How Toyota, McDonalds & Apple bringing terrific efficiencies through Just in Time (JIT)?

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How Toyota, McDonalds & Apple bringing terrific efficiencies through Just in Time (JIT)?

“Supply Chain is like nature; it is all around us” by Dave Waters.

Just-in-time is a movement that has attained huge acceptance in the business community over the past decade. Just-in-time (JIT) manufacturing is well liked approach for management of inventory. Just-In-Time (JIT) manufacturing is a production model based on the Toyota Production System, used to eliminate waste and in which business owners produce products once a customer has requested & paid for it, not created in excess or in advance of need. 

What is Just-in-Time (JIT)?

The notion of producing the right units in the right quantities at the right time is described by the short term Just-in-time (JIT). In JIT method, the company retains as much inventory as it requires during the production and transformation process, which in turn saves the storage cost & insurance.

Strong implementation is dependent on creating a business wide initiative, motivating staff engagement and formulating a policy and strategy that can be mobilized.

Objective of JIT

  • The main objective of JIT strategy is for right inventories across the organization & its supply chain.
  • JIT production reduces the waste related with waiting, overproduction & excess inventory which are 3 of the 8 waste categories described in the Toyota Production System.
  • The extensive acquisition of just-in-time (JIT) inventory principles doubtlessly makes production operations more systematic, customer responsive & cost effective.
  • Many business owners use this inventory method to boost efficiency and reduce waste, which reduces inventory stock costs. This method, therefore, requires manufacturers to predict demand precisely to be effective.

Also See: 5 Most Important steps towards Profitable Supply Chain Transformation

Elements of JIT

  1. Set-up Time

 An efficient Just in Time System environment basically needs reduced setup time. Reduced setup time offers the capability to react quickly to customer orders & decreases the demand for safety stocks.

  1. Plant Layout

Just in Time System provides improved plant layout. In conventional layouts, all of the machinery of a comparable class are assembled together in same physical location. For instance, all of the granulation machines are in one location & all of the compression machines in another.

  1. Flexible Workforce

 Workers should be multitalented in a Just in Time Inventory System environment, which is often organized into small “cells” that contain all of the equipment needed to perform several steps in the production process. Workers should have the knowledge of using all of the various pieces of equipment in the work cell.

  1. Defect Rates

JIT technology offers lower defect rates.

Companies Practicing Just In Time (JIT) Successfully

Traditionally, inventory of finished goods was regarded assets. But this belief has changed owing to JIT & now inventory is regarded as waste or unlucrative, sustaining extra costs.

Companies Practicing Just In Time (JIT) Successfully

  1. Toyota

Toyota was the first to implement JIT system efficiently.

Factors Pertaining to Toyota’s Success-

  • They keep small batches of raw material at every production station, which makes sure that there is always sufficient inventory stock to begin production of any product.
  • Precise forecasting to stock raw materials at the correct levels.
  1. McDonald’s

In the food & beverage industry, it’s useful to implement a JIT inventory system as finished products for human consumption have a lifetime after which they are worthless. McDonald’s presented what this system looks like in the real world where they have components onsite for the immediate future, although nothing is made until a consumer places an order. So with this process, whenever a customer gets an order, they feel the same consistent experience.

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Factors Pertaining to McDonald’s Success-

  • Standardized procedures ensuring consistency.
  • JIT method boosts customers satisfaction as items are made more freshly.
  • JIT inventory system helps business owners save money and decrease wastage, while still providing their customers with the products they want & need in a timely manner.
  1. Apple

Tech company Apple has utilized JIT principles to make its manufacturing process a success. Their motivation was not just reducing waste & associated costs but also to reduce energy consumption. How did they do it? They developed reliable & trustworthy relationships with their suppliers so that they could order stock with far shorter preparation times with the assurance orders would be met. Furthermore, Apple began to take advantage of drop shipping where products are shipped directly from the manufacturer to the customer, cutting out ‘middlemen’ and therefore reducing shipping & storage costs.

Factors Pertaining to Apple’s Success-

  • Stocking inventory at their retail stores.
  • A willingness of suppliers to keep inventory on hand permitting Apple to be free of this responsibility.
  • Drop shipping arrangements for online purchases.

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Final Word

Companies effectively implementing JIT principles as a key part of #supplychaintransformation have considerable competitive advantages over competitors that have not. The move is riddling out how to apply JIT principles to attain competitive advantages in your particular industry & business situation.

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