Discover Just-in-Time (JIT) Inventory Management System and how it could help businesses in reducing waste of space, waste of capital, and waste of inventory.
Published 15 Jul 2022
We are used to seeing boxes piling up in warehouses or in storage rooms of businesses. This is one way business owners make sure that they'll be able to meet the demands of their customers. They keep supplies in their inventories even if they do not know what will be the demand for it. Some companies can have too much inventory, while others do not have enough.
Businesses have traditionally managed inventory by maintaining stock levels of products to meet emergencies and unexpected demand. The same goes for most manufacturers when creating goods and products. This kind of inventory management businesses—keeping large amounts of inventory—causes waste.
The following are the disadvantages of the traditional inventory system:
To avoid these wastes, businesses are now beginning to turn to Just-in-Time (JIT) Inventory Management.
Just-in-time is an inventory management system that focuses on manufacturing and delivering only what is needed, when it is needed, and how much is needed just in the time it was actually demanded. JIT manufacturing was initially known as the Toyota Production System (TPS).
JIT aims to eliminate the 7 Waste or the “7 Mudas” of lean manufacturing:
The goal of TPS is to provide the highest quality, the lowest cost, and the shortest lead time to meet the customer’s satisfaction. The TPS was established based on two concepts:
JIT manufacturing system is based on the Japanese production leveling system called “Heijunka”. It is composed of three fundamental elements which can be seen in the “House of Toyota” illustration: Takt time, continuous flow production, and the Pull system.
House of Toyota
Kanban, or physical inventory control cues, is a Japanese scheduling system that is commonly used in combination with lean manufacturing and JIT. It is a system in which only the inventory needed at that moment is replenished. In order to track production and order new shipments of replacement parts as they become available, Kanban cards are used.
Example of a Kanban Card | Source: Interlake Mecalux
Industries that practice JIT management system benefit from the following:
A just-in-time strategy minimizes overproduction, which can result in an accumulation of unsaleable inventory. These unsaleable items are categorized as inventory dead stock, which results in waste and takes up valuable warehouse space.
With the JIT system, businesses order only what they need, eliminating the chance of stockpiling unusable goods.
Companies will also spend less money on raw materials with the JIT system, because they just buy what they need to manufacture the products ordered.
JIT reduces the amount of time that you need to retain items in your warehouse by as much as possible. Because inventory turns over more quickly, you can reduce the amount of warehouse or storage space required to store goods.
Excess inventory can double storage costs. A just-in-time approach keeps warehouse holding expenses low. Because you only order when a consumer orders, your item is sold before it arrives to you, eliminating the need to store it. Businesses that adopt a just-in-time inventory system can greatly reduce or eliminate their warehouse inventory.
Because JIT demands commencing production only when an order arrives, you must source raw materials locally. Local sourcing also saves time and costs on transportation.
Adopt the JIT inventory management system to reduce waste, cut on costs, and empower your team to become more efficient. To support these goals, invest in digital technologies. Use iAuditor by SafetyCulture, one of the best apps for inventory management, to manage your stocks more efficiently than with the traditional way of paper-based inventories.
The following are ways iAuditor can help you implement the JIT system in your inventory management:
Check out these helpful checklists:
Loida Bauto is a content contributor for SafetyCulture. An Interior Designer by training, she began to pursue her passion for writing in 2017. Her interests involve a diverse range of topics such as Disability, Universal Design, and Sustainability, among other matters that aim to improve the world we live in. She is a self-published book author in 2018 and 2021.
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