JUST IN TIME INVENTORY

MANAGEMENT
OPERATIONS MANAGEMENT

ANANYA GARG 23138

MOHD ARMAAN KHAN 23208
SYUN GOYAL 23250
JUST IN TIME INVENTORY MANAGEMENT
Outlining the definition, use and process of the JIT Inventory Management technique

WHAT IS JUST IN TIME TECHNIQUE THE PROCESS

JIT is a form of inventory management that requires working closely with DESIGN: PROCESS
suppliers so that raw materials arrive as production is scheduled to begin,
but no sooner
.
MANAGE: TOTAL
REVIEW: KPIs
The goal is to have the minimum amount of inventory on hand to meet QUALITY
AND METRICS
demand, reduce waste and improve quality CONTROL

.
JIT is what’s known as a lean management process. In JIT, all parts of any
production or service system, particularly people, are interconnected. They
REFINE:
KAIZEN
inform each other and are mutually dependent on generating successful
outcome PRODUCT INVENTORY PULL:
AND KANBAN
PROCESS MANAGEMENT
ADVANTAGES OF JIT .

1 2. 3.
. Increased efficiency Lower Costs Smooth production flows
BUILD: SKILLS ESTABLISH:
AND VENDOR
. .
CAPABILITIES RELATIONSHIP
• Raise Inventory • Reduce Working • Shorter Production
Turnover Ratios Capital Cycles
• Minimal Inventory • Lower Holding • More Functional FINE TUNE:
Obsolescence Costs Production Cells INVENTORY
• Minimize Raw • Lower Cash • Compressed
Materials on Hand Investment Operations
• Local Sourcing • Reduce Labor Costs • Reduce Product Organizations may vary in how they implement JIT in their environment, but
Defects the general steps are the same

Introduction Comparison Application Impact Case Studies JIC

JUST IN TIME INVENTORY MANAGEMENT
Analyzing the issues with JIT Adoption and explaining the elaborate process of integration

DESIGN: PROCESS A review of the essential manufacturing building blocks: product

design, process design, personnel and manufacturing planning

OBSTACLES IN IMPLEMENTATION
MANAGE: TOTAL TQM ensures there is continuous improvement throughout the
QUALITY CONTROL process by defining workers’ roles and measures statistical quality
control and stabilizes schedules

Educate the team on production and withdrawal methods using

PULL: KANBAN signaling methods like Kanban and review lot size policies and
1 2. S reduce lot sizes
.
O ESTABLISH:
VENDOR
Settle on preferred suppliers, negotiate contracts, discuss lead
times, delivery expectations and usage metrics and measures
Lack of proper Inconsistent timing
L RELATIONSHIP

training and worker

commitment
and quantities of
deliveries
U FINE TUNE: Determine inventory needs, policies, controls and reduce
T INVENTORY inventory movements

3. 4. I BUILD: SKILLS
Inform your team about the skills and capabilities it needs to
O AND
CAPABILITIES
complete its work and conduct team education

Lack of accurate Failure to allow N

sufficient time for the
forecasting
system evolution S REFINE: PRODUCT
AND PROCESS
Reduce the number of parts and steps in production by refining,
standardizing and reviewing the entire process

REVIEW: KPIs Define and implement quality measures and metrics and conduct
AND METRICS a root cause analysis of any problems

Introduction Comparison Application Impact Case Studies JIC

JUST IN TIME INVENTORY MANAGEMENT
Comparison of JIT with traditional inventory technique

PUSH INVENTORY SYSTEM PULL INVENTORY SYSTEM

WHAT IS IT? In this system, companies need to forecast stocking needs to Rather than looking ahead at anticipated demand, pull system
meet consumer demand and the business inventory management involves a more short-term approach.
must have plenty of products in stock ahead of the demand In The business relies on the ability to place orders for products as
manufacturing, this strategy is sometimes called “build to customers request them
stock.”

