Just in Time?: Toyota

Just In Time?
The just-in-time, or JIT, inventory system is a strategy in which orders of raw materials for
manufacturing are aligned closely with production schedules.
In a JIT system, companies keep on hand only materials that will be immediately used for the
production of goods.
Companies practicing JIT
Toyota
Toyota was the first to implement JIT effectively in 1970 and is still one of the
most successful companies practising JIT systems. Their method, also known as
the Toyota production strategy, sees that raw materials are not brought to the
production floor until the order is received from the customer and the product is
ready to be built. During the production process, no parts are included in the
next node or station unless they are required to. This keeps the amount of
inventory to a minimum which as a result, lowers costs. This also allows Toyota
to adapt quickly to customer’s demands, significantly reducing the risk of
having excessive inventory at its disposal.
Apple
Tech giant Apple has also leveraged JIT principles to make its manufacturing
process a success. Apple’s approach to JIT is different in that they leverage their
suppliers to achieve JIT goals.
Apple has only one central warehouse in the US and about 150 key suppliers
worldwide; they developed strong and strategic relationships with their vendors.
This outsourcing of production made Apple leaner and resulted in slashing costs
and reducing overstock.
With only one central warehouse in the US, most of their inventory is at their
retail stores. Adding further to the JIT mix, Apple began to take advantage
1
of dropshipping. As a result, this reduces shipping costs, wastage, and storage
costs.
Mcdonald’s
Fast-food chains such as McDonald’s use JIT inventory to serve their customers
on a daily basis. These fast food restaurants usually have everything they need
on hand but for example, don’t start assembling and making their hamburgers
and sundaes until the order has been taken, (except for a few finished products
at peak times). This standardizes the process, so that every time a customer
receives an order, they are getting the same consistent experience.
The measures are taken by the company to go for

JIT.
JIT inventory management
ensures that stock arrives as
it is needed for production or
to meet consumer demand,
but no sooner. The goal is to
eliminate waste and increase
the efficiency of your
operations. Since the main
objective is often quality and
not the lowest price, JIT
requires long-term contracts
with reliable suppliers.
2
Steps in Cycle of Continuous Improvement for JIT Inventory
1. Design: The JIT process begins with a review of the essential

manufacturing building blocks: product design, process design, personnel
and manufacturing planning. Then plans are put into place to eliminate
disruption, minimize waste and build a flexible system.
2. Manage: A Total Quality Management (TQM) review ensures there is
continuous improvement throughout the process. A management review
defines workers’ roles and responsibilities, defines and measures
statistical quality control, stabilizes schedules, and checks out load and
capacity schedules and levels.
3. Pull: Educate the team on production and withdrawal methods using
signaling methods like Kanban. Review lot size policies and reduce lot
sizes.
4. Establish: Vendor relationships are vital to the success of JIT. Review
vendor lists. Settle on preferred suppliers, negotiate contracts, discuss
lead times, delivery expectations and usage metrics and measures. Learn
how to make the most of them in the supply chain.
5. Fine-tune: Determine inventory needs, policies, controls and reduce
inventory movements.
6. Build: Inform your team about the skills and capabilities it needs to
complete its work and conduct team education and empowerment
sessions to educate them.
7. Refine: Reduce the number of parts and steps in production by refining,
standardizing and reviewing the entire process.
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8. Review: Define and implement quality measures and metrics and conduct
a root cause analysis of any problems. Emphasize improvements and
track trends to improve every aspect of JIT.

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Just In Time?

Companies practicing JIT

The measures are taken by the company to go for

1. Design: The JIT process begins with a review of the essential

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