What is Just-in-Time (JIT) Manufacturing
Just-in-time (JIT) manufacturing is a production model where products are only created when there is a demand (rather than producing them in bulk and storing them). It stops you from losing money building products you can’t sell or paying for storage and transportation costs whilst you’re waiting for orders.
Good to know
JIT manufacturing is more than just a cost-cutting tool. It’s about being more efficient as a company: minimizing waste, speeding up production, and staying responsive to actual customer demand.
To pull it off, companies need accurate demand forecasting and strong supplier relationships. It’s a balancing act between having enough inventory to meet demand and avoiding excess that ties up capital or storage space.
A brief history
Toyota pioneered Just-in-Time manufacturing in the 1950s and ’60s. In post-WW2 Japan, they had limited capital and resources, so building smaller factories and only producing small batches of products was a necessity, not a choice.
By the 1970s, Toyota was outperforming many Western carmakers. Manufacturers in the US and Europe started to adopt JIT, too.
But the COVID-19 pandemic exposed a key weakness: no buffer. When factories shut down and ports closed, many companies couldn’t produce their products. There was demand, but they couldn’t meet it because they had no stockpiles to fall back on.
Today, JIT is still widely used, but often as part of a hybrid approach to add more security.
Tools and technologies
There are several key tools that support a Just-in-Time (JIT) production model, and each company will have a different setup. But some of the main tools are:
- ERP Systems: These coordinate inventory, orders, and production schedules to keep materials arriving and products being made exactly when needed.
- Manufacturing Execution Systems (MES): These track production in real time, helping prevent delays and overproduction by providing up-to-the-minute visibility on the factory floor.
- Kanban Systems: Whether physical boards or digital apps, Kanban signals when to restock materials or produce more products based on actual demand, ensuring a smooth, demand-driven workflow.
How it's different
| Term | What is it? | How is JIT different? |
|---|---|---|
| Make-to-Order (MTO) | A production model where items are made only after a customer places an order. | MTO reacts to actual orders; JIT anticipates demand but still produces in advance. |
| Lean Production | A broader strategy focused on reducing waste and being more efficient. | JIT is just one lean method focused on inventory; lean includes a wider set of tools. |
| Make-to-Stock (MTS) | Products are manufactured in advance and stocked based on forecasted demand. | Opposite of JIT: produces and stores inventory ahead of actual demand. |
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