Just-in-time manufacturing reduces excess inventory and increases efficiency by producing each part only when needed. Benefits include inventory reduction and cost savings, but disadvantages include transportation costs and price/quality volatility. Emergency inventory can ensure short-term productivity.
Just-in-time manufacturing is a manufacturing strategy that increases process efficiency by eliminating excess inventory that provides no form of value to the customer. In manufacturing, this generally means producing each part only when it’s needed, rather than storing it for later use, which requires expensive storage space and inventory management. The biggest benefit of properly implemented just-in-time manufacturing is a reduction in wasted resources and an overall increase in efficiency. Disadvantages include costs associated with constant transportation rather than storage of parts, potential difficulties in obtaining product components at exactly the time needed, and instability in the price and quality of needed components over time.
The most significant benefits of just-in-time manufacturing are efficiency gains, inventory reduction, and cost savings. Producing all components exactly when they are needed, or “just in time”, prevents inventory build-up. The space, time and personnel required for warehousing and inventory management are largely unnecessary when just-in-time manufacturing is implemented correctly, as there should be little or no excess inventory build-up. In addition, inventory reduction can reduce the organizational burdens of inventory management, minimizing the risk that some necessary components may be lost and slow down the production process.
There are many potential disadvantages of just-in-time manufacturing, which can, in some cases, lead to an overall decrease in efficiency and cost-effectiveness. Avoiding inventory storage often requires frequent transport of necessary components and finished goods to and from the production space. This frequent transportation has the potential to be both costly and environmentally damaging, particularly if transportation over a significant distance is required. When daily transport of material is required, problems such as roadblocks, thunderstorms and other unforeseeable obstacles can cause significant delays and production disruptions. Maintaining at least a small emergency inventory can ensure short-term productivity even in the face of delivery delays.
Price and quality volatility are also important factors affecting the feasibility and practicality of just-in-time manufacturing. Some products are based on components that can vary greatly in price and quality over time. Purchasing a significant stock of certain components of a certain quality level at a certain price can enable the production of goods of constant quality and price over a long period of time. Just-in-time manufacturing methods, on the other hand, make a company highly susceptible to short-term price and quality changes. Therefore, even the final products made through just-in-time manufacturing can vary in terms of price and quality.
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