JIT Approach

Just-in-time is often seen as a way of minimizing stocks of work in progress. It assumes that the main purpose of stock is to give a buffer between operations, and allow for short-term mismatches between supply and demand. The traditional way of allowing for these is to keep stocks that are high enough to cover any likely problems. Just-in-time gives a more radical solution with the following argument.

Stocks are held in an organization to cover short-term variation and uncertainty in supply and demand. These stocks serve no useful purpose – they only exist because poor coordination does not match the supply of materials to the demand. As long as stocks are held, there are no obvious problems and no incentive for managers to improve the flow of materials. This means that operations will continue to be poorly managed, with problems hidden by the stocks.

Organizations should really try to improve their operations, find the reasons for differences between supply and demand, and then take whatever action is needed to overcome the differences. This will allow them to eliminate stocks and have operations done just as they are needed.

You can imagine JIT on a car assembly line. Just as the chassis moves down the line to a work station, an engine arrives at the same point and is fitted. This is repeated for all parts. As the car body arrives at another work station, four doors also arrive and are added. All the way down the line materials arrive just at the time they are needed, so the car is assembled in one smooth process.