Push systems are standard in industries that produce a wider Pull systems are usually seen in industries with shorter lead
variety of products and longer lead times. times.

The push system puts no limits on the amount of in-process A pull system, however, is based on the just-in-time
work that can be in the system at any one moment. A push manufacturing model. It’s a lean manufacturing technique that
system provides a faster and easier way for manufacturers to seeks to cut waste by only pulling in materials and producing
get products to customers. goods when there is an already-specified need.

DIFFERENCES Push systems rely on demand predictions. The ability to predict A pull system relies on customer demand instead of predictions
consumer demand helps organizations see into the future and to trigger production. Being able to meet production demand with
know what to expect. Raw material planning and procurement, cv
careful planning and strategic actions at the right moment is
supply chain operations, logistics, and more all rely on market crucial for a pull system.
predictions in a push system.

In a push system, businesses stock up on inventory in anticipation Businesses only stock up on inventory in a pull system when
cv
of consumer demand. This can lead to excess inventory and cv
consumer demand is detected. This can lead to shortages if
wasted resources. demand is higher than expected.

Introduction Comparison Application Impact Case Studies JIC

JUST IN TIME INVENTORY MANAGEMENT
Real time usage of the Just in Time Inventory system including the special way companies perceive it

HOW COMPANIES VIEW JIT WHAT TYPE OF COMPANIES USE JIT

It is viewed as a management strategy that aligns raw material orders from
suppliers directly with production schedules of the company. The JIT inventory system is popular with small businesses and major corporations
alike because it enhances cash flow and reduces the capital needed to run the
The terms short-cycle manufacturing, used by Motorola, and continuous-flow business.
manufacturing, used by IBM, are synonymous with the JIT system.

1. 2. Retailers, restaurants, on-demand publishing, tech manufacturing, and automobile

The success Steady High-quality
manufacturing are examples of industries that have benefited from just-in-time
of the JIT Production Workmanship
inventory.
production
process relies 3. 4.
No Machine Reliable
on Breakdowns Suppliers

SPECIAL CONSIDERATIONS

Kanban is a Japanese The Kanban system

scheduling system that's often highlights problem areas by
Special Case Of Toyota Motors….
used in conjunction with lean measuring lead and cycle
manufacturing and JIT. Taiichi times across the production
Ohno, an industrial engineer at reliable suppliers Famous for its JIT inventory system, Toyota
process, which helps identify Motor Corporation orders parts only when it
Toyota, developed kanban in an upper limits for work-in-
effort to improve receives new car orders. Although the
process inventory to avoid company installed this method in the 1970s, it
manufacturing efficiency. overcapacity. took 20 years to perfect it.

Introduction Comparison Application Impact Case Studies JIC

JUST IN TIME INVENTORY AT TOYOTA
Real time usage of the Just in Time Inventory system at Toyota

Video Link
Introduction Comparison Application Impact Case Studies JIC
ACHIEVING JUST IN TIME OPERATIONS VIA KANBAN
Having defined a ‘pull’ system, JIT needs some way of controlling the flow of materials through a process, done by Kanbans

PRINCIPLES OF USING KANBANS

1 2 3 4
A message is Materials are only The size of a container
Only one
passed backwards, moved in standard is around 10% of daily
container full is
asking preceding containers which needs, but is the
produced or
operations to send hold specific smallest reasonable
moved at a time
materials amounts batch that can be made

5 6 7
Containers can only A specific While it is simple to
be moved if the number of administer, this
container has a containers and system makes sure
kanban attached kanban is used that stocks cannot
accumulate

Introduction Comparison Application Impact Case Studies JIC

OTHER EFFECTS OF JIT
JIT has an effect on everything that is done in the organization, there are 2 key elements

RELATION WITH SUPPLIERS JIDOKA – QUALITY AT SOURCE

Close Collaboration: Quality as a competitive advantage:

JIT requires a close and collaborative relationship with • In an increasingly competitive global market, offering
suppliers. They need to understand the production superior quality sets brands apart.
schedules and requirements of the manufacturers to deliver • This competitive edge translates into increased
market share, profitability, and sustained growth in a
materials or components promptly crowded marketplace.

