Business
Just-In-Time Inventory Management
Just-In-Time (JIT) inventory management is a strategy used to minimize inventory holding costs by receiving goods only as they are needed in the production process. This approach aims to reduce waste, improve efficiency, and lower storage expenses. By synchronizing production with demand, companies can enhance their responsiveness to market fluctuations and streamline their operations.
Written by Perlego with AI-assistance
Related key terms
1 of 5
11 Key excerpts on "Just-In-Time Inventory Management"
eBook - PDFEssentials of Logistics and Management
The Global Supply Chain.
- Philippe Wieser(Author)
- 2012(Publication Date)
- EPFL PRESS(Publisher)
In addition, in France today still, industrial management and logistics are not considered as academic disciplines. To conduct research in this field, a student must select a course of study such as “Management Sciences” or “Organizational Science.” Let us move to a more precise definition of the JIT approach, most of the principles of which have come to us via the Japanese model and in particular from the leaders of Toyota. Very many definitions have been put forward under the appellation JIT. To mention “Just in Time” is to define some sort of productivity ideal characterized by ”the delivery of the right product, at the right time, to the right customer”, to which it is important to add, at minimum cost. Were we not to add this last requirement, the goal of “Just in Time” would not present any particular problems. Indeed, given large inventories of raw materials and work in process, and above all of diversified finished products in very large numbers, it would almost always be possible to “deliver the right product, at the right time for the customer and to the right customer”, but the existence of inventories during the whole production process would of course lead to a major increase in cost and thus is truly wasteful. This explains why very often when authors write about “Just in Time” they as a matter of course imply “with a global reduction in cost”. This reduction, in an industrial system, can come from various sources, for example at the level of equipment design, investment choices, commercial policy of product selection, outsourcing, etc. However, if one focuses on produc- tion management only, this reduction comes mainly in the guise of inventory decrease, this being viewed in the short term as a cost parameter on which one can act, everything else remaining unchanged. We can therefore better understand why Minimal Inventory Just in Time is often used to qualify the achievement of this quest for productivity in terms of flow management.
eBook - PDFOperations Management
An Integrated Approach
- R. Dan Reid, Nada R. Sanders(Authors)
- 2020(Publication Date)
- Wiley(Publisher)
Of course, that means incurring a high inventory cost because of the extra goods that are kept in storage. JIT systems have been very efficient at reducing setup costs, which is a key to the success of JIT manufacturing. Setup times have been reduced from hours to mere seconds, and the goal is to reduce them to zero. Low setup times mean that small lot sizes of products can be produced as needed and that production lead times will be shorter. The ultimate goal of JIT is to produce products in a lot size of 1. A major aspect of JIT manufacturing is its view of inventory. JIT manufacturing views inventory as a waste that needs to be eliminated. According to JIT, inventory is carried to cover up a wide variety of problems, such as poor quality, slow delivery, inefficiency, lack of coordi- nation, and demand uncertainty. Inventory costs money and provides no value. Inventory also hurts the organization in another way: it does not allow us to see problems. According to JIT, by eliminating inventory we can clearly identify problems and work to eliminate them. An analogy that is often used to describe JIT’s view of inventory is that of a stream, as shown in Figure 7.2. The rocks in the stream represent problems. When the water in the stream covers the rocks, we cannot see what they are. By reducing the amount of water in the stream (by reducing inventory), we can finally identify the problems. However, identifying the problems is not enough—we have to solve them. In sum, JIT manufacturing is an efficiently coordinated production system that makes it possible to deliver the right quantities of products to the place they are needed just in time. Just-in-time manufacturing The element of JIT that focuses on the production system to achieve value-added manufacturing. Setup cost Cost incurred when setting up equipment for a production run.
