Advantages of Jit

ADVANTAGES OF JIT

1) Lower stock holding

All manufacturing units aim at one thing, which is to minimize the expenditure that related to the ordering and carrying out inventory. The company should order only that much inventory, no more no less or hold no inventory which is needed to carry on their immediate production. So the company should not store any extra inventory that is needed in the production since it will incur an additional carrying cost. As soon as goods are finished, it should be shipped to the customer immediately without any delay in order to minimize the warehouse costs where the goods are placed.

2) Better customer satisfaction

Implementing the Just-in-Time inventory management model can allow firms to serve their customers faster and more efficiently. By using Just-in-Time (JIT) model, the company can have a better control over the manufacturing process, making it easier to respond quickly when the needs of customers change where the company can cut the production of one product type and switch it to a different type product to meet changes in customer demand. According to Bonnie Conrad, a computer manufacturer that use JIT inventory control model can quickly increased the production of a hot model, while reducing the number of outdated products.

3) Elimination of waste

“The seven waste” 7Ws introduced by Toyota’s Chief Engineer Taiichi Ohno as the core of the Toyota Production system also known as Lean Manufacturing in order to eliminate waste. The 7Ws includes of:

i. Defects: Components or products that does not meet the specification or standard. Defect will result additional cost to organization when they need to re-inspecting, and make a correction on the product produced. Basically defects are caused by the unclear operating procedure such as inadequate training, shortage of skills, incapable processes, incapable suppliers, and excessive stock.

ii. Over production: A key element of JIT was making only the quantity required of any components or product. Producing more than required will lead to the excess inventory, excess storage space, and unnecessary handling cost by workers and equipment.

iii. Waiting: Time not being used effectively is a waste. Whenever goods are not moving or being processed, the waste of waiting occurs. Waste of waiting occur when the company waiting for a breakdown to be resolved, waiting for previous process to complete, and also waiting for the raw materials to arrive.

iv. Transportation: The waste of transport I relate to the movement of products from one location to another. In Toyota Production System (TPS), we can see that many of their suppliers are located close to their plants. When the product does not ship at a huge distance, it will cut the cost of damage or obsolete product and it will arrive at the destination as soon as possible.

v. Movement: Waste of movement is any motion of man or equipment that does not add any value to the product or service. Poor workstation layout, large batch size, poor method design to lifting one component to another is a problem for organization since it required excessive walking or motion.