Quality Assurance:
JIT relies on receiving materials just in time for production,
suppliers must consistently provide high-quality products. Improved processes ensure consistent high quality:
Any delays can disrupt the entire production process, • Rigorous methods continually refine processes,
minimizing defects and variations.
leading to inefficiencies and increased costs.
AUTHORITY TO STOP • This meticulous attention to detail results in products
meeting stringent quality standards, bolstering
Reliability and OPERATIONS
Dependability: reliability and fostering long-term customer
Suppliers must be reliable and dependable in terms of satisfaction and loyalty.
delivery schedules. Any delays in delivering materials can
lead to production delays, impacting the manufacturer's
ability to meet customer demand.
Consumer expectations for high quality:
• Modern consumers, influenced by experiences with
Flexibility:
premium brands, demand flawless products.
Suppliers need to be flexible and responsive to changes in • Meeting these expectations is imperative for retaining
production schedules. They should have the capability to market trust, loyalty, and staying ahead in an ever-
adjust their production or delivery schedules quickly to evolving consumer landscape.
accommodate the manufacturer's needs.

Introduction Comparison Application Impact Case Studies JIC

Types of Waste in Operations and Role of JIT
Outlining the wastage in the Operations and how JIT helps reduce it

WHAT IS WASTAGE TYPES OF WASTE

▪ Waste refers to any activity that consumes Overproduction

resources but does not add value to the • Producing more than actual customer demand.
product. • Leads to excess inventory and higher storage cost.
▪ It increases operational cost without improving
customer value. Waiting
▪ Major forms include excess inventory, waiting • Idle time when machines or workers are not productive.
• Caused by poor scheduling, machine breakdown, or material shortage.
time, and overproduction.
▪ Excess Inventory is considered waste because Excess Inventory
it blocks capital and adds storage cost. • Holding more raw material, work in progress, or finished goods than
required.
• Blocks working capital and increases carrying cost.
Why Waste Occurs in Traditional Systems
Transportation
• Unnecessary movement of materials between locations.
▪ Production based on demand forecasts leads to • Does not add value but increases time and handling cost.
overproduction.
▪ Large inventory levels increase holding cost, Motion
storage cost, and risk of obsolescence. • Unnecessary movement of workers due to poor workplace layout.
• Reduces labor productivity.
▪ Poor coordination between production stages
creates waiting time. Overprocessing
▪ Excess material handling increases operational • Performing more work than required by customer.
inefficiency. • Increases production cost and time.

Introduction Comparison Application Impact Case Studies JIC

JUST IN TIME INVENTORY MANAGEMENT CASE STUDY – ZARA
Zara’s Fast Fashion Success through Just-In-Time Inventory

Overview of Zara’s Fast Fashion Strategy How Zara Uses JIT Inventory

• Zara is a global fast-fashion brand owned by Inditex • Zara produces clothing in small batches instead of mass production.
(Spain). • Stores send real-time sales data to headquarters.
• Known for rapid fashion production and quick
• Production starts only when demand is confirmed.
response to trends.
• Introduces new designs every 2 weeks, unlike • Inventory is replenished twice a week.
competitors who take months. • Minimal warehouse storage → faster inventory turnover.
• Uses Just-In-Time (JIT) to minimize inventory and
respond quickly to demand. Zara’s JIT system ensures products arrive exactly when needed, reducing
excess stock.

