What is Just-in-Time Manufacturing?

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What is Just-in-Time Manufacturing?

In the 1960s and 1970s, companies in Japan, most notably Toyota, began toying with a new manufacturing technique—and a new philosophy on managing things—called just-in-time manufacturing, or JIT.

The idea behind JIT, sometimes referred to as lean manufacturing, is that you produce and have only what you need, instead of stocking up on bulk inventory. It was a radical approach to the process of manufacturing and producing goods.

In essence, the JIT model is built around the concept of making things to meet demand, as opposed to purposely building up a surplus of inventory. The purpose behind JIT is to reduce waste that results from overproduction. Having excess inventory on hand and waiting for inventory to be bought up and shipped out is also wasteful.

Even though Toyota made JIT popular, the idea behind it is decades old. In fact, Henry Ford described the JIT idea in his autobiography. He said that his company found it cost ineffective to purchase anything more than what was immediately needed.

When a company has a rapid turnover of manufactured goods, less money is trapped in materials sitting in warehouses. It’s a very powerful and proven manufacturing and management philosophy that many companies have adopted to their advantage.

There are several companies today that use JIT as the basis of their manufacturing process. Melaleuca is one such company. Melaleuca products do not pile up in the company warehouse, but are made based on what the customer wants and then shipped out very quickly. Melaleuca became a $1 billion consumer packaged goods company largely because of JIT principles.

Another outfit that has successfully adopted the JIT model is Harley Davidson. By transforming itself into a JIT manufacturer following the Second World War, Harley Davidson boosted productivity and dropped inventory levels by 75 percent.

However, many companies continue to operate successfully without employing the JIT model. In some instances, it is advantageous to produce items in excess, especially when the goods being produced have a long shelf life. As technology advances, and more and more consumers lean toward buying online, directly from the manufacturer, what will happen to the kings of surplus inventory?

Only time will tell.