existing stocks
  • In case of delivery failures there are no stocks to bridge and maintenance of production
  • States of emergency such as natural disasters or accidents can lead to a production standstill

 

Conclusion

In summary, it can be stated that the just-in-time concept has established itself in particular in the area of mass and series production. Companies can use it to comprehensively optimize production processes and greatly reduce inventories and lead times. However, to benefit from the process, an up-to-date technical infrastructure and excellent communication between the company and external suppliers are required.

FAQ

We explain the most important terms in the context of just-in-time production here:

Just in Time is a decentralized organization and control concept used in logistics and production. It involves delivering goods to the right place at the right time and in the right quantity in order to avoid inventories and optimize production flows.

The just-in-time concept sustainably shortens throughput times, thus ensuring less capital commitment in the form of inventories and leading to a reduction in costs in the long term. However, there is a high dependency on suppliers and resilient transport routes, as there are no internal inventories to bridge possible delivery shortfalls. Good communication is therefore essential.

The Just in Time process delivers the right product in the right quantity to the right place at the right time. Just in Sequence additionally supplements this concept with delivery in a specific sequence. This means that they can be further processed in production without sorting processes. The Just in Sequence process is thus an extended form of Just in Time and guarantees production-synchronous delivery.

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