Key JIT Practices at Zara Benefits of JIT for Zara

• Advanced technologies like RFID and centralized distribution centres • Reduced inventory holding cost
ensure real-time tracking and efficient inventory flow. • Lower risk of unsold fashion items
• Faster response to changing trends
• Zara follows a vertically integrated (design → production → • Creates scarcity → increases customer urgency
distribution controlled internally) and demand-driven production • Higher inventory turnover than competitors
system, enabling quick manufacturing and delivery. • Improved cash flow due to lower inventory
investment
Zara can move designs from concept to store in about 2 weeks • Reduced need for heavy discounts and seasonal
using JIT production. clearance sales

Introduction Comparison Application Impact Case Studies JIC

JUST IN TIME INVENTORY MANAGEMENT CASE STUDY – McDonald’s
Implementation of Just-In-Time Inventory System at McDonald’s

Operational Efficiency in McDonald’s Supply Chain JIT Principle at McDonald’s

• McDonald’s is one of the world’s largest fast-food chains serving millions of customers ➢ Prepare food only when ordered
daily. ➢ Continuous replenishment
• Operations depend on managing perishable food items efficiently. ➢ Focus on freshness & speed
• The company focuses on speed, freshness, and consistency. ➢ Maintain minimum inventory
• Just-In-Time (JIT) helps maintain optimal inventory levels across outlets.

Advantages of JIT in McDonald’s Operations

Demand-Based Food Preparation System
➢ Ensures fresh food quality
• Food items are prepared only after customer orders are received. ➢ Reduces spoilage of perishable ingredients
• Restaurants maintain minimal cooked inventory. ➢ Lowers storage and refrigeration costs
• Real-time sales data guides kitchen preparation. ➢ Improves service speed and efficiency
• Production matches actual customer demand instead of estimation. ➢ Maintains consistent product standards globally

Operational Outcomes and Business Impact

Integrated Supply Chain and Inventory Control

• Automated systems enable real-time inventory monitoring. ➢ Significant reduction in food wastage.
• Strong supplier coordination ensures timely delivery of fresh ingredients. ➢ Faster customer service and reduced waiting time.
• Demand forecasting supports efficient daily stock planning. ➢ Efficient global supply chain coordination.
• Continuous replenishment reduces wastage and stock shortages. ➢ Enhanced customer satisfaction and operational
profitability.

Introduction Comparison Application Impact Case Studies JIC

Just-In-Case (JIC)
Outlining the definition, advantages and disadvantages of JIC inventory system

WHAT IS JIC ADVANTAGES AND DISADVANTAGES OF JIC

ADVANTAGES
Just-In-Case (JIC) is an inventory management strategy • Ensures availability of materials and finished goods at all
where businesses maintain extra stock as a safety buffer times
against uncertainty. • Protects against supply chain disruptions
• Prevents production stoppages
• Reduces risk of stock-outs
• Improves customer service during demand fluctuations
It is based on the idea of preparing for unexpected demand • Suitable for uncertain and unstable markets
increases, supply disruptions, or delays.
Under JIC, companies hold higher inventory levels to
ensure materials and finished goods are available at all
times.
DISADVANTAGES
• High inventory carrying cost
It is commonly used in environments with: • Increased storage and warehousing expenses
- Uncertain demand • Risk of obsolescence and deterioration
- Unreliable suppliers • Blocks working capital
- Long lead times • May lead to overproduction
JIC focuses on risk minimization and operational continuity • Inefficient compared to lean systems like JIT
rather than cost minimization.

Introduction Comparison Application Impact Case Studies JIC

DIFFERENCES BETWEEN JIT AND JIC
Comparison of JIT with other techniques

JIT emphasizes waste reduction and cost JIT produces goods only when needed, while
efficiency, while JIC emphasizes risk reduction JIC produces and stores goods in advance.
and supply security.

JIT
v.
JIT depends on reliable suppliers and stable JIT lowers carrying costs but increases risk of stock-
demand, while JIC protects against uncertain outs, while JIC reduces stock-out risk but increases
demand and supply disruptions. carrying costs.
JIC

JIT focuses on minimizing inventory levels, while JIC

JIT reduces storage space requirements, while
focuses on maintaining high inventory levels as a safety
JIC requires larger warehousing and storage
buffer.
facilities.

Introduction Comparison Application Impact Case Studies JIC

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