Just-in-time (JIT) is a concept that is very essential in the modern supply chain management, with the aim of increasing efficiency and reducing wastage by receiving goods and materials only when needed in the production process (Young, 2017). This helps to reduce the inventory costs. JIT requires that the producers are in a position to accurately conduct a demand forecast. The JIT system was first implemented by Toyota basing it on a basic practice known as the Kanban method. This is a signaling method which was developed by Toyota Company in the 1950s to ensure that goods and materials arrive in the production process "just in time"; not earlier or later. The concept was then adopted by many other companies and ended up spreading globally. It is applied in manufacturing, inventory, and in the supply chain management. The aim of this paper is to evaluate the different just-in-time theories as they relate to supply chain management, articulate the various theories associated with just-in-time inventory theories, and analyze the reasons for the growth of just-in-time inventory technique.
The just-in-time strategy has a religious concept having been applied in the Christian bible. In the book of Luke chapter 4, the devil is seen to apply the strategy while tempting Jesus. Jesus is said to have had fasted for forty days and nights and just in time when he had completed his fast and was hungry, the devil tempts him to turn a stone into bread and eat it. However, the concept did not work for the devil since Jesus was equipped with ready responses to the temptations which left the devil with no options but to leave.
The just-in-time strategy makes the use of other few concepts which have been developed around it to make the process more efficient. These concepts include the Kanban method and the information processing theory developed by Galbraith in 1973. As mentioned earlier, the just-in-time strategy is based on the basic principles of the Kanban method. This method involved working with small lots of products to save on the storage space. When the raw material was reduced at a certain level, an order was placed with the supplier to start the production of the next lot (Wild, 2017). These were referred to as the Kan cards. When the second level was reached, the supplier received the order for the delivery of semi-fabricates. These were referred to as the Ban cards and thus the Kanban cards principle. For this principle to work, there was the need to show the Kanban when the material was being acquired showing the need of the respective material and the proof that the previous material had been consumed. This was a modality to ensure that all the application rules of the JIT method were followed.
Presently, the Kanban cards are still in use. They contain information such as the unit name and code, number of units per product, the process, and the supplier. The Kanban cards carry two functions in the production process. One, they issue signals from the previous ring to the next in the production chain to begin the production of necessary pieces (Wild, 2017). Two, they notify workers to dispatch pieces to the next processing position to reach where needed at the moment when they can be processed. Ideally, Kanban control system "pulls" production JIT to allow smaller stocks to be produced. The system can either use one card or two cards.
The information processing theory has its central concern on uncertainties surrounding organizations in their production process. In the JIT system, uncertainties are directly related to the concepts of productivity and efficiency in the system (Xavier, 1998). The target of a functional JIT system is to eliminate wastage of all forms, particularly in inventories and provide a flexible production system adaptable to changes in demand. This is achievable only when uncertainties in the production and supply chain management system have been rid. The theory utilizes several concepts in its operations. One of the concepts is the "Poka Yoke" which means the deployment of fool-proof mechanisms to avoid the occurrence of mistakes. The mechanisms are developed by workers by applying their expertise and knowledge about the equipment and processes to reduce mistakes. This reduces the need for information processing required to deal with uncertainty. Another concept is known as "Jidoka." This gives the workers the autonomy to stop the line any time a problem is detected. This concept is considered one of the bases for quality assurance in JIT environments. The information processing theory is closely interlinked with the Kanban system and both work towards improving the efficiency of the JIT system.
Achieving the JIT operational objectives demands the coordination of production planning, sourcing, and logistics. Managers need to understand the concept fully in order to apply it to the operations of the organization efficiently. The production manager focuses on optimizing production-oriented goals such as equipment utilization and labor efficiency. The purchasing manager focuses on principles that will reduce the company's overall expenditure. The logistics manager should focus on optimizing the transportation and distribution network by getting raw materials in and finished goods out of the production process. This way, the JIT goal is achieved.
The just-in-time inventory system has grown over the years basing on its positive contribution to the performance of organizations. The widespread use of JIT inventory principles makes production operations more efficient, cost-effective, and customer responsive. Companies that use the system have a significant competitive advantage over those that don't. To achieve competitive advantage involves figuring out how to apply the JIT principles in the specific operations of the organization (Xavier, 1998). The closer an organization gets to operate in a true JIT situation, the more responsive it is to customers, the less capital used on raw materials and finished goods inventory and the better one can optimize transportation and logistics operations. This ultimately leads to saving on costs and reducing wastage which is the founding goal of the JIT system.
There are advantages which form part of the reasons why the JIT system has grown over time. When operations in an organization are JIT based, the management focuses on the whole production process. In particular for inventory and logistics, the movement to JIT system demands that small quantities of materials are moved but more frequently. These materials are moved as and when needed and this eliminates the cost that would be associated with storing inventory as well as the wastage that would be associated with bundling the stock together. It also ensures that the products are produced as dictated by the demand which means that they reach the customers in their fresh state. Additionally, the adoption of the JIT system in the other phases of production such as manufacturing has seen the system expand with its principles adopted to maximize profit and reduce costs. The flexibility of the system to fit in the other phases of production as well as increase efficiency has increased its popularity.
In summary, the just-in-time inventory strategy is a method that focuses on improving efficiency by reducing inventory cost and wastage. The principles of JIT have developed since the 1950s to-date. The concepts which work around the JIT system include the Kanban method and the information processing theory. The ability of the JIT system to increase efficiency and cut unnecessary cost has seen its growth over the years.
Liberty University Custom: Young (2017). Supply chain management (Custom ed.). New York
Wild, T. (2017). Best practice in inventory management. Routledge.
Xavier, G. G. (1998). JIT and supply chain management: an information processing perspective. Production, 8(1), 45-61.
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