What is JIT?
Success in business requires high levels of efficiency. With the ever increasing competition that is now at a global level, businesses need to utilize resources very well with a minimum amount of waste. Only those who are able to deliver the best quality products while using the least amount of resources can maintain profitability. This is because a majority of resources that are used in different kinds of production have become scarce. JIT is a production strategy that is designed to ensure high efficiency in the use of storage space and amount of capital tied down in raw materials as well as finished products yet to be delivered to the market.
JIT which is an abbreviation for Just In Time is also known as the Toyota Production System. This business module is the brain child of the founder of the Toyota Motor Corporation, Mr. Sakichi Toyoda. It is designed to ensure that production processes respond to consumer needs in the most efficient way possible. The goal is to eliminate the need for inventory since raw materials are brought in as and when needed which also means that finished products are delivered to the market immediately after production. By eliminating the need for large storage areas, the business operates on a leaner budget. There is also less capital tied down in the form of unused raw material or unsold finished products.
This business strategy requires a smooth and seamless operation, focus on quality as well as effective response to short notice. Because of the minimal inventory involved, all stages of the production process must be extremely efficient and flexible. The business must have the capacity to increase or reduced production in response to market demand at the shortest notice.
JIT has one main objective which is the elimination of waste in any production process. Wastage of resources in any manner leads to loss and no business should entertain this. Overproduction, storage, rework or correction and conveyance are examples of resource wastage that JIT seeks to eliminate. To effectively run a process that eliminates all kinds of waste requires very efficient internal and external communication as well as response to communication. The business must have reliable suppliers who can quickly deliver on orders placed. It must also be able to quickly respond to increased or reduced production requirements through fast and effective communication to all parties involved in the different stages of the production process.
There are some challenges that come with the adoption of the JIT module. One of these is the lack of contingency as the system assumes that all the stages of production will adequately respond as and when needed. Should there be a problem somewhere along the production line it is very likely to affect the market. Supply shocks are a common result of interruption in the production process of a JIT system. This can lead to extreme price shifts for consumers as has been experienced in the oil industry. Proponents of the JIT system however see this as an opportunity for improvement because it helps in eliminating the causes of interruption in business processes.