- Özer Özcelik, Adil Akinci(Authors)
- 2019(Publication Date)
- Peter Lang Group(Publisher)
At the base of this system, there is a structure in which the satisfaction of the customer is intended and the unnec- essary expenditures are removed by providing continuous improvement. In this system, the input sources to be used in production come to enterprise as needed, thus the enterprise works with zero or very low inventory levels. JIT is a manufacturing approach initially used in Japan that is emphasized on excellence through continuous improvement in productivity and quality indexes in all the phases of the production cycle. Some JIT’s definitions and concepts have been proposed. These concepts range from the strict sense of just-in-time production applied to material flow to the concept of a management philosophy focused on increasing customer satisfaction and obtaining competitive advan- tage in the market. Hence it can be stated that the initial concept related to mate- rial flow has now been transformed into another concept which considers JIT as a tool which impels the competitive advantages of companies (Alcaraz et al., 2014, p. 761). 2 Just In Time (JIT) Production System JIT, known by names like stockless production and zero inventory, aims to put an end to improper resource utilization with optimal use of production resources. For this purpose, the system is tried to be developed with the lowest produc- tion cost by optimizing the physical resources to meet the customer’s quality and delivery requirements. For this, a system that requires new concepts and behaviors at every stage of production, from sub-industry relations to deliveries, to realize zero inventory, zero defect and zero supply period is introduced (Demir & Gümüşoğlu, 2009, p. 566). The principles of management in the JIT system are summarized with 4P model (Philosophy, Process, People and Partners, Problem Solving) as shown in Fig. 1. The philosophy of the JIT system can be described as an approach that aims to improve work, process and methods by removing all unnecessary things.
eBook - PDFOperations Management
An Integrated Approach
- R. Dan Reid, Nada R. Sanders(Authors)
- 2023(Publication Date)
- Wiley(Publisher)
Low setup times mean that small lot sizes of products can be produced as needed and that production lead times will be shorter. The ultimate goal of JIT is to produce products in a lot size of one. A major aspect of JIT manufacturing is its view of inventory. JIT manufacturing views inventory as a waste that needs to be eliminated. According to JIT, inventory is carried to cover up a variety of problems, such as poor quality, slow delivery, inefficiency, lack of coordination, and demand uncertainty. Inventory costs money and provides no value. Additionally, inven- tory hurts the organization because problems cannot be identified. According to JIT, by elim- inating inventory problems can be identified and then eliminated. An analogy that is often used to describe JIT’s view of inventory is that of a stream, as shown in Figure 7.2. The rocks in the stream represent problems. When the water in the stream covers the rocks, they cannot be seen. By reducing the amount of water in the stream (by reducing inventory), the problems can be seen. However, identifying the problems is not enough—they need to be solved. In sum, JIT manufacturing is an efficiently coordinated production system that makes it possible to deliver the right quantities of products to the place they are needed just in time. Total Quality Management (TQM) The second major element of JIT is total quality management (TQM), which is integrated into all functions and levels of the organization. The foundation of JIT is to produce the exact product that the customer wants. Quality is defined by the customer, and an effort is made by the whole company to meet the customer’s expectations. setup cost Cost incurred when setting up equipment for a production run. total quality management (TQM) Philosophy that seeks to improve quality by eliminating causes of product defects and by making quality the responsibility of everyone in the organization.
eBook - ePubProduction and Operations Analysis
Traditional, Latest, and Smart Views
- Susmita Bandyopadhyay(Author)
- 2019(Publication Date)
- CRC Press(Publisher)
Section 10.2.2 . The various implementation measures as discussed are red tagging, use of signboards, outlining, use of Andon, use of Kanban, use of buzzers.Till now, a significant number of aspects related to the JIT manufacturing concept have been discussed. The next section now discusses the various important aspects of JIT logistics, in brief.10.7.1 Just-in-Time Logistics
The American Council of Logistics Management defines logistics as “the process of planning, implementing and controlling the efficient, cost effective flow and storage of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption for the purpose of conforming to customers’ requirements.” Philip Kotler defines logistics as “planning, implementing, and controlling the physical flows of materials and finished goods from point of origin to point of use to meet the customer’s need at a profit.” The basic objectives of logistics activity can be delineated through the following points.• Minimization of inventory• Minimization of costs related to logistics• Reliable and consistent delivery of performance• Minimize the damage to the products• Quicker and faster response to the customersHowever, from the point of view of JIT, the goal of logistic is to deliver to customer, the right product in right condition in right quantity, to the right customer at the right place at the right time, at the right price
eBook - PDF- Don Hansen, Maryanne Mowen, Dan Heitger, , Don Hansen, Maryanne Mowen, Dan Heitger(Authors)
- 2021(Publication Date)
- Cengage Learning EMEA(Publisher)
If the workers perceive JIT as a way of simply squeezing more out of them, then JIT efforts may be doomed. Perhaps a better strategy for JIT implementation is one where inventory reduc-tions follow the process improvements that JIT offers. Implementing JIT is not easy; it requires careful and thorough planning and preparation. Companies should expect some struggle and frustration. The most glaring deficiency of JIT is the absence of inventory to buffer production inter-ruptions. Current sales are constantly being threatened by an unexpected interruption in pro-duction. In fact, if a problem occurs, JIT’s approach consists of trying to find and solve the problem before any further production activity occurs. Retailers who use JIT tactics also face the possibility of shortages. JIT retailers order what they need now—not what they expect to sell—because the idea is to f low goods through the channel as late as possible, hence keeping inventories low and decreasing the need for mark-downs. If demand increases well beyond the retailer’s supply of inventory, the retailer may be unable to make order adjustments quickly enough to avoid irked customers and lost sales. Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 1034 Chapter 20 Inventory Management: Economic Order Quantity, JIT, and the Theory of Constraints Yet, in spite of the downside, many retailers and manufacturers seem to be strongly commit-ted to JIT. Apparently, losing sales on occasion is less costly than carrying high levels of inventory.
