Just-in-time delivery

Definition

Just-in-time delivery is a logistics strategy that aims to improve efficiency by receiving goods only as they are needed in the production process, thereby minimizing inventory costs. This approach relies on precise scheduling and coordination between suppliers and manufacturers, ensuring that materials arrive just before they are required for use, which enhances productivity and reduces waste.

5 Must Know Facts For Your Next Test

1. Just-in-time delivery was popularized by Japanese manufacturers, particularly Toyota, as part of their production system to reduce waste and increase efficiency.
2. By minimizing excess inventory, companies practicing just-in-time delivery can significantly lower storage costs and reduce the risk of obsolescence.
3. This strategy requires a high level of coordination with suppliers, as any delays can disrupt production schedules and lead to costly downtime.
4. Just-in-time delivery is closely tied to the concept of demand-driven production, where manufacturing is based on customer demand rather than forecasted sales.
5. The success of just-in-time delivery is dependent on a reliable transportation network and accurate forecasting methods to ensure timely arrival of materials.

Review Questions

• How does just-in-time delivery impact supply chain efficiency?
  • Just-in-time delivery enhances supply chain efficiency by reducing the amount of inventory held at any given time, which lowers storage costs and minimizes waste. This approach encourages tighter coordination between suppliers and manufacturers, ensuring that materials arrive precisely when needed. As a result, production processes become more streamlined and responsive to real-time demand, making the overall supply chain more agile.
• Evaluate the risks associated with implementing just-in-time delivery in manufacturing.
  • Implementing just-in-time delivery can introduce several risks, including reliance on supplier reliability and the potential for production disruptions due to unforeseen delays. If a supplier fails to deliver on time, it can halt production lines, leading to increased costs and lost sales opportunities. Additionally, market fluctuations can complicate demand forecasting, potentially resulting in stockouts or excess demand that cannot be met in a timely manner.
• Assess how just-in-time delivery contributes to the principles of lean manufacturing and its overall impact on operational performance.
  • Just-in-time delivery is a fundamental component of lean manufacturing principles as it emphasizes efficiency by eliminating waste associated with excess inventory. By aligning production schedules closely with actual demand, organizations can enhance their operational performance through increased responsiveness and flexibility. This synergy not only lowers costs but also improves quality by allowing for more focused production processes, ultimately leading to higher customer satisfaction and competitive advantage.

Related terms

Supply Chain Management: The management of the flow of goods and services, including all processes that transform raw materials into final products.

Lean Manufacturing: A production practice that considers the expenditure of resources in any aspect other than the direct creation of value for the end customer to be wasteful and thus a target for elimination.

Inventory Turnover: A ratio that shows how many times a company's inventory is sold and replaced over a period, reflecting the efficiency of inventory management.