Nift, Gandhinagar

JUST IN TIME
INVENTORY SYSTEM
Submitted By
Priyal Goyal
Submitted to
Apparel Quality Procedures and Practices Mrs. Nuti Mehta
HISTORY
The just-in-time philosophy was initially known as the “Toyota
Production System” (TPS) or just-in-time manufacturing. The
approach was developed in post-World War II Japan, when car
manufacturing faced shortages and had to minimize resource
consumption to survive and remain competitive.
Eiji Toyoda and Taiichi Ohno, Japanese industrial engineers,
created the system when Toyota Motor Company (TMC)
recognized that U.S. carmakers of that era were outpacing their
Japanese counterparts. After some testing, they established the
Toyota production system and closed the gap between 1945 and
1970. JIT has continued to grow as a practice worldwide. This
system’s basic underlying idea is to minimize the consumption of
resources that add no value to a product.
WHAT IS IT?
Just-in-time, or JIT, is an inventory management method in which goods are received from
suppliers only as they are needed. The main objective of this method is to reduce inventory
holding costs and increase inventory turnover.
JIT is a form of inventory management that requires working closely with suppliers so that
raw materials arrive as production is scheduled to begin, but no sooner. The goal is to have
the minimum amount of inventory on hand to meet demand.
JIT inventory ensures there is enough stock to produce only what you need, when you need
it. The goal is to achieve high volume production with minimal inventory on hand and
eliminate waste.
HOW DOES
A JUST IN
TIME
MODEL
WORK?
Steps in Cycle of Continuous Improvement for JIT Inventory

Design: The JIT process begins with a review of the essential manufacturing building blocks: product design,
process design, personnel and manufacturing planning. Then plans are put into place to eliminate disruption,
minimize waste and build a flexible system.
Manage: A Total Quality Management (TQM) review ensures there is continuous improvement throughout
the process. A management review defines workers’ roles and responsibilities, defines and measures
statistical quality control, stabilizes schedules, and checks out load and capacity schedules and levels.
Pull: Educate the team on production and withdrawal methods using signaling methods like Kanban. Review
lot size policies and reduce lot sizes.
Establish: Vendor relationships are vital to the success of JIT. Review vendor lists. Settle on preferred
suppliers, negotiate contracts, discuss lead times, delivery expectations and usage metrics and measures.
Learn how to make the most of them in the supply chain.
Fine-tune: Determine inventory needs, policies, controls and reduce inventory movements.
Build: Inform your team about the skills and capabilities it needs to complete its work and conduct team
education and empowerment sessions to educate them.
Refine: Reduce the number of parts and steps in production by refining, standardizing and reviewing the
entire process.
Review: Define and implement quality measures and metrics and conduct a root cause analysis of any
problems. Emphasize improvements and track trends to improve every aspect of JIT.
 Smaller Investments

Greater Productivity

ADVANTAGES Reduces Inventory Waste

Just in time requires carefully planning the
entire supply chain and usage of superior Lower Costs
software in order to carry out the entire
Smoother Production Cost
process till delivery, which increases
efficiency and eliminates the scope for error
Improved Quality
as each process is monitored.
Gives the manufacturer more
control

