Just in time is a method of production and it is a part of Supply Chain Management. This manufacturing process is driven by a series of indicators that are known as Kanban. These signals inform manufacturers when it is necessary to make the next step. Kanban commonly take the form of 'tickets'. When the system is implemented to its optimum, the Just in time method can improve the quality and efficiency of a manufacturer dramatically. In addition, it can also increase the levels of return on investment.
When this method of Supply Chain Management is employed, stocks are not replenished until current levels drop below a pre-determined level. This means that warehousing remains uncluttered and any available space can be used to its best effect. The main drawback top this style of operating is that re-order levels are always determined by the previous demand levels. Therefore, if there is a sudden up-rise in demand stocks can end up being depleted as a consequence. This can have a very negative effect on customer service and lead to unhappy customers. It is vital that the Just in time system is managed well in order for it to reap rewards. Another term related to this method of manufacturing is 'Kaizan'. This means 'the continuous improvement of a process'.
One of the first companies to implement the Just in time strategy was the Ford Motor Company. They used a 'dock to factory floor' concept, whereby incoming materials went straight into the production area and were never stored idle on site. This meant that there was a massive dependence on the reliability of the freight or logistics company that supplied the parts. The Japanese car company Toyota was also an early employer of this process. The Just in time strategy has roots in Japan and is very popular there due to the high premium required for any kind of warehousing or storage space.
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