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JIT manufacturing is very similar to Lean manufacturing , and the terms are often used synonymously. Following the war, Japan lacked the cash to finance big-batch, large inventory production methods used by other developed countries.
They also had high unemployment and a lack of abundant natural resources. They built smaller factories, which focused on quickly turning small amounts of raw materials into small amounts of physical products. Processing smaller batches allowed the manufacturers to reduce financial risk, while slowing generating sustainable levels of working capital. The system that they used came to be known as just in time manufacturing, popularized in Western media as the Toyota Production System.
Supporting a JIT manufacturing system requires discipline, structure, and explicit processes. Delivering in small quantities with high delivery frequency is called JIT delivery. Many shipping companies specialize in JIT delivery frequency to meet the market demand. JIT delivery can be driven my JIT or Lean thinking, or it can apply to factories in congested areas that lack sufficient stock space.
The EOQ formula produces an order quantity based on a trade-off between inventory holding cost and inventory ordering cost. JIT inventory management does not support the concepts of such mathematical determinations.
Just-in-time (JIT) manufacturing, also known as just-in-time production or the Toyota Production System (TPS), is a methodology aimed primarily at reducing. The just-in-time (JIT) inventory system is a management strategy that aligns raw material orders from suppliers directly with production.
Therefore, JIT is a manufacturing inventory concept that came from factories and was then applied to the overall supply chain. Just in time supply chain is simply applying just in time manufacturing, JIT manufacturing or JIT production principles to supply chain, which means to inventory management outside of the factory. Just in time supply chain supports seeing the overall supply chain as if every stocking position and every stocking level is a short lead time product location that is no different than a manufacturing facility that is lucky enough to be able to be continuously replenished under the Toyota, inventory model.
This typically results in the system being set to work on consumption-based planning using methods like reorder points. JIT is opposed to forecasting philosophically, considering it too unreliable. The problem is that while this may apply to a stocking level or stocking position, it is not possible to apply consumption based planning in all circumstances.
And the longer the lead time.
Lean is just rebranded JIT. At one time it was JIT, and then it became Lean.
JIT was based upon low inventories that the Japanese were able to keep. But without understanding, that Japanese companies work more collaboratively than US companies. The US does not have the same supplier network setup that Japanese companies do. The result is a smooth flow of production and reduced inventory costs. This method relies on signals given at different points in the production process that tell the manufacturer when to make the next part.
Stock depletion signals the ordering of new parts. The just-in-time method is used by major auto manufacturers, such as Toyota, who take advantage of synchronized assembly line systems.
One major advantage of the just-in-time inventory management system is that funds that were tied up in inventory costs can be used elsewhere. Likewise, areas devoted to storing inventory are now free to be used in production or for other needs within the company. Less waste and lower inventory costs result in increased profits for the organization.
The just-in-time method does not work for all companies. Not every supplier or manufacturer has the luxury of ordering only the materials they need to complete a specific order. A company must consider potential variables in the manufacturing process -- such as inclement weather delaying receipt of inventory materials, labor strikes or supply shortages -- before deciding if this inventory method is right for their organization. An alternative to the just-in-time inventory management method is the MRP, or "materials requirements planning" system.