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Just in Time Problems - Disadvantages of JIT (Just in Time) model?

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  #1  
Old 3rd December 2006, 04:26 PM
Eng. Lutfi

 
 
Posts: 21
Cry Baby Just in Time Problems - Disadvantages of JIT (Just in Time) model?

Greetings every body

May any of you provide me with some disadvantages of JIT (