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JIT - Background and History JIT is a Japanese management philosophy which has been applied in practice since the

early 1970s in many Japanese manufacturing organizations. It was first deve loped and perfected within the Toyota manufacturing plants by Taiichi Ohno as a means of meeting consumer demands with minimum delays . Taiichi Ohno is frequent ly referred to as the father of JIT. Toyota was able to meet the increasing challenges for survival through an approa ch that focused on people, plants and systems. Toyota realized that JIT would on ly be successful if every individual within the organization was involved and co mmitted to it, if the plant and processes were arranged for maximum output and e fficiency, and if quality and production programs were scheduled to meet demands exactly. JIT manufacturing has the capacity, when properly adapted to the organization, t o strengthen the organization s competitiveness in the marketplace substantially by reducing wastes and improving product quality and efficiency of production. There are strong cultural aspects associated with the emergence of JIT in Japan. The Japanese work ethic involves the following concepts. Workers are highly motivated to seek constant improvement upon that which alread y exists. Although high standards are currently being met, there exist even high er standards to achieve. Companies focus on group effort which involves the combining of talents and shar ing knowledge, problem-solving skills, ideas and the achievement of a common goa l. Work itself takes precedence over leisure. It is not unusual for a Japanese empl oyee to work 14-hour days. Employees tend to remain with one company throughout the course of their career span. This allows the opportunity for them to hone their skills and abilities at a constant rate while offering numerous benefits to the company. Definition: Just-in-Time (JIT) inventory management is the process of ordering and receiving inventory for production and customer sales only as it is needed and not before . This means that the company does not hold safety stock and operates with low i nventory levels. This strategy helps companies lower their inventory carrying co sts. Just-in-time inventory management is a cost-cutting inventory management strateg y though it can lead to stockouts. The goal of JIT is to improve return on inves tment by reducing non-essential costs. Examples: Just-in-time inventory management is used by Toyota Manufacturing as its invento ry management system. ADVANTAGES OF JIT The just-in-time inventory model allows companies to reduce their overhead expen ses while always ensuring that parts are available to manufacture their products . Many companies, including Dell and McDonald's, use some sort of just-in-time i nventory management to serve their customers better while lowering the cost of d oing business. Lower Warehouse Costs Storing excess inventory can cost a lot of money, and reducing the amount of inv entory you keep on hand can reduce your carrying costs as well. Companies that i mplement the just-in-time inventory model may be able to reduce the number of wa rehouses they maintain, or even allow them to eliminate those warehouses altoget her. Better Supply Chain Management The just-in-time inventory model can also help companies be more efficient and c ompetitive in the way they handle their supply chains and use their parts to ass emble products for their customers. A more efficient supply chain can provide lo wer costs throughout the manufacturing process, and those lower costs can then b e passed on to the customer. Those lower costs can make the company's products m ore affordable, and help the company gain a larger market share and stay ahead o f its competitors.

Better Customer Satisfaction Implementing the just-in-time inventory management model can allow companies to serve their customers faster and more efficiently. Companies that use the just-i n-time model have a greater level of control over the entire manufacturing proce ss, making it easier to respond quickly when the needs of customers change. For instance, a computer manufacturer that uses the just-in-time inventory control m odel can quickly ramp up production of a hot model, while reducing the number of unsold units and outdated products. Less Waste When companies use the traditional method of inventory management and control, t hey can end up with pallets of unsold items that simply go to waste. The company many need to slash prices on that unsold inventory just to get rid of it, which can reduce the perceived value of the firm's other products. The just-in-time i nventory model reduces this waste and helps the company respond more quickly to what its customers need