American Business


Just-in-time production (JIT)

Just-in-time production (JIT) is a management philosophy that embraces eliminating all waste and continually upgrading and improving production processes. The basic concept of just-in-time is that materials and supplies are replenished exactly when they are needed rather than too early or too late, thus ensuring an efficient flow of production. Just-in-time (JIT) reduces the cost of having expensive materials sitting idle while waiting for production and eliminates the cost of having expensive equipment sitting idle while waiting for materials. It also reduces or eliminates related production costs such as scrap materials, defective products, unnecessary inventory, and wasted space, so that a company expends the least amount of resources—including materials, personnel, and facilities—to produce its final products. While traditional companies focus more on planning than control, expending tremendous time and energy planning inventory level, materials and parts shipments, production schedules, etc., a just-in-time company emphasizes control more than planning by developing flexible, fast operations and processes that enable quick response to changing market conditions.

The Toyota Motor Company developed the just-in-time production strategy in Japan in the mid-1970s. The Japanese approach to just-in-time is to make products “flow like water” through a company. JIT readily exposes problems common in traditional companies, such as defective parts, lost orders, late shipments, and an over-reliance on overtime, by eliminating the excessive inventory levels and management practices used to compensate for these problems. The Japanese compare inventory to a lake, and these types of problems to boulders beneath its surface. As the “water” (inventory) recedes, the “boulders” (problems) are exposed and “removed,” or resolved. By reducing inventory to minimal levels, a just-in-time company achieves a constant work pace with products “flowing” through the production facility. Using the just-in-time philosophy, Toyota reduced the time required to produce an automobile from 15 days to 1 day.

While JIT emphasizes the importance of reducing material inventories to support the concept of “the right parts, at the right place, at the right time,” it is more than just an approach to dealing with materials. Just-in-time production affects all aspects of a company’s operations, from product design and manufacturing operations to parts-suppliers and customer relations. A just-in-time production environment requires a company to develop close relationships with selected vendors who participate in the design process and will ensure consistently high quality and on-time delivery of materials. Just-in-time product engineering and design emphasizes standardization and continuous process improvements. The just-in-time production philosophy also changes the role of the labor force and of management. Just-in-time strives to develop flexible, broadly skilled workers who are capable of solving production problems and initiating process improvements. In a non-JIT environment, management typically makes all production-related decisions. In a just-in-time production environment, teams comprised of workers and management make decisions jointly through consensus. Eliminating many of the status symbols traditionally reserved for management such as the executive dining room, reserved parking places, and executive bonuses creates a less adversarial relationship between workers and management, enhancing cooperation.

The just-in-time production concept, or management philosophy, is very much a part of the competitive strategy of most large companies today. Often referred to by other names such as “continuous flow manufacturing,” “stockless production,” “cellular manufacturing,” or “lean production,” just-in-time simplifies production and lowers costs, giving JIT companies a competitive edge. Current management literature suggests that implementing just-in-time offers many advantages to companies, including

  • maintaining minimum inventory levels 
  • establishing customer order-driven production planning and scheduling 
  • purchasing materials in small-lot sizes only when required 
  • performing simple, quick, and inexpensive machine setups 
  • developing a flexible, multiskilled, and empowered workforce 
  • creating a flexible manufacturing system that quickly adapts to changing market conditions 
  • improving and maintaining product quality 
  • developing time- and cost-effective preventive maintenance 
  • promoting continuous process improvements 
  • improving worker morale 
  • reducing labor, material, and overhead costs

In spite of the obvious advantages of just-in-time production, many U.S. manufacturers have still not adopted a just-in-time philosophy. The dominant reason is that just-in-time requires an overall change in corporate culture at every level of an organization. JIT demands new types of relationships with suppliers, customers, and employees that render traditional methods and processes obsolete. Additionally, implementing just-in-time requires an ongoing commitment to continuous improvement, not only in a company’s products but also in its processes.

Further reading

American Production & Inventory Control Society, Incorporated. Just-In-Time Reprints, Articles Selected by the Just-In-Time Committee of the APICS Curricula & Certification Council. Alexandria: APICS, 1998; Monden, Yasuhiro. Toyota Production System, An Integrated Approach to Just-in-Time, 3d ed. Norcross, GA: Engineering & Management Press, 1998; Wheatley, Malcolm. Understanding Just in Time. Business Success Series. Hauppauge, New York: Barron’s Educational Series, 1997.

—Karen S. Groves