Just in time, or JIT, manufacturing is a business strategy that helps to minimize inventory while still supplying product to consumers in a timely manner. By operating with a business model that allows raw materials to enter the production process as soon as they arrive at the factory, the business does not have to maintain storage areas for large supplies of raw goods. A business using JIT is also likely to pay less taxes on goods in process, and never has to worry about the costs involved with maintaining a large finished goods inventory. At the same time, careful planning with a JIT manufacturing model also means that orders are filled quickly and do not create problems for customers.
The underlying philosophy of JIT manufacturing is very simple. Buy only what is needed to produce finished goods that will be sold in the short term, rather than stockpiling large quantities of goods that may remain in inventory for an extended period of time. The idea is to make use of those raw materials as soon as they are delivered. At the same time, the finished goods should be on the way to consumers shortly after rolling off the assembly line. In order for JIT to work, this means careful planning and scheduling of both the ordering of raw materials and the labor and equipment needed to successfully deliver the goods on time.
While the modern day strategy of JIT manufacturing is of recent vintage, the underlying concepts of the approach have been around for centuries. Shoemakers who take the customer order and then secure the leather necessary to make the shoes by a certain date employ the essentials of JIT. Caterers who do not purchase food before securing the business of a client is also making use of obtaining what is needed when it is needed. Even some independent publishers make use of JIT manufacturing by only producing copies of books as they are ordered.
Manufacturing plants often benefit from making use of JIT manufacturing processes. This is particularly true with industries where there is a great deal of variance in demand over the course of a year. Companies operating within industries that go through cycles of demand will project when the next big wave of demand will begin and secure raw materials just in time to begin producing finished goods to meet that demand. As a result, finished products do not have to set in warehouses for months on end. Instead, they may be stored for a very short time before being shipped to the buyer.
