JUST IN TIME MODEL
Mr. Rupesh Kumar
Aryabhatt College Of
What is JIT ?
•“A philosophy of manufacturing based on
planned elimination of waste and continuous
improvement of productivity ……”
Emergence of JIT
• Evolved in Japan after World War II, as a result of
their diminishing market share in the auto industry.
• Toyota Motor Company- first to implement fully
functioning and successful JIT system, in 1970’s.
• Japanese Manufacturers looked for a way to
gain the most efficient use of limited resources. They
worked on "optimal cost/quality relationship.
Functioning of JIT
Involves keeping stock
levels to a minimum
Stock arrives just in time
to be used in production
Works best where there
is a close relationship
between manufacturer and
Goods not produced unless
firm has an order from a
Aims to get highest
volume of output at the
lowest unit cost.
Functioning of JIT
A method of production
No demand - no production!
demand triggers production
Finished goods assembled just
in time to be sold to customer
Component parts assembled
just in time to become finished
Materials purchased just in
time to make component parts.
Just In Time (JIT) Purchasing Is Directed Toward The
Waste (That Is Present At Incoming Inspection, Excess
Inventory and Poor Quality)
Objectives of JIT Purchasing
To Reduce All Non-Value-
Elimination Of In-Plant
Elimination Of In-Transit
Quality And Reliability
Some companies, benefited by
• Dell do not have to tie up capital in stock which means they can invest it
in other areas of the business, such as R&D or promotion, to increase
• Dell require less space for stock which means they save money on
storage facilities which will increase their profit margins.
• Dell have a high dependence on their suppliers and should the suppliers
fail them, it is Dell’s reputation and sales which would suffer if they were
unable to meet demand from their customers.
• Dell may be unable to benefit from bulk-buy discounts which leaves
them with an option of increasing the price to the customer or reducing
their own profit margin.
Advantages of JIT
Capital not tied up in stocks
Less space required for stock
Closer relationships with suppliers
Less vulnerability to fashion and technology
Reduction in stockholding costs
Increase in cash flow
Disadvantages of JIT
Danger of disrupted production due to non-
arrival of supplies
Danger of lost sales
High dependence on suppliers
Less time for quality control on arrival of
Increased ordering and admin costs
May lose bulk-buying discounts