Just-In-Time Materials (JIT) Inventory Management

Just-in-time materials (JIT) inventory management seems valuable primarily because it seeks to eliminate inventory outright, instead of aiming for streamlining and eventually minimizing the manufacturing process. While JIT does streamline the process to a degree, it does so by virtue of repetition and ordering similar products. The deployment of JIT management works best when the product is not perishable, for instance, fresh foods or medicines. In other words, JIT techniques are intended to assure maximized value for minimized inventory, which then decreases the amount of time spent during each individual step of the supply chain process. Subsequently, this method aspires to improve productivity by limiting the conditions and room for possible error. As an illustration, Toyota Global is well known for its use of JIT.

Ludwig (2013) reported that Toyota’s logistics management team opts for a centralized approach because it maximizes flexibility amongst its suppliers. In addition, Toyota’s “660 suppliers across more than 30 states, Canada and Mexico” (Ludwig, 2013, p. 20) suggest long term relationships and, at the same time, competitive relationships. Ultimately, the logistics control team within Toyota Motor Engineering and Manufacturing determines any risks in regards to outsourcing among American businesses (Ludwig, 2013).

As a comparison, material requirements planning (MRP) essentially equates sales to the materials themselves and lends itself well to deliveries of products with multiple components by typically relying on batch or special orders, and, as such, it is more flexible. On the other hand, JIT is a much more ephemeral procedure—materials are scheduled for delivery and ideally used within a single day. It is fundamentally purchasing "only what is needed, when it is needed, and in the amount needed" (Toyota Global, 1995-2014, para. 1) and nothing else beyond that. While MRP might be more flexible, JIT is more precise in what it aims to do.

References

Ludwig, C. (2013). Total supply chain vision. (cover story). Automotive Logistics, 16(3), 16-26.

Toyota Global. (1995-2014). Just-in-time – philosophy of complete elimination of waste. Toyota. Retrieved from http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html