The terminology of lean production may at first seem a little odd to beginners. Explaining the just-in-time method is a good place to start, as it embodies the basic principles and shows how different concepts are interlinked.
Lean production helps to significantly improve efficiency by cutting out waste. The 7 Muda – the types of waste that the lean philosophy seeks to tackle – also include high stock levels. The just-in-time method is an approach that deals perfectly with this problem by ensuring that suppliers receive orders for only what is actually needed. That might sound banal, but it can also help to cut costs significantly when successfully implemented. The just-in-time method is now a firm fixture of the automotive and aerospace industries. The text below offers an introduction to this highly promising logistics concept.
How just-in-time works
Materials are available when they are actually needed.
Just-in-time (JIT) means what it says – that materials are available when they are actually needed. In other words, a manufacturing company will get materials from its supplier only when it requires them. Since the process is geared toward the company’s order book, just-in-time production is also sometimes referred to as “demand-flow manufacturing”. The system brings a range of benefits and can significantly lower costs associated with personnel, storage and transport. Capital tie-up costs are also reduced. Ultimately, storage always ties up capital that could be invested usefully elsewhere.
What’s more, flexibility is significantly improved, which supports better service, as customer requirements can be met more quickly. Under certain circumstances, small buffers and/or waiting times can occur, though there is no conventional stock keeping as such. The same applies to the intralogistics aspect of just-in-time, which is managed with Kanban (cards) that represent an order for materials that is submitted to the upstream station (pull principle). Today, an IT-based version of this system, known as e-Kanban, is growing in popularity. By visually mapping processes, it gives users a good opportunity to identify ways that systems can be optimised.
The prerequisites and risks of JIT logistics
The aforementioned benefits of just-in-time make the system an interesting option for industrial production. However, the basic prerequisites associated with it should not be overlooked. Not every production system is compatible with this kind of approach. Indeed, it only really works when large volumes of material are involved, otherwise it is difficult to justify the logistics outlay that comes with JIT. Moreover, JIT requires outstanding infrastructure both inside and outside the plant and covers the entire supply chain.
On top of that, the system places a great deal of responsibility on suppliers. It goes without saying that they must be flexible when it comes to logistics. There are also numerous external factors that have an impact, such as difficult climatic conditions and traffic levels, which can easily throw the entire production system into disarray. All this needs to be taken into account at all times. However, there is also an opportunity to establish a completely trusting relationship between supplier and manufacturer that can benefit both parties enormously. What’s more, the global success of the just-in-time method speaks for itself.