- C. Carl Pegels(Author)
- 2002(Publication Date)
- Information Age Publishing(Publisher)
Since the database is a crucial part of the sys-tem, a qualified IT technician is required to input data and keep suppliers and supply chains current. The AIR and JIT system are designed to quickly respond to any changes in the production line, such as new models or new subassemblies to be constructed. The conventional JIT process for material management relies on a build pipeline that is regularly refurbished to reflect actual customer orders and refined forecasts. 64 Proven Solutions for Improving Supply Chain Performance In summary, Rover was very pleased with the JIT system. Rover Group reduced their core supplies base from 2,000 to fewer than 600 today. All of the parts required to build a customer-configured vehicle are now trig-gered by as few as five automatic triggers. Automating the material call has resulted in reducing material stock, both within Rover and its supply chain. A more effective utilization of resources and storage space is now realized. Utilizing the JIT has enabled emphasis away from the time-consuming activity of requesting pallets one at a time. This leaves more time for reduc-ing order-to-delivery times, targeting future reduction in pipeline stock, and supplier development. The implications for other businesses are to provide the capability to manage materials requests for the manufacturing of products in variable lot sizes. These variable lot sizes will enable greater customer configuration capabilities by reducing warehouse inventory, thereby reducing costs and saving money. JUST-IN-TIME–ORIENTED U.S. MACHINE SHOPS The problem addressed in this research study was the gap in empirical lit-erature dealing with JIT machine shops. The model for JIT operations was also further defined based on previous research studies. The study also provided researchers with more realistic descriptions of machine shop operations. It compared machine shops with low and high levels of sales to JIT customers to assist in identifying areas of change.
eBook - PDFNew Wave Manufacturing Strategies
Organizational and Human Resource Management Dimensions
- John Storey(Author)
- 1994(Publication Date)
- SAGE Publications Ltd(Publisher)
of responses Figure 9.12 JIT USA/UK survey USA 90 77 69 88 68 40 38 20-40 68 UK 75 1 9 48 74 39 23 47 <20 64 JUST-IN -TIME MANUFACTURING 193 • strategic JIT: where the company takes a long-term view of JIT imple-menta tion, and acknowledges its impact on the total business; • transi tory JlT: where the company sees JIT as another short-term, temporary manage ment technique which can yield some inventory or labour cost savings. An example of transitory JIT think ing is provided by the following view: 'JIT stands for just-in-time. That means that our suppliers are being told to deliver that way. This greatly helps to reduce our stocks.' No wonder that many suppliers lo ok on JIT as standing for 'Japanese-Inspired Terror', when the assemblers are trying to grab all the advantages themselves! The reality of such a situation is that costs and stocks get passed down the supply chain, and that no net improvement is achieved. The assemblers get their own back in the form of higher piec e part prices. Five key questions It has been emphasized repeatedly that JIT / TQ must form part of the busi-ness strategy. This impl ies that the vision of an excellent company must be specif ied, together with the role of JIT /TQ in achiev ing this vision. Voss and Clutterbuck (1989) proposes that the top team asks itself five key questions before starting on the JIT journey. Will lIT improve our business performance? JIT deliverables such as reduced costs and time to market need to be con-sidered in relation to their relevance to current and future business needs. If a company decides not to adopt JIT, then it should consider the potential threat from competit ors who will, or who already have. How suitable is lITfor our manufacturing environm ent? Think ing that JIT is limited to manufacturing environments where there are high, stable volumes is mistaken. First, it takes only a narrow view of 'JIT (flow scheduling).
