Just-in-Time Systems

How It Works

The aim of just-in-time systems is to remedy perceived inefficiencies in warehouse processes associated with traditional manufacturing. Prior to the development of just-in-time systems, manufacturers were dependent on warehouses during the production process because stockpiles of raw materials and/or components were used to ensure the flow of production. Manufacturers ordered parts at regular intervals to replenish these critical stockpiles. While this practice assured that parts would be available when needed, they required warehouse space and all the associated costs that go with warehousing.

When utilizing just-in-time systems, manufacturers only order parts when existing inventories reach a low point, thus minimizing storage costs. This process relies on signals between different points in the manufacturing process to alert inventory clerks when to order needed parts; thus the term just-in-time. A variety of methods can be used to signal that components need to be ordered, ranging from highly technical inventory systems to simple visual checks.

Proponents of just-in-time systems argue that diminishing storage costs are just the beginning of the savings. Other potential benefits of just-in-time systems include optimizing the flow of production, involving employees in the manufacturing process and associated decision making, and improving the quality of the end product, which will likely increase sales and enhance the reputation of the product.

Just-in-time systems are dependent on a second process called lean production. Without lean production, just-in-time systems may actually harm profitability by slowing production and inhibiting profit through supply shortages. Lean production, at its root, is based on preserving the market value of the product while minimizing excess or inefficient work. All activity must be directed toward definite objectives that add to the value of the end product.

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