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Introduction to JIT (Just in Time) Concept

May 20, 2011 by Hajara Saleeth in Management

JIT in time concept was initiated in Japan making the Toyata as its mater piece. JIT is system whether company starts manufacturing/purchasing once the customer orders the good effectively making zero inventories. In other words, in a JIT environment materials are purchased and produced as and when it is needed. The whole idea is based on the phrase provide the goods just in time as promised when the order is placed by the customer. The opposite of the JIT production is known as JIC (Just in case) system where it produces goods for inventory with the intention of having goods just in case a customer places a immediate order.

JIT production system identifies the hidden problems in the value chain and reduces the production waste of the system while increasing the throughout (Sales-Raw Material Cost). Even though the JIT system seems to be interesting and less complicated it requires lot of coordination with supply chain to avoid delays in the production schedule.

The whole concept of the JIT is differentiated from traditional productions systems using push vs pull systems of production. The push system of production pushes materials to the next stage of the production irrespective of whether time and resources are needed at the next level of production creating lot of inventories at each level of the production flow. The traditional manufacturing organizations adopt push system where they produce for inventory and work in progress. The pull system of production is where the materials are pulled by next level of the production only when is signaled or required by the next stage of production. This drastically reduces the inventory held as it does not keep any work in progress. JIT concept is built based on the concept of pull production which eliminates the total inventory.

Source: (Kaluarachchi, 2009)

JIT is of 02 types which are:

  • JIT production: This where the production of the goods is started only when the customer places the order. In this method there will not be finished good stocks but there will be raw material stocks as the purchasing is carried out in normal way.
  • JIT purchasing: This goes one step beyond the JIT production where the purchasing of raw materials for production is also carried out once the order is placed by the customer eliminating raw material stocks.

To read more about JIT please refer articles on:

Success Factors of JIT

Back Flush Costing

 

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