SCM Terminology

JIT (Just-in-Time)


JIT was originally developed by taking a hint from the way that U.S. supermarkets do product replenishment. JIT in the Toyota Production System gives the Japanese auto industry an edge in the market and is adopted by many companies in the manufacturing industry.

"JIT (Just-in-Time)" is said to be a model system of the manufacturing industry that was formulated by Mr. Taiichi Ohno as the Toyota Production System. Behind the creation of JIT was the issue of whether the Japanese auto industry could survive after the war. Facing the presence of the U.S. auto industry that produced twice as much as the Japanese auto industry did, the Japanese government actually discussed whether or not auto manufacturers were really needed in Japan.

Mr. Ohno pursued a theme that seemed impossible, at that time, if judged by common sense. He tried to use a high-mix low-volume production system to counter the overwhelmingly strong mass production system of the U.S. He didn't try to challenge the U.S. by management strategies and production activities involving the entire company including the head office, but instead he just focused on the factory system. His basic concept was that production management, which is an indirect business process, is regarded as a "guest" of the factory and it is the workers at the factory themselves who directly make the decisions. The management function is excluded from this operation system. Mr. Ohno said that it was the structure of the U.S. supermarkets that gave him the idea of incorporating this "automatic nervous system function" into production activities. Specifically, the idea he referred to was that customers purchased products when they needed them and for the amount that they needed. In response, the supermarkets would replenish these products only for that amount in small batches.

If the replenishment cycle time is shortened, the number of products to replenish will be reduced and there will be fewer inventories held for a long time. Also, the time that raw materials and work-in-process items are held in the factory, i.e. the lead time, will shorten. This JIT operation is designed as the automatic nervous system that reacts to information called "Kanban" issued from previous processes to later processes every minute. As the reactions of the automatic nervous system are transmitted to the muscles and the muscles create movements, without giving information to the brain, suspension and resumption of operations are done by mutual dependence through the sharing of information amongst the various members. As this production system evolves, the system then shifts from "one-by-one production" to "flow production". Furthermore, as the capacity of the operations increases for each process then synchronization amongst operations takes place during the process from prototype production to mass production.

Experience shows that the difference between the two systems "one-by-one production" and "flow production" is one third in lead times and a half in costs. If throughput is doubled, fixed cost per unit will be halved.

Taken with kind permission from the book:
"Understand Supply Chain Management through 100 words" by Zenjiro Imaoka.