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9.2 Just-In-Time (JIT) Operations
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Just-In-Time is a system in operation under which the production is made as per the demand at a particular moment, with no prior production for any anticipated demand.
This was pioneered by Toyota at their facility to reduce non-profitable activities, make the manufacturing system more flexible, and eliminate the costs of carrying/maintaining inventory. See Figure 9C below:
Potential risk
JIT inventories can bring about disruptions in the supply chain. It only takes one supplier of raw materials who has a breakdown and cannot deliver the goods on time to shut down a manufacturer's entire production process.
A customer order for goods that surpasses the company's forecasted expectations may cause parts shortages that delay the delivery of finished products to all customers (Peavler, 2019).
Conventional production is a push system whereas JIT is a pull system (demand pulls the production) or build to order.
Implications of JIT:
Suppliers must be reliable
Small lot size is used
Reorder cost is low
Minimal disruptions
Skilled and flexible workforce that can detect and solve problems immediately
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