Just in time is an effective production management system
Just in time is an inventory control method. Along with the growing development of digital transformation and the market becomes more connected to be supported by the existence of technology, such as automation, artificial intelligence, and analytics, making an increase in the process in cutting costs and also increases the efficiency of the company.
Then, what is the actual understanding of just in time? On this occasion, let’s discuss completely the management of inventory just in time.
The definition of management just in time is
So, JUST IN TIME management is an inventory control method in which it carries various materials into the production process, to the warehouse, or to the customer promptly to be used, which in turn can reduce the need for storing excessive inventory materials in the warehouse.
Just in time management is also claimed to reduce costs and waste, as well as being able to maximize efficiency and also the benefits of the company. why? Because the JUST IN TIME inventory management system allows companies to run better to meet the level of customer demand while maintaining inventory costs so they can remain low.
Every businessman can also achieve a longer increase and also significantly when implementing a Just in Time management system.
At first, this system was introduced in Japan in the 1960s. After the second world war was completed, various industries in Japan had to fight under great pressure. This is because Japan is relatively smaller and lacks natural resources available.
In addition, the land there was insufficient for a large factory and warehouse space that had been filled with inventory. Moreover, the country also experienced a shortage of cash after the second world war.
To overcome the problem, an industrial engineer from Toyota Motor Corporation named Taiichi Ohno began to develop and also apply an inventory management method which at that time was called Kanban.
The system developed by Ohno can identify seven types of waste that can paralyze the level of production efficiency. In addition, there are also ten rules made specifically to guide prospective producers to lead to high productivity levels, minimal costs, and also maximum profits.
The seventh type of waste is unnecessary transportation, inventory levels that are considered excessive, unnecessary activities, delays, excessive production, investment in a feature that is not needed and record it in production.
In the late 1970s, the system created by Ohno then changed the entire production process of Toyota very identical to being able to present downsuction. So, this system is also famous in Western countries and is called the Toyota production system.
The system has a lot of praise, but it takes more than 15 years of careful work to be able to perfect it.
Its continence that continues to grow and the power of digital transformation that continues to increase has made the system just in time an important part of the supply chain management strategy for the company to be able to build a system that focuses on four important things.
These four important things are stable production and can be produced, workflow and minimal production equipment will be an error, quality workmanship, and good products, and reliable vendors and have been proven in the entire supply chain.
The purpose of the JUST IN TIME inventory management system is
The most important goal in implementing a Just in time inventory management system is:
1. Strategic supply chain management, build a more efficient but complete supply chain that has been fulfilled with vendors with a high level of reliability and also proven performance in meeting KPI which is indeed very important for the company’s production process.
2. Changes to the production system and also inventory strategies that can maximize the level of efficiency and also accuracy to reduce waste and eliminate the need for excessive inventory levels, costs, and storage space in the warehouse.
3. Optimizing the process through real-time analysis and also a sustainable increase to target the problem area and also improve the company’s performance.
Benefits of JUST-IN-TIME Inventory Management
To understand how precious inventory is just in time, it must be compared to a more traditional model that has been known as the management of JUST IN TIME.
By using Just In Time, the producers can bring raw materials and finished goods in a much larger amount with their inventory so that they can be better prepared in the face of increasing consumer demand.
Based on inventory systems in JUST IN TIME management, inventory costs will decrease in the absence of the need for storage costs in paying excess inventory. In addition, just this time is also able to reduce costs and increase competitive advantage through:
- The period of the short production process can provide greater agility for producers to be able to meet consumer demand that can continue to change.
- Minimizes the level of warehouse expenditure and also raw materials. Orders were made to be able to meet demand.
- Additional savings so that later it does not have to bring inventory produced to be able to fulfill the order that is canceled or invalid.
- Better cash flow reports. Reducing capital expenses can free your work model so that it can be invested into other projects and also product development. This is very important for small businesses with a minimal budget.
Challenges when implementing JUST-IN-TIME inventory management
Although many advantages can be obtained when implementing a Just in Time management system, this management system can only work if you have successfully implemented four important things.
The very risky section of applying Just in time is the lack of reliable suppliers and also disorders that are not related to the possibility. For example, without a permanent inventory, the loss of a single source of raw materials will be able to delay or disable the production in the company.
In addition, natural disasters or political conflicts will also be able to stop the trade routes that make you and customers cannot be considered.
Even worse, only a few companies can know the actual potential costs of the JUST IN TIME inventory failure.
In 1997, a fire at one of the Toyota supplier companies was able to cripple the production of valve-p for Toyota vehicles itself. The damage caused is very severe that it can stop production for weeks.
Although the management process is just in time it has been used throughout the world since the late 70s, the process has experienced improvements using qualified technology.
In addition to Toyota companies, other companies such as Dell, Harley-Davidson, and Apple also use the Just In Time system to ensure that their company can maximize the level of savings, productivity, to customer satisfaction.
These companies have resources and cultural commitments needed to overcome the potential directly and maintain production and shipping so that they can continue to run with the possibility that can be developed to handle delays that might be estimated.
Using a comprehensive cloud-based procurement solution can include support for the implementation of the inventory just in time. With the existence of a built-in press automation system that is made to improve sustainable processes, centralized data management to be able to maximize transparency and accuracy.
In addition, with the strong analytic supported by artificial intelligence technology, it would be much easier to be able to find sources more strategically, develop workflow and responsive process control, and able to connect inventory management in the existing software environment.
Closing
Thus the explanation of us about Just In Time. So, we can conclude that JUST IN TIME management is an inventory control method in which carry various materials into the production process.
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