No longer available |Learn more- Don Hansen, Maryanne Mowen(Authors)
- 2017(Publication Date)
- Cengage Learning EMEA(Publisher)
Increasing throughput and decreasing operating expenses have always been emphasized as key ele-ments in improving the three fi nancial measures of performance; the role of minimizing inventory, however, in achieving these improvements has been traditionally regarded as less important than reducing operating expenses. The theory of constraints, like JIT, assigns inventory management a much more prominent role than does the traditional just-in-case viewpoint. TOC recognizes that lowering inventory decreases carrying costs and, thus, decreases operating expenses and improves net income. TOC, however, argues that lowering inventory helps produce a competitive edge by having better products, lower prices, and faster response to cus-tomer needs. Higher-Quality Products Better products mean higher quality. It also means that the company is able to improve products and quickly provide these improved products to the market. The relationship between low inventories and quality has been described in the JIT section. Essentially, low inventories allow defects to be detected more quickly and the cause of the problem to be assessed. Improving products is also a key competitive element. New or improved products need to reach the market quickly — before competitors can provide similar features. This goal is facilitated with low inventories. Low inventories allow new product changes to be introduced more quickly because the company has fewer old products (in stock or in process) that would need to be scrapped or sold before the new product is introduced. Lower Prices High inventories mean more productive capacity is needed, leading to a greater investment in equipment and space. Since lead time and high work-in-process inventories are usually correlated, high inventories may often be the cause of overtime. Overtime, of course, increases operating expenses and lowers pro fi tability.
eBook - PDF- AnilK. Bhowmick(Author)
- 2018(Publication Date)
- Routledge(Publisher)
Just-in-Tim e and the Rubber Industry 31 David C. Barker DCB Associates Shropshire, England 31.1 INTRODUCTION At a seminar entitled Competitive Manufacturing in the Rubber Industry, the author observed that the British rubber industry has “entrenched attitudes, is reluctant to change, defends the status quo and is unwilling to look at concepts like Just-in-Time manufacture and Total Quality Management.” Hard-hitting comments indeed, but surprisingly not one delegate chose to voice any disagreement to their validity. This was, no doubt, a form of silent support for the general recognition that the rubber indus-try is conservative by nature and is failing to exploit the benefits to be gained from sys-tems and approaches that are succeeding in other manufacturing sectors. Successful implementation of manufacturing philosophies such as just-in-time and total quality management, especially in the rubber industry, can contribute extensive and quite dramatic improvements. The aims of this chapter are to clarify the need for the adoption of such methodologies, to simplify the actions required, and to remove the mystique that always surrounds “new ways of doing things” that emanate from the Far East. 31.2 DEFIN ITION S It is not my intention to cloud the issue by the use of jargon and its associated acro-nyms; in my opinion any more than three constitute a new language. So I will start by limiting myself to just that number, namely: 1. Just-in-Time (JIT) is nothing more than the concept of the continuous elimination of “waste.” So if we give ourselves a satisfactory definition of waste, we should have little difficulty in recognizing it. 867
- Mbanje S, Lunga J (Editors)(Authors)
- 2016(Publication Date)
- Van Schaik Publishers(Publisher)
146 CHAPTER 10 INVENTORY ISSUES IN SUPPLY CHAIN MANAGEMENT and efficiency that best supports the company’s competitive strategy and inventory. This must work together with transportation, information, facilities, sourcing and pricing, which are the main drivers of supply chain performance. In an operational setting, inventory management is accomplished through the use of a set of procedures normally called an inventory management system, which include a set of decisions, rules and guides for various inventory situations. Inventory includes all those goods and materials that are used in the production and distri-bution processes. It encompasses all raw materials, work in progress and finished goods within the supply chain. Raw materials, component parts, subassemblies and finished products are all part of inventory, as are the various supplies required in the production and distribution process. Changing inventory policies can dramatically alter the supply chain’s efficiency and responsiveness . Inventory management policy affects how efficiently a firm deploys its assets in producing goods and services. Inventory ties up capital, uses storage space, requires handling, deteriorates, sometimes becomes obsolete, incurs taxes, requires insurance, can be stolen and is sometimes lost. How-ever, the benefits of a properly managed inventory outweigh the costs of maintaining it. Devel-oping effective inventory control systems to reduce waste and stock-outs in manufacturing or service organisations is a complex problem. The right amount of inventory supports manu-facturing, logistics and other functions, but excessive inventory is a sign of poor inventory management that creates an unnecessary waste of scarce resources. Besides, excessive inventory adversely affects financial performance. Inventory compensates for inefficient management, including poor forecasting, haphazard scheduling and inadequate attention to set-up and ordering processes.
Index pages curate the most relevant extracts from our library of academic textbooks. They’ve been created using an in-house natural language model (NLM), each adding context and meaning to key research topics.
