JUST IN TIME Manufacturing

Just-in-time manufacturing is a strategy used in the business manufacturing process to reduce costs by

reducing the in-process inventory level. It is driven by a series of signals that tell the production line to
make the next piece for the product as and when it is needed. The signals used are usually simple visual
signals, such as the absence or presence of a piece needed in the manufacturing process.

 ( Inventory is the total amount of goods and/or materials contained in a store or factory at any
given time. Store owners need to know the precise number of items on their shelves and storage
areas in order to place orders or control losses. Factory managers need to know how many units
of their products are available for customer orders. Restaurants need to order more food based
on their current supplies and menu needs. All of these business rely on an inventory count to
provide answers.

The word 'inventory' can refer to both the total amount of goods and the act of counting them. Many
companies take an inventory of their supplies on a regular basis in order to avoid running out of popular
items. Others take an inventory to insure the number of items ordered matches the actual number of
items counted physically. Shortages or overages after an inventory can indicate a problem with theft
(called 'shrinkage' in retail circles) or inaccurate accounting practices.

Restaurants and other retail businesses which take frequent inventories may use a 'par' system based on
the results. The inventory itself may reveal 10 apples, 12 oranges and 8 bananas on the produce shelf,
for example. The preferred number of each item is listed on a 'par sheet', a master list of all the items in
the restaurant. If the par sheet calls for 20 apples, 15 oranges and 10 bananas, then the manager knows
to place an order for 10 apples, 3 oranges and 2 bananas to reach the par number. This same principle
holds true for any other retail business with a number of different product lines).

Just-in-time manufacturing can lead to huge improvements in quality and efficiency. It can also lead to
higher profits and a larger return in investment. A reorder level is set and new stock is ordered when that
level is reached. There is no overstocking of parts. This saves on space in the warehouse.

Just-in-time manufacturing was first used by Henry Ford of the Ford Motor Company. Ford only bought
materials for his immediate needs in the manufacturing process. He bought only the amount of material
needed to fit into his plan of production. He planned transportation of materials so the flow of his product
would be smooth. This gave him a rapid turnover and decreased the amount of money tied up in raw
materials.

Ford's just-in-time manufacturing process was adopted by many other car manufacturers. Toyota in

Japan used the process with very satisfactory results; huge amounts of cash appeared as in-production
inventory was built and then sold. The response time on the factory floor fell to about a day. Customer
satisfaction was higher, as vehicles could usually be provided within a day or two. Many vehicles were
built to order, which reduced the threat that they would be built and not sold, thus eliminating another risk
to business.

With just-in-time manufacturing, assemblers no longer have a choice of which parts to use; every part has
to fit correctly. This means that multiple suppliers are usually eliminated from the process and quality
assurance is higher. The parts used are all of the same quality, which means that line stops for quality
checks are almost eradicated, leading to higher productivity rates. The just-in-
time manufacturing philosophy has been applied to many industries and businesses with very successful
results.
There seems to be only one problem with just-in-time manufacturing, and that is that the whole process
lies in historical demand. Manufacturers need to gauge the levels of materials and parts needed from their
past or current sales figures. If there is a rise or fall in demand for the product, it could have serious
effects on the inventory process. Manufacturers have to make sure they have a sales forecast or
reference in place to allow for these fluctuations in sales. If they do not have these figures, it could cause
a serious problem for the just-in-time manufacturing process