Disadvantages of JIT (Just In Time) and Impacts on Costs

tempohk · Apr 28, 2007

Hello all ~

i have one worksheet abt JIT.
Colud u suggest any some disadvantages of JIT & discuss how can have impacts on cost.

many thanks for all asst. :thanx:

Randy · Apr 28, 2007

Re: Disadvantages of JIT

tempohk said:
Hello all ~

i have one worksheet abt JIT.
Colud u suggest any some disadvantages of JIT & discuss how can have impacts on cost.

many thanks for all asst.

1st of all Welcome to the Cove :bigwave:

Please feel free to avail yourself to all of resources that are open to all here.

OK, now to your question...My very 1st guess would be that if whatever is supposed to be JIT does not get there in time and the cost could be loss of revenue and a customer.

That's the big picture as I see it.

BradM · Apr 28, 2007

Re: Disadvantages of JIT

tempohk said:
Hello all ~

i have one worksheet abt JIT.
Colud u suggest any some disadvantages of JIT & discuss how can have impacts on cost.

Welcome to the Cove! Glad to see you here!

I would suppose that, if it is working properly, there are few disadvantages to JIT. Successful J.I.T. will hinge on a robust ordering system. However, as we all know, nothing in life works the way it should. Randy's post was succinct and effective to the downsides of the failures.

I guess the only other disadvantage I would see is that it is difficult to respond to variance in demand. If you have a highly varied demand pattern, ordering becomes substantially more complex. You can still utilize J.I.T. with uncertain demand, it's just a little more challenging.

You stated you have one worksheet on J.I.T. I'm sorry, but I don't understand that statement. Do you have a sheet briefly explaining J.I.T., or are you implementing it, and want to know some more about it?

If you would like to post the worksheet, maybe we can help you with it.

Dimitri · Apr 29, 2007

JIT manufacturing has been around for many many years, it allows a company to keep the bare minimum of stock at their own plant to keep how much money they have sitting on the shelves as low as possible which is supposedly makes a company save money.

Little history bit that many I've talked to about JIT didn't know, it was actually started by Ford Motor Company and was called "Dock to Factory Floor manufacturing".

One thing about JIT is that in many cases suppliers are the ones that end up storing the amount of stock at their own location instead of the end manufacturer's location, which makes JIT sort of pointless in my opinion because your transferring stock from your location to your supplier's location which means your still warehousing the goods for a "time" and the cost of the supplier warehousing the goods will be factored into their cost to you eliminating any "savings".

JIT still makes no sense to me on why its "good" to use in a factory setting because its "benefits" don't seem to make sense to me, but thats ok. I don't understand alot of things. :tg:

Dimitri

Jim Wynne · Apr 29, 2007

Dimitri said:
JIT manufacturing has been around for many many years, it allows a company to keep the bare minimum of stock at their own plant to keep how much money they have sitting on the shelves as low as possible which is supposedly makes a company save money.

Little history bit that many I've talked to about JIT didn't know, it was actually started by Ford Motor Company and was called "Dock to Factory Floor manufacturing".

One thing about JIT is that in many cases suppliers are the ones that end up storing the amount of stock at their own location instead of the end manufacturer's location, which makes JIT sort of pointless in my opinion because your transferring stock from your location to your supplier's location which means your still warehousing the goods for a "time" and the cost of the supplier warehousing the goods will be factored into their cost to you eliminating any "savings".

JIT still makes no sense to me on why its "good" to use in a factory setting because its "benefits" don't seem to make sense to me, but thats ok. I don't understand alot of things.

Dimitri

I think the Japanese were doing JIT before Ford latched onto it. You're correct that there will almost always be some cache of "safety stock" somewhere in the supply chain (automotive OEMs, in particular, require it), and for that reason JIT isn't of much use to anyone other than OEMs.

Dimitri · Apr 29, 2007

Jim Wynne said:
I think the Japanese were doing JIT before Ford latched onto it. You're correct that there will almost always be some cache of "safety stock" somewhere in the supply chain (automotive OEMs, in particular, require it), and for that reason JIT isn't of much use to anyone other than OEMs.

Perhaps Jim, but Henry Ford did write Today and Tomorrow in 1926 talking about it and then Toyota adapted it and used it in its Toyota Production system that they first published as a method in August 1977 when they set the first "standards" for it a good 50-51 years later.

Dimitri

Kevin H · Apr 30, 2007

I think part of the reason JIT took firmer hold in Japan than in the US was due in part to the overall size of the country and the cost of land near cities. The costs associated with storage were much lower in the US, so it was easier to keep buffer stocks of inventory. The overall political situation in the 1950's and 1960's where the US was the dominant manufacturing country after WWII also probably helped defeat the idea of JIT. After all, why worry about inventory when you can sell anything you make.

If memory serves, there were tax changes in the US national tax laws in the 1970's that affected how inventory was valued and taxed, so that it became more costly to hold inventory. I remember hearing about JIT and US applications around that time.

Craig H. · Apr 30, 2007

Dimitri said:
JIT manufacturing has been around for many many years, it allows a company to keep the bare minimum of stock at their own plant to keep how much money they have sitting on the shelves as low as possible which is supposedly makes a company save money.

Little history bit that many I've talked to about JIT didn't know, it was actually started by Ford Motor Company and was called "Dock to Factory Floor manufacturing".

One thing about JIT is that in many cases suppliers are the ones that end up storing the amount of stock at their own location instead of the end manufacturer's location, which makes JIT sort of pointless in my opinion because your transferring stock from your location to your supplier's location which means your still warehousing the goods for a "time" and the cost of the supplier warehousing the goods will be factored into their cost to you eliminating any "savings".

JIT still makes no sense to me on why its "good" to use in a factory setting because its "benefits" don't seem to make sense to me, but thats ok. I don't understand alot of things.

Dimitri

I have seen this inventory shift happen many times. More often than not "Just In Time" is accompanied by "Just Poor Planning". A proper and profitable implementation takes more discipline than many companies are willing to impose upon themselves, IMHO. The suppliers pay in the form of higher finished goods inventory levels and difficulty planning shipping schedules.

If a customer comes in and says they want to implement JIT within, say, a month or two, its time to jack the price up. Suppliers should be in on JIT implementation from the very beginning of the planning stages.

ralphsulser · Apr 30, 2007

We provide our automotive customers with JIT, but internally we still have JIC (Just In Case) of 5 days FG in the warehouse. Why? Well customers make more inventory requirement errors than we do. They also have "lost" inventory and call us in a panic.

ralphsulser · Apr 30, 2007

Kevin H said:
I think part of the reason JIT took firmer hold in Japan than in the US was due in part to the overall size of the country and the cost of land near cities. The costs associated with storage were much lower in the US, so it was easier to keep buffer stocks of inventory. The overall political situation in the 1950's and 1960's where the US was the dominant manufacturing country after WWII also probably helped defeat the idea of JIT. After all, why worry about inventory when you can sell anything you make.

Also the Japanese OEMs build a plant, then the suppliers build plants nearby to supply that particulalr OEM with JIT. Toyota and Honda are perfect examples.

Disadvantages of JIT (Just In Time) and Impacts on Costs

tempohk

Randy

BradM

Dimitri

Jim Wynne

Dimitri

Kevin H

Craig H.

ralphsulser

ralphsulser

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