Just-in-Time (JIT)
Just-in-Time (JIT) is a production and inventory strategy within Supply Chain Management where goods and materials arrive precisely when they are needed instead of being stored in inventory for long periods. JIT is a cornerstone of the Lean philosophy and aims to eliminate waste, minimize inventory costs, and free up capital without compromising the production flow.
What is Just-In-Time?
JIT is a strategy where production is controlled by actual demand - production only occurs when there is a need. This differs from traditional production, where goods are produced in advance based on sales expectations.
JIT requires:
- Precise planning: To predict the exact time of need.
- Close collaboration with suppliers: To ensure frequent, small, and reliable deliveries.
- Continuous monitoring: Of production and demand to react quickly to changes.
Why is JIT used?
JIT is used to maximize efficiency and minimize waste throughout the entire value chain.
The strategy helps companies to:
- Reduce inventory levels and costs: Frees up capital and minimizes costs for storage space, insurance, and obsolescence.
- Improve cash flow: Due to lower capital tied up in inventory.
- Increase flexibility: Makes production more responsive to changes in demand and allows for quicker shifts between products.
- Expose bottlenecks: Since there are no large inventories to hide problems, JIT forces the company to continuously identify and eliminate inefficiency.
When can Just-In-Time be relevant?
JIT is primarily used in Lean Manufacturing and logistics, where close coordination with suppliers is possible.
It can be relevant when you want to: