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Creating and Using a JIT Inventory Process in Your Supply Chain
For just-in-time manufacturing to succeed, buyers and suppliers have to develop open, intimate and trusting relationships. Reducing cycle is not about doing things faster - it's about doing things smarter and faster. It happens through bringing together suppliers and customers, streamlining business and manufacturing processes to eliminate non value-added activities, and by ensuring reliable performance of products that are manufactured. Even many of the most conservative corporations have now realized just-in-time (JIT) manufacturing is a process and philosophy that they must consider adopting for surviving in the fiercely-competitive market place.

Where does JIT really begin? Does it begin at manufacturing facilities? Does it begin with new technology? Does it begin with the suppliers? JIT begins in the manufacturing company where steps are taken to lower inventory, reduce set-up times and improve business and manufacturing processes. JIT begins when investment of time and resources are committed to make cutting edge enterprise resource planning (ERP) solutions, supply chain planning tools and Web-enabled solutions work for the industry. JIT begins when manufacturing companies extend their enterprise to encompass its suppliers into mainstream manufacturing.

It takes great courage and a high degree of management involvement in convincing suppliers to follow JIT practices and integrate organizations. The major step towards true supplier integration is to reduce your supplier base. This means that the manufacturing company would have a limited number of dedicated suppliers who produce a variety of products on a JIT basis. In determining the few selected suppliers, a company may develop criteria for preferred or certified suppliers that includes extremely high quality levels to reduce or eliminate inspections, and by ensuring that the suppliers can hold inventory (vendor held consigned inventory) thereby ensuring JIT deliveries to the manufacturing plant. Manufacturers may have to consider reducing their supplier base with supplier pre-certification so that product inspections are not required on receipt, move towards lower lot or forge successful relationships with their existing supply base. Two common challenges that are typically unavoidable include planning for peaks and uncontrollable environment issues.

Customer acceptance of JIT manufacturing is largely dependent on demonstrating a firm's ability to service customer requirements while managing factories with JIT principles. It is important to recognize customer requirements for accurate and on-time delivery. By collaborating with customers through pilot projects, you should be able to test JIT principles to find the most suitable approach before implementing initiatives on a widespread basis.

Noting the potential impact on delivery, the adoption of JIT is a decision that must be made in unison with the customer. While many clients still may believe that a JIT system may have adverse effects on them or feel that a lean JIT approach was not critical, and believed product demand would begin to deplete and short-term inventory surpluses. But, by leveraging pilot programs, you can demonstrate to your customers how JIT will work effectively, without any lasting negative effect on delivery.