The changed business environment with its increasingly demanding customers and shorter product life cycles has impacted the way inventory is held. While excessive stocking allows markets to be served better, it leads to high carrying costs. A just-in-time inventory system is usually a wise approach to managing stocks.
The just-in-time inventory system works well in manufacturing industries that repeatedly produce large volumes of undifferentiated products, by facilitating production of the right part in the right place at the right time. In addition, there are a few prerequisites for a just-in-time inventory system to be successful. Let's take a look.
Stable production schedule: This is vital to the effective management of inventory. A just-in-time inventory system can succeed only when there is a predictable pattern of demand, and a predetermined production schedule to meet it.
Quick setup time: Production processes with long setup times will not have the flexibility required in a just-in time process. While setup time will depend on the complexity of the equipment and process, proper planning and design can help optimize it.
Smaller lot sizes: Keeping production and distribution batch sizes as small as is practically feasible, means smaller input order quantities, and therefore financial savings. However, this will need the back up of a very reliable vendor network, in order to work smoothly.
Shorter lead times: The total time lapsed between placing of an order and receipt of goods is called the delivery lead time. Developing a supplier network located close to the production site can help reduce this. Lead times during the production process can also be reduced by setting up all workstations in one place. In this context, "Manufacturing Processes for Engineering Materials" from is a useful book dealing with real-world applications of engineering materials, manufacturing processes and systems.
Redeployed idle time: The just-in-time inventory system will work most efficiently when there is minimal wastage of resources. For example, if there is a waiting time of a machine or a worker in between jobs, it can be utilized better by deploying the resource for another task. Preventive maintenance is also essential in order to cut down loss of productive time due to machinery breakdown.
Trained workers: In order to work, a just-in-time inventory system needs a team of capable and committed employees implementing it. Therefore, workers must have inter-disciplinary training, so that they are capable of handling more than just one task.
Low error rate: A solid quality assurance program for input materials as well as manufactured products will reduce the need to maintain buffer stock. Workers must feel responsible for maintaining quality and be empowered with the authority to take decisions that support it. Programs like "defect tracking software" and "quality control software" from can be of great help in this regard.
The bottom-line is, a just-in-time inventory system can bring many rewards, only if handled carefully handled and implemented well.
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