Just-in-time: Problematic or Possible?

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Just-in-time > Best Practices > Just-in-time: Problematic or Possible?

Just-in-time: Problematic or Possible?
Dyan Constantine, Mexico, Member
Just-in-time (JIT) has always been a troublesome part of the management of any supply chain. However, it is feasible if the parties have a better understanding of their respective roles and the value each must bring to the chain.
Managing a supply chain is never an easy feat, it requires dedication and great communication among all parties. It also requires skill in balancing the inventory needs from both a financial and sales perspective. The sales people requires inventory to meet the targets, however, if there is too many item in stock it mops up all the liquidity which could be used to achieve greater competitive advantage, this will be a headache for the finance department.
So how do we go about satisfying both? Improve communication which will result in improved planning geared towards having just what is needed, when it is needed. For this to be achieved, the supplier(s) has a pivotal role to play.

JIT = Focus on Customer
Eric Schmitz, Consultant, Belgium, SIG Leader
Just-in-time is focussing very deeply, very consequently on the customer. JIT is used to increase the added value for the customer! That means that the delivery performance and the price performance have to be at the top of the market.
For this it is mandatory that the financial team and sales team focus together on the customer needs. There are no opposing objectives; the common objective is customer satisfaction. The delivery performance and the cash flow performance are part of the equation for the customer satisfaction. Each company will have their own equation how to satisfy the customer and how to determine the next points of improvement.
To achieve such team work, communication is not sufficient. A culture within the company of 'relentness seeking for customer satisfaction today and tomorrow' will be needed. That will ask training, coaching and professional skills. I always recommend the Kano-model to start understanding the needs of the customer.

J.I.T. concept is just shifting a burden in the supply chain
Faustine Panga, Student (MBA), Tanzania, Member
The J.I.T. concept in the supply chain is just shifting a burden from one part of the supply chain to the other.
For example, the manufacturer may not want keep stock that means the supplier has to keep on behalf to meet J.I.T. delivery which means he will charge for that quick delivery.

Mis-use of Just-in-time
Eric Schmitz, Consultant, Belgium, SIG Leader
There is a lot of powergame being played in the supply chain. Quite often JIT is abused to serve short term profits. So, Mr. Faustine Panga, you are correct to point out this phenomenon.
But the concept of JIT is not to shift the burden. The concept of JIT started with Toyota Production System and T. Ohno who very strongly insisted on respect for suppliers.
JIT is a way to improve continuously and as such to challenge the internal process and the supplier. But in a way that you do not harm the long term future of the supplier.
That is also the strength of JIT: because there is an actual daily improvement, you do not have to make big steps. For each step the supplier can train and built up his skills. In stead of a burden it is a powerful training. The supplier will become much more competitive without making losses!

JIT is a Benefit to the Supply Chain
Joe Marshall, Management Consultant, United Kingdom, Member
As somebody who implemented Lean in his own company, had 1.5 day's of stock and my nearest supplier being 160 miles away from my plant I agree with Mr. Schmitz's comments.
I always developed the supply chain on a win-win basis and spent a lot of time educating my suppliers to demonstrate that they could benefit in a similar fashion. There was no concept of burden, in fact the objective was to develop a secure supply base. I wanted my suppliers to be profitable!

Communication is the Catalyst for JIT
Dyan Constantine, Mexico, Member
@Eric Schmitz: whilst communication may not be sufficient, I can tell you that it starts there .
Often, the planner and the sales department are not in sync and this results in the problem where too much or too little is available to satisfy the customers' needs.
Just-in-time is not only used to add value to the customer. It is a strategy used to ensure that inventory levels are kept at their lowest as the carrying cost for inventory can be quite hefty and reflects poorly on a CNWC of any organization.
Communication should be a pivotal part of the culture of all organization. In fact it should be an innate characteristic in order to achieve teamwork.

Special Interest Group Leader
Eric Schmitz

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