Do you run a manufacturing unit and have been wondering about the best methods of improving its efficiency? One of the methods that you should consider is Just-In-Time (JIT) that involves producing exact quantities at the time when customers need them. To help you make the decision on whether to adopt the system, here is a comparison of the associated pros and cons.
A Brief Look at JIT Production System
JIT system was started by Toyota as a response to declining productivity in its system in 1976. The strategy entails producing products at the time agreed with the client to assure them of quality and also lower production costs.
The most important thing about JIT is accuracy. Therefore, you need to work closely with your clients in order to establish what they need so that you can only order enough raw materials and optimize the resources.
Pros of Using JIT System
- Keeping Stocks at the Bare Minimum
Let us face it – ordering raw materials in bulk and storing them for long can lock a lot of money in your warehouse. However, JIT involves only buying raw materials enough for producing what the clients ordered so that you will never have excess stock in your warehouse. Indeed, this comes with more benefits:
- Less money is used to maintain inventory.
- No money gets tied to your stock.
- You are sure of always using fresh materials for your production.
- Cutting Down Wastage in Your Production Line
One of the main losses incurred by manufacturers is through wastage, especially during storage of the raw materials and finished products.
The problem is particularly common in production facilities that deal with fresh supplies where either raw materials or finished products can easily go rancid. JIT creates a seamless supply chain, where all the materials that are received get processed and released into the market immediately to reduce related wastage.
- High Productivity
To implement the JIT production system, you need to ensure that your production system is highly efficient. This includes installing better machinery, automation, and timely maintenance. The overall effect is improved productivity and higher profitability.
While the benefits of using JIT are indeed many, it also comes with a number of disadvantages. The most notable of these disadvantages is that adaptability to a spike in demand volume is pretty low.
Because the inventory is maintained at the bare minimum, you might be unable to meet the additional customer needs. Furthermore, a company that deals with products that are only available seasonally might find it challenging to operate without buying in bulk.
If you want to increase your production unit’s efficiency, JIT can be considered a great production system. However, it is paramount to ensure you understand the system’s pros and cons, especially the need to keep the inventory at the bare minimum.