JIT - Just in Time - The Concept

            JIT philosophy aims at reducing waste, which is defined by Fujio Cho of

Toyota as “any thing other than the minimum amount of equipment, materials, parts, space and worker’s time, which are absolutely required to add value to the product.”  Thus waste is any resource used in excess of the minimum amount required to add value to the product. 

More specifically JIT seeks to achieve the following goals.

1.  Estimation of non-value added activities. 

2.  Zero inventory. 

3.  Batch size of one. 

4.  A 100% on time delivery service.

            The following are the key features of  JIT production.

            1.  The production line is run on a demand pull basis, so that activity of each work station is authorised by the demand of downstream work stations.  Thus, parts move through production system based on end unit demand,  focusing on maintaining a constant flow of parts rather than batches of WIP.

            2.  Set-up time and manufacturing lead time are minimised.  Demand-led production may require manufacturing small quantities of the product and producing small  batches is economical only if set up time are small. 

            3.  The production line is stopped if parts are absent or defective work is discovered.  In absence of buffer stock emphasis is placed on ‘doing the job right the first time’.  The focus is on eliminating the root causes of defect, waste or re-work.  JIT goes hand in hand with ‘total quality’.

            In a JIT environment:

a. Absence of large amount of materials and work-in-progress inventory enables to control inventory through personal observation;

b. work-in-progress constitutes, a lower percentage of total cost of production; 

c. there is no need for an elaborate cost accounting system of stores requisition, material transfer notes, rework accounting and so forth. 

All the above provide tremendous cost advantage to firms adopting JIT production.

            In a JIT environment, EOQ model has lost its relevance because the focus is on synchronising delivery and usage. Such synchronisation requires no stock be purchased in large and kept in stores.  Should a firm adopt JIT purchasing depends on reduction in cost of quality, cost of delayed delivery, cost of early delivery, and ordering costs.  All these cost be compared with premium payable to suppliers (by way of increase in cost of quality products for just in time supply). Firms using JIT purchasing have reported significant saving in cost.

 Palanichamy VP    www.bharadwajinstitute.com