Improved Efficiency
SMALLER INVESTMENTS
In a JIT model, only essential stocks are obtained
and therefore less working capital is needed for
finance procurement. Therefore, because of the
less amount of stock held in the inventory, the
organization’s return on investment would be
high.
The Just-in-time model uses the “right first
time” concept whose meaning is to carry out the
activities right the first time when it’s done,
thereby reducing inspection and rework costs.
This requires less amount of investment for the
company, less money reinvested for rectifying
errors and more profit generated out of selling
an item.
GREATER PRODUCTIVITY
Greater Productivity: JIT enhances
productivity by reducing the time and
resources involved in manufacturing
processes.
Faster Product Turnaround:
Manufacturers can more quickly
produce products.
Shorter Production Runs: With JIT,
manufacturers can deliver new products
more quickly and easily.
Simplify Change Orders: Having less
raw material stock to draw down before
product changes makes it easier to
implement engineering change orders to
existing products.
REDUCES INVENTORY
WASTE
Waste Reduction: The JIT inventory management
model eliminates overordering and excess of all
kinds.
Reduce Obsolete Inventory and Dead Stock:
Low inventory levels significantly reduce the
risk of inventory going unsold and sitting in
the warehouse obsolete.
Reduce Defective Product Loss: Defective
inventory items are easier to identify and fix
when production levels are low, which
reduces scrap costs.
LOWER COSTS
Lower Costs: Receiving goods on an as-needed basis
reduces inventory costs.
Reduce Working Capital: The low inventory levels that
come with JIT limit the amount of working capital
needed.
Lower Holding Costs: Inventory holding costs (like those
for warehousing) are minimal because less space is used.
Lower Cash Investment: Companies invest less cash in
inventory because JIT doesn’t require having a lot of
stock on hand.
Reduce Large Raw Material Spends: In JIT, businesses
order raw material when needed, so cash is available for
other uses that could be more valuable to the company.
Reduce Labor Costs: Labor expenses are lower since the
number of person-hours required to fulfill orders is
usually fewer than full-time production.
SMOOTHER PRODUCTION FLOW
Smoother Production Flow: JIT can eliminate bottlenecks and
delays across the entire production process.
Shorter Production Cycles: JIT shortens manufacturing time,
which decreases lead times for customers.
Reduce Product Defects: Production mistakes can be spotted
faster and corrected, which results in fewer defective
products.
Shorter Production Runs: Fast equipment setup times reduce
production runs, lowering investment in finished goods.
More Functional Production Cells: Employees walk individual
parts through the processing steps in a work cell, which
reduces scrap levels. Cell models also eliminate work-in-
process queues that build up at more specialized workstations.
Compressed Operations: Arranging production work cells near
each other limits the amount of work-in-process inventory
moving between cells.
GIVES THE MANUFACTURER
MORE CONTROL
In a JIT model, the manufacturer has complete control
over the manufacturing process, which works on a
demand-pull basis. They can respond to customers’
needs by quickly increasing the production for an in-
demand product and reducing the production for slow-
moving items. This makes the JIT model flexible and
able to cater to ever-changing market needs. For
example, Toyota doesn’t purchase raw materials until an
order is received. This has allowed the company to keep
minimal inventory, thereby reducing its costs and
enabling it to quickly adapt to changes in demand
without having to worry existing inventory.
IMPROVED EFFICIENCY
Improved Efficiency: JIT eliminates the costs that come with
extra raw materials, unneeded inventory and product
storage.
Raise Inventory Turnover Ratios: Greater efficiency
brings higher inventory turnover.
Minimal Inventory Obsolescence: The high inventory
turnover rate keeps items from sitting in your facility for
too long and becoming obsolete.
Minimize Raw Materials on Hand: Receiving deliveries in
the smallest possible quantities—sometimes multiple
times per day—virtually eliminates raw material
inventories.
Local Sourcing: When suppliers are located near a
company's production facility, the shortened distances
contribute to timely deliveries. On-time, reliable delivery
of goods reduces the need for safety stock.
IMPROVED QUALITY
Improve Quality: A flexible workforce can focus on making
quality products with lower defect rates. Better outcomes
increase customer satisfaction and reduce the cash outlay
for production.
Reduce Work-in-Progress Goods: Fewer items
moving on the shop floor allows teams to focus on
building high-quality products.
Less Damage: Since minimal inventory is on hand,
storage-related accidents decline.
Certified Quality: Suppliers guarantee quality in
advance. So, deliveries go straight to production areas
instead of being held in receiving to await inspection.
 No scope for mistakes

DISADVANTAGES Timelines are difficult to maintain

Just in time requires carefully planning the entire

supply chain and usage of superior software in Non Environment friendly
order to carry out the entire process till delivery,
which increases efficiency and eliminates the
scope for error as each process is monitored. No backup

Local Sourcing
NO SCOPE FOR MISTAKES
Just-in-time makes it very difficult to rework orders, as
the inventory is kept to a bare minimum and only based
on the customers’ original orders.
TIMELINES
The model is dependent on suppliers’ performance and
timeliness, which are hard to ensure. Additionally, the
manufacturer needs to be able to cover any sudden
increases in the price of raw materials, since they
cannot wait to order during better pricing.
NON ENVIRONMENT
FRIENDLY
Since the JIT model requires a lot of shipping back and
forth between the supplier, manufacturer, and
customer, it can have detrimental effects on the
environment due to over consumption of fossil fuels and
packaging.
NO BACKUP
In case of disruptions, a JIT model can have a major
impact on the business. Since there is no excess stock
to fall back on, sales may come to a halt.
REQUIRES ORGANISATION
A just-in-time system needs to be carefully tracked and
organized, which will be hard if you are doing it
manually. Softwares should be adopted as it makes the
whole process more manageable. Even though a good
software help you it can be a bit tricky and/or expensive
to adopt a new software system and train your
personnel accordingly to use the same.
TECHNIQUES INVOLVED IN JIT INVENTORY METHODOLOGY

Order: Maintain a high level of physical and organizational discipline.

Better Quality: Eliminate defects through attention to detail and continuous improvements.
Reduced Setup Time: Create flexible changeover approaches when setups need to adjust
to meet customer demand.
Small Lot Size: In JIT, one is the ideal lot size. The small size reduces in-process inventory,
carrying costs, storage space, and makes for easier inspection and rework.
Load Uniformity: Leveling is a control mechanism that achieves a stable, level daily
schedule.
Flow Balance: Flow scheduling organizes throughput for even distribution of energy and
labor.
Diversified Skills: Cross-trained workers can be deployed to different areas to keep
production moving.
Visibility for Control: Using communication tools, like those found in Kanban, keeps the entire
team informed of inventory levels.
Ongoing Maintenance: Ongoing oversight and focus on detail, including the machinery
and tools the business uses every day, helps maintain a low defect, low problem
environment.
Use Fitness: JIT spaces designed to fit each process speeds up production. One
workstation pulls output from the one before it, as needed, based on a master schedule or
customer demand.
Logical Plant Layout: Product-oriented design makes assembly easier and more efficient.
Strong Supplier Network: Strong relationships with vendors make JIT inventory most
effective.
Worker Immersion: Every team member should be dedicated to the process and
colleagues to achieve JIT goals.
Cell Manufacturing: Create an environment where groups can work as quickly as possible
to make as many products as they can and limit the waste they create.
Pull System: The process of only replacing products once they’ve been used in production.
KANBAN
Kanban is the “nervous system” of lean JIT
production, controlling work-in-progress
production and inventory movement. Kanban is
crucial when it comes to eliminating manufacturing
waste due to overproduction.
More traditional mass production methods use
push inventory strategies based on the estimated
number of expected sales. Kanban’s pull system
creates more flexibility on the production floor
because a company only produces goods based
on actual orders. Kanban uses cards (paper or
digital) to track the progress of production on a
factory floor. As inventory moves through the
manufacturing process, Kanban cards reflect that
progress and can signal when it’s time to order
more stock.
BRAND THAT USE JIT
INVENTORY SYSTEM
Ensuring they feel that they belong and are heard is the next.
TOYOTA
Toyota was the first to implement JIT effectively in 1970 and is still one of the most successful
companies practising JIT systems. Their method, also known as the Toyota production strategy,
sees that raw materials are not brought to the production floor until the order is received from the
customer and the product is ready to be built. During the production process, no parts are included
in the next node or station unless they are required to. This keeps the amount of inventory to a
minimum which as a result, lowers costs. This also allows Toyota to adapt quickly to customer’s
demands, significantly reducing the risk of having excessive inventory at its disposal.
Important factors in Toyota’s success
Small quantities of raw material are kept at each station of production, assuring that there is
always enough inventory stock to start production of any product. This is also replenished once
used.
Accurate forecasting to stock raw materials at the correct levels
APPLE
Tech giant Apple has also leveraged JIT principles to make its manufacturing process a success.
Apple’s approach to JIT is different in that they leverage their suppliers to achieve JIT goals.
Apple has only one central warehouse in the US and about 150 key suppliers worldwide; they
developed strong and strategic relationships with their vendors. This outsourcing of production
made Apple leaner and resulted in slashing costs and reducing overstock.
With only one central warehouse in the US, most of their inventory is at their retail stores. Adding
further to the JIT mix, Apple began to take advantage of dropshipping. As a result, this reduces
shipping costs, wastage, and storage costs.
Important factors in Apple’s success
A willingness of suppliers to keep inventory on hand allowing Apple to be free of this
responsibility
Holding inventory at their retail stores
Dropshipping arrangements for online purchases
MC'DONALDS
Fast-food chains such as McDonald’s use JIT inventory to serve their customers on a daily basis.
These fast food restaurants usually have everything they need on hand but for example, don’t start
assembling and making their hamburgers and sundaes until the order has been taken, (except for a
few finished products at peak times). This standardises the process, so that every time a customer
receives an order, they are getting the same consistent experience.
Important factors to Mcdonald’s success
Standardised procedures ensuring consistency
JIT method increases customers satisfaction as items are made more freshly
JIT helps business owners save money and reduce wastage, while still providing their customers
with the products they want and need in a timely manner. As excess inventory is vastly decreased
by ordering inventory stock on a “just when you need” basis, business owners will not need to keep
large quantities of inventory stock parts reducing all the costs associated with this.
 CONCLUSION
JIT inventory has the potential to generate tremendous benefits for
many companies. This approach has caught on since Toyota invented it
because it can lower costs and increase profitability in a big way. To
evaluate whether it’s a fit for your business, you should consider the pros
and cons with your industry and business model in mind and whether the
organization could support the processes required to make this work.