How JIT Compares to the Conventional Supply ChainĪ crucial part of JIT’s charm is that it completely revolutionized the traditional supply chain systems. Today, apart from Toyota, many other famous companies like Apple & McDonald’s have adopted some or the other variant of JIT as their guiding principle when it comes to inventory management. The spike on the Ngram below shows the sudden rise in JIT’s popularity around the world after the successful implementation in Japan. The word “JIT” started regularly occurring in popular literature across multiple languages. To overcome this two-fold challenge, a Toyota employee named Taiichi Ohno came up with a bold yet brilliant action plan.Īs the world witnessed the stellar success of JIT shown by Toyota, more companies were interested in adopting the model for managing their inventories. So even though the Japanese had the technical prowess to build brilliant engineering products but lacked the necessary funding, something that the western manufacturers didn’t have to face. Due to the lack of real estate spaces in the country, companies found it challenging to expand their inventories by setting up warehouses.Īnother fallout of the world war was that it left the country’s economy in a mess. Japan was still reeling from the aftermath of WW2. However, Toyota would not go on to implement this system until the 1970s. Toyoda wasn’t a native English speaker, the concept was inscribed with a grammatical error and became the “Just In Time” system in 1936. Hence, the material must arrive just in time. He thought- if the material arrives late, it causes unfortunate delays in production and losses, but if the material arrives earlier than required, it causes unnecessary inventory costs. This got him thinking about the parallels between this incident and material procurement & production. Although the train was on time, he was slightly late and hence missed it by a few minutes. ![]() Once, during his visit to the United Kingdom, Mr. The story of how he stumbled upon the idea is almost serendipitous. JIT is in direct contrast with the Just In Case strategy, where companies beef up their inventory to tackle any increase in sales.Īlso known as the Toyota Production System, the JIT was first adopted by the visionary founder of the Toyota Motor Company, Mr. This way, the companies can reduce their inventory costs by only storing the bare minimum raw materials required for production. Just In Time (JIT) inventory management refers to an inventory management technique that focuses on cutting down the inventory by procuring raw materials after receiving the sales order. “Just In Time” (JIT) is one such highly effective inventory management technique that originated in post-WW2 Japan but has been implemented worldwide and has shown exemplary results. Inventory management is one such key area that has transformed over the past decades for the better.Ĭompanies that can cut down on their inventory costs have a significant edge over the other players, which is why we’re witnessing revolutionary inventory management methods being developed around the world. ![]() Companies today are increasingly investing in techniques that can help them outsmart their competition. Ecommerce has emerged as the one true leveler of the playing field of our times.
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