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How Just In Time Management Is Used Supply Chain

What is just-in-time (JiT) management?

Just-in-time (or JiT) management is an efficient use of limited resources. This theory was first discussed by Peter Drucker, who coined the term “management” as we know it today.

Drucker described this concept in his 1982 book The Best In Business is Noisily Consistent Work Ethic. He wrote that companies use JiT management when they have a resource that they are spending money to create or achieve a goal, but they don’t consume all of their budget immediately.

Instead, they hold off using up these resources until right before they need them to meet their goals. At that time, they spend the amount needed to make sure everything goes according to plan.

This can be applied to anything — from investing in new equipment to giving paid vacations. Once you’ve made your investment, you’re free to use it. But only for the allotted amount of time.

Importance of JIT in supply chains

Supply chain professionals use JiT management during the inventory stage of production. When supplies run low, a manufacturer will order more so they have enough to keep producing products.

In fact, many times manufacturers will run out of one material or component and won’t stop manufacturing even if they ran out of another part. This is because there’s usually not much difference between how much each individual component costs.

Benefits of JIT

how just in time management is used supply chain

Overly busy work schedules are one of the major causes of stress for working professionals. With most employers now offering at least some form of online job applications, looking for employment has become much more accessible.

However, with this accessibility comes a higher demand for employees to do these applications quickly and efficiently. This can be stressful for those who feel that they have done their best but still no response or poor responses from applicants.

In fact, there is actually research showing that applying too many times can hurt your career even further. The reason? Employers develop preferences among candidates depending on how frequently they apply.

As such, people’s chances of being selected for positions decrease over time. Plus, individuals may perceive you as someone who leaves things hanging rather than putting extra effort into your search. – Source: EmbraceChange.

Challenges in JIT

how just in time management is used supply chain

There are several reasons why just-in-time (JIT) management is not the best strategy for every business. The main challenge with this approach is that it requires very close coordination of all levels in the supply chain to be done at exactly the right time, which can be difficult if you don’t have strong internal processes in place already.

There also are costs associated with using JIT strategies. Having to order extra inventory means there will be excess cost due to carrying too much inventory, as well as investment and logistics expenses. These additional costs can add up quickly when you’re running low on budgeted funds.

In addition, even though buying only what you need now saves money in the short run, it can put stress on your supply chains’ availability because they may not have enough stock to meet demand. This could create backorders or shortages, which would hurt their reputation and cause them to lose sales because people won’t want to buy from them.

Examples of JIT

how just in time management is used supply chain

Many large companies use just-in-time (JIT) management to fulfill their demands for products or services. This is done by having a constant supply of the product, or service, so that they do not need to buy a big batch at one time.

Supply chain professionals call this steady flow of inventory “just in time” inventory. By keeping the supplies ready and available, your business does not have to spend extra money stocking up before production can start.

This helps your company save money!

There are many ways that businesses employ JIT logistics including:

Having a supplier that always has enough goods on hand

Finding vendors that never run out of merchandise

Knowing when to order materials so that there is not much waiting

Businesses with JIT logistics have it very easy because their suppliers keep them supplied. They know that every month, the manufacturers will be sure to make an adequate amount of the item for sale, which keeps sales high.

Lessons to Learn

how just in time management is used supply chain

A few more things you should know about just-in-time (JIT) management is that it’s not necessarily expensive, and there are ways to use it even if you don’t have much of an budget. This article will go into more detail about some of those strategies, but first let me give you my take away message for this article!

The most important thing to remember when trying to implement JIT into your supply chain process is that it isn’t something that happens overnight. It takes time to develop relationships with vendors so they work as scheduled, and it can be frustrating when they don’t because you need their product or service at a certain time.

That said, I would like to talk to you today about three easy ways to apply just-in-time concepts in your own business. These tips won’t cost a lot, and none require any special equipment or software, either. If you already do part of each of these ideas, then great! Add another one to your list, and continue moving forward towards better control over your inventory and resources.

How to implement JIT

how just in time management is used supply chain

A key part of implementing any form of JIT is having adequate resources or equipment to fulfill job orders. This could be ensuring there are enough employees to handle the workload, investing in more efficient production methods or machinery, or even investing in new technology that can help you manage your supply chain efficiently.

In fact, research shows that every dollar invested in improving inventory efficiency will result in up to $5 in total savings!

By reducing stocking costs, you’ll have extra money to put towards other areas of the business such as hiring additional staff or expanding into different markets.

When it comes to supply chains, one of the biggest overhead expenses is storing excess inventory. By investing in ways to reduce this cost, not only do you save financially, but you also increase profit margins.

And with increasing competition, it becomes important to keep up-to-date on what products and services are being used by your competitors and how they manage their supply chain.

Create a plan

how just in time management is used supply chain

A second way to use JIT in supply chain is creating a plan. This can be done at either site level or object level depending on what you are trying to achieve.

At the site level, we talked about how companies use it to keep up with demand. But they also use it for maintenance or upgrades of equipment.

They create a part of their inventory that is dedicated to just making sure this machine is running properly. When it is time to buy new parts, then these go into production and stock.

This cuts down on having to find space to store extra supplies while people have access to them who need them. It also helps avoid waste as there is no need to store excess materials.

The same goes for upgrading an item. Once it has been used for its purpose, it can be trashed or recycled instead of warehoused until it is replaced.

Identify what is important

how just in time management is used supply chain

A second way to use just-in-time management in supply chain is to focus on keeping things that are essential for the organization running smoothly. By using this theory, you can create an internal system of resources to meet your organizational’s needs!

By creating our own internal systems of support, we allow ourselves to feel more confident in their abilities, as well as giving them the opportunity to prove themselves. This creates an upward spiral of motivation which helps everyone work harder and better.

It also allows us to reduce the pressure on external sources, suchas by outsourcing certain tasks or letting go of control over some processes. You may even find that people working under you have additional help and resources they didn’t before so there’s less need to manage those individuals directly.

Make it a routine

how just in time management is used supply chain

A second step to using JIT effectively is making this process a standard part of your supply chain management job. This means that every time you place an order, or make a shipment, you include some amount of time for completion.

In addition to having enough time to complete orders, you should also have adequate resources and equipment needed to do so efficiently.

This way, your organization will not be left waiting or with inadequate supplies because of timing. Also, workers will know how much time they have to finish their assignments due to the nature of the employment!

Just-in-time concepts can save your company money by cutting down on overproduction and underutilization of materials and equipment. And even though there is no excess inventory, you still get to enjoy low prices caused by the limited availability of items.

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