The Importance Of JIT Inventory Management

A couple of weeks ago, we posted a blog that highlighted the Flux Connectivity team’s commitment to Lean manufacturing. As a reminder, Lean manufacturing is a process that we implement in order to eliminate waste as best we can. In that blog, we also pointed out our commitment to adhering to JIT manufacturing principles.

What
is JIT?

Standing for “just-in-time”, JIT is a concept
attributed to Kiichiro Toyoda, the founder of car manufacturer, Toyota. And
it’s all about manufacturing what is needed, when it is needed and only in the
amount that is needed. In order to both maximize efficiency and decrease waste
during the course of our manufacturing processes, we receive goods only as they
are required. This significantly reduces the cost of inventory.

As Rosemary Peavler explains on TheBalanceSMB.com, “ordering inventory on an as-needed basis means that the company does not hold any safety stock, and it operates with continuously low inventory levels. This strategy helps companies lower their inventory carrying costs, increase efficiency and decrease waste. JIT requires manufacturers to be very accurate in forecasts for the demand of their products.”

How
was JIT inventory originated?

According to Len Calderone of Manufacturing Tomorrow, Toyoda conceived JIT by examining the ways in which American supermarkets restock their shelves. When customers retrieve items from shelves, employees replace those items and those items alone. It is only the empty space on the shelves that is restocked. The idea is that there need not be an abundance of product – only what is necessary.

“In a manufacturing situation, a worker would go to
an inventory storage location and remove the quantity of material needed for
production,” explains Calderone, “The inventory storage location would then
replenish just the amount of the material taken. The just-in-time inventory
model lets manufacturers reduce their overhead expenses while always ensuring
that parts are available to manufacture their products.”

What
are the benefits of a JIT inventory system?

Essentially, the “just-in-time” concept has replaced
the older “just-in-case” train of thought. When manufacturing companies order more
inventory than necessary – you know, to be “on the safe side” – they often find
themselves overstocked. This, of course, leads to smaller profits since unused
inventory that sits on the shelves is incapable of growing a company’s revenue.
In addition, as Peavler explains, the JIT model helps manufacturers to be a lot
more productive.

“JIT offers advantages such as allowing
manufacturers to keep production runs short, and move on to new products
quickly and easily if needed,” she writes, “Companies using JIT no longer need
to maintain a huge expanse of warehouse space to store inventory. A firm also
no longer needs to spend large amounts of money on raw materials for
production, because it only orders exactly what it needs, which frees up cash
flow for other uses.”

At Flux Connectivity, we are committed to strict on-time delivery performance measures by leveraging both Lean and JIT manufacturing principles. For more information, please don’t hesitate to give us a call at 1-800-557-FLUX or email us at connect@fluxconnectivity.com.