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Just In Time and Lean

Just-in-Time (JIT) and Lean Systems

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JIT is an inventory management system that was initiated by Toyota Production System in the1980s which focuses on the coordination of the production activities on the shop floor in such a way that the parts and components arrive to the work station exactly at the time they are needed for assembly, not before.  This approach aims to reduce the WIP inventories during the production process, and thus, reduces cost of production.  The JIT approach is suitable for repetitive manufacturing systems such as automobile assembly plants.  At every work station, there are typically idle materials, parts and components waiting to be assembled to the automobile body.  They occupy space, and might need extra equipment to be moved around.  With JIT systems, parts and components arrive from the supplier’s facility within a few hours before they are needed for assembly.  In order for this system to work well, the company has to estimate or forecast the demand accurately, and need to have a special relationship with its suppliers.  Many times suppliers are required to make frequent shipments of small quantities to the assembly plants, may be three or four shipments a day, which might require suppliers to locate close to the assembly plants.  This forces suppliers to make a large investment, which is why many suppliers expect long term commitments and contracts from the assembly plants. 

The significant reduction of inventory levels in the 1980s created an awareness for reducing waste at every level of manufacturing processes in 1990s.  The focus on waste reduction and continuous improvement is called Lean manufacturing.  The Lean systems are run based on five principles:

Provide more value for customers with fewer resources. Reduce waste at every level of manufacturing and provide the same service and same quality product while  using less resources.

Focus only on processes that add value.  Eliminate the manufacturing steps that do not add value. For example, unnecessary movement of the materials between the work stations is considered waste and should be eliminated.  Materials should be at the right place and at the right time for the optimal cost of manufacturing. The unnecessary transportation within the facility not only causes an increase in production cost but also an increased risk of damage.

Eliminate waste and create flow. The WIP inventories are considered waste in the system.  They are used as buffers between the stations to reduce the impact of production problems. As production processes are improved while using the JIT approached, the WIP inventories are reduced and the smooth flow of materials can be achieved. 

Nothing is made until the customer demands it (pull system).  Basing the production quantity on forecasts typically creates inventories, since forecasts are only predictions of future demand based on past performance.  On the other hand, the pull systems, where production occurs only after the customer orders are received, eliminate the built up of inventories by satisfying the existing customer demand.  

Strive for perfection.  This concept was also adopted from Japanese manufacturing systems where the management emphasizes continuous improvement of processes and defect elimination (called Kaizen).