Is Just-in-Time Manufacturing Going the Way of the Dinosaur?
Just-in-time (JIT) manufacturing has been a cornerstone of the Lean manufacturing philosophy since it was introduced as part of the Toyota Production System in the 1980s. Since then, the JIT concept has helped manufacturers around the world control costs, improve production, and meet customer demand. That is, until the COVID-19 pandemic put supply chains under tremendous stress.
Now, JIT faces widespread criticism as its negative impact comes to light. It’s difficult to produce goods “just in time” when supply chain disarray completely disrupts timing.
Just-in-Time manufacturing defined
JIT is the practice of initiating production only after receiving an order or anticipating specific customer demand. The goal is to prevent stockpiling and reduce on-hand inventory of produced goods and excess resources.
JIT is a cornerstone of Lean manufacturing, which means it is ingrained in many manufacturers’ fundamental operations. They rely on this concept because it allows them to get the most out of resources while simultaneously cutting costs. JIT also helps reduce waste, lead times, labor, and bottlenecks. But while there are numerous advantages to JIT, the concept also has its share of flaws — flaws exposed by the COVID-19 pandemic.
The pandemic exposed the pitfalls of JIT
The COVID-19 pandemic — and the 2021 Texas snowstorm — show how “black swan” events and unexpected circumstances can quickly derail JIT. Rooted in value-stream timing, JIT is open to failure when variables fall outside normal tendencies. One of the concept’s main flaws is the absence of a buffer system, particularly when supply chain issues tend to cause major delays in production.
Since the pandemic began, manufacturers have faced a big shortage in raw materials due to disrupted supply chains. Companies utilizing JIT concepts found themselves unable to keep up with demand — with limited inventories and no way to quickly replenish them. This is especially evident in the automotive industry, which continues to suffer from a shortage of semiconductor chips.
Will manufacturing move away from JIT?
JIT has been in place for a long time, and its cost-reduction benefits are indisputable. Therefore, manufacturers will continue to use it despite its flaws. Manufacturing companies are now, more than ever, trying to save money where they can. Moving away from JIT would mean higher static costs: a prospect many companies can’t afford right now.
While the pandemic exposed flaws in JIT, black swan events are not common. JIT manufacturing works too well for companies to stop using it any time soon. Most will adapt in the short-term and look for ways to continue JIT practices with more supply chains control.
The balance between supply chain and inventory management
Current criticism of JIT revolves around the inability of domestic companies to get supplies quickly through global supply chains. The situation has many producers thinking about procurement opportunities closer to home. Until this becomes feasible, many manufacturers are forced to ramp up inventory — and that only works if they can get their hands on vital materials during global shortages. At present, the cost savings of JIT are heavily offset by the inflated costs of materials sourcing.
Bringing supply chains back to the United States could prevent a similar JIT catastrophe from recurring in future. Reshoring supply chains would cut delivery times and help prevent supply shortages. Though it will take time, reshoring is gaining traction as the best solution for addressing the flaws of JIT manufacturing.
