Just In Time (abbreviated as JIT) is basically an inventory management
strategy opted by the company to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. However, JIT can be applied to all process of an organization: order taking, purchasing, operations, distribution, sales, accounting, design, etc. It is a production strategy that strives to improve a business' return on investment by reducing in-process inventory and associated carrying costs. It controls work flow by bringing in materials and sending out goods on demand—ideally, just enough to provide what consumers want and no more. With JIT, the ultimate goal would be zero inventories. Companies typically hold inventory in three locations: raw materials; work-in-process inventory of partially worked materials or sub-assemblies for workstations to complete; and finished goods to be shipped out to customers. However, a company ties up resources in both materials and product that sits in multiple storage areas, not to mention the utilities and space costs incurred in keeping the product from perishing.
Just-In-Time (JIT) manufacturing is applied in manufacturing which involves having the right items of the right quality and quantity in the right place and the right time. It has been widely reported that the proper use of JIT manufacturing has resulted in increases in quality, productivity and efficiency, improved communication and decreases in costs and wastes. The potential of gaining these benefits has made many organizations question and consider this approach to manufacturing. For these reasons, JIT has become a very popular subject currently being investigated by many worldwide organizations. Just-In-Time management involves the application of old management ideas; however, their adaptation to the modern manufacturing firm is a relatively new practice.
JIT production system identifies the hidden problems in the value chain and reduces the production waste of the system while increasing the throughout (Sales-Raw Material Cost). Even though the JIT system seems to be interesting and less complicated it requires lot of coordination with supply chain to avoid delays in the production schedule. It requires that producers are able to accurately forecast demand otherwise there may be chance of stock out and production shut down.
Implemented correctly, JIT focuses on continuous improvement and can improve a manufacturing organization's return on investment, quality and efficiency. However, it has got its own advantages and disadvantages as well.