By- Shashank kulshrestha

What is JIT ?

• “A philosophy of manufacturing based on planned elimination of waste and continuous improvement of productivity ……”

Emergence of JIT

• Evolved in Japan after World War II, as a result of their diminishing market share in the auto industry.

• Toyota Motor Company- first to implement fully functioning and successful JIT system, in 1970’s.

• Japanese Manufacturers looked for a way togain the most efficient use of limited resources. They worked on "optimal cost/quality relationship.

Involves keeping stock levels to a minimum

Stock arrives just in time to be used in production

Works best where there is a close relationship between manufacturer and suppliers

Goods not produced unless firm has an order from a customer

Aims to get highest volume of output at the lowest unit cost.

Functioning of JIT

Functioning of JIT A method of production

control. No demand - no production! Anticipated/planned consumer

demand triggers production Finished goods assembled just

in time to be sold to customer Component parts assembled

just in time to become finished goods

Materials purchased just in time to make component parts.

JIT Purchasing

Just In Time (JIT) Purchasing Is Directed Toward The Reduction of

Waste (That Is Present At Incoming Inspection, Excess Inventory and Poor Quality)

Delay

Objectives of JIT Purchasing

To Reduce All Non-Value-Added Activities.

Elimination Of In-Plant Inventory.

Elimination Of In-Transit Inventory

Quality And Reliability Improvement

Companies adopted JIT

Some companies, benefited by adopting JIT

• Dell do not have to tie up capital in stock which means they can invest it in other areas of the business, such as R&D or promotion, to increase sales.

• Dell require less space for stock which means they save money on storage facilities which will increase their profit margins.

• Dell have a high dependence on their suppliers and should the suppliers fail them, it is Dell’s reputation and sales which would suffer if they were unable to meet demand from their customers.

• Dell may be unable to benefit from bulk-buy discounts which leaves them with an option of increasing the price to the customer or reducing their own profit margin.

Advantages of JIT

Capital not tied up in stocks Less space required for stock Closer relationships with suppliers Reduced deterioration Less vulnerability to fashion and technology

changes Reduction in stockholding costs Increase in cash flow

Disadvantages of JIT

Danger of disrupted production due to non-arrival of supplies

Danger of lost sales High dependence on suppliers Less time for quality control on arrival of

materials Increased ordering and admin costs May lose bulk-buying discounts