Just-in-time production is a form of organization that limits costs and time allocated to each manufacturing stage as much as possible. Its aim is to reduce raw material inventories, keep product storage costs to a minimum, and cut production lead times.
Just-in-time management means delivering products to customers when they need them and in the shortest possible time. This is precisely where just-in-time supply can become a real challenge for a business.
If demand increases rapidly, this can lead to stock-outs, often resulting in the loss of customers who turn to competitors.
To avoid this, JIT production requires high-quality partnerships, as well as regular, flexible delivery.
For this lean management process to function, all departments involved in the production of a product must be perfectly coordinated, whether in terms of purchasing and replenishment, logistics, sales, or production.
More concretely, there are two different processes for JIT production:
- push system, based on sales forecasts;
- pull system, based on actual demand.
While the JIT method has the advantage of reducing intermediate and production stocks, it also has a number of disadvantages for companies.
In this case, it's a complex production mode to set up and can complicate stock control. Malfunctions can often occur, especially when unexpected events intervene.
Likewise, JIT production has a hard time withstanding the failure of one of the links in the chain, especially when it comes to supplier failure, and can add more time to the order cycle. You can, of course, provide a substitute product for the consumer, but this may lead to dissatisfaction on their part.
To maintain a good level of JIT orders, the company must have a large production capacity, impeccable coordination, and a transport system that’s efficient, reliable, and rapid.
Without all these elements, JIT inventory management can quickly become chaotic and damage the company's reputation.
