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By-

Shashank kulshrestha

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What is JIT ?

A philosophy of manufacturing based on

planned elimination of waste and continuousimprovement of productivity

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Emergence of JIT

Evolved in Japan after World War II, as a result oftheir diminishing market share in the auto industry.

Toyota Motor Company- first to implement fullyfunctioning and successful JIT system, in 1970s.

Japanese Manufacturers looked for a way to

gain the most efficient use of limited resources. Theyworked on "optimal cost/quality relationship.

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Involves keeping stocklevels to a minimum Stock arrives just in time

to be used in production Works best where there

is a close relationshipbetween manufacturer andsuppliers

Goods not produced unless

firm has an order from acustomer Aims to get highest

volume of output at thelowest unit cost.

Functioning of JIT

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Functioning of JIT

A method of productioncontrol.

No demand - no production!

Anticipated/planned consumerdemand triggers production

Finished goods assembled justin time to be sold to customer

Component parts assembledjust in time to become finished

goods Materials purchased just in

time to make component parts.

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JIT Purchasing

Just In Time (JIT) Purchasing Is Directed

Toward The Reduction of

Waste (That Is Present At Incoming Inspection,

Excess Inventory and Poor Quality)

Delay

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Objectives of JIT Purchasing

To Reduce All Non-

Value-Added Activities.

Elimination Of In-Plant

Inventory.

Elimination Of In-Transit

Inventory

Quality And Reliability

Improvement

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Companies adopted JIT

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Some companies, benefited by

adopting JIT

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Dell do not have to tie up capital in stock which means they can invest itin other areas of the business, such as R&D or promotion, to increasesales.

Dell require less space for stock which means they save money on

storage facilities which will increase their profit margins.

Dell have a high dependence on their suppliers and should the suppliersfail them, it is Dells reputation and sales which would suffer if they wereunable to meet demand from their customers.

Dell may be unable to benefit from bulk-buy discounts which leavesthem with an option of increasing the price to the customer or reducingtheir own profit margin.

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Advantages of JIT

Capital not tied up in stocks

Less space required for stock

Closer relationships with suppliers Reduced deterioration

Less vulnerability to fashion and technology

changes Reduction in stockholding costs

Increase in cash flow

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Disadvantages of JIT

Danger of disrupted production due to non-arrival of supplies

Danger of lost sales High dependence on suppliers Less time for quality control on arrival of

materials

Increased ordering and admin costs May lose bulk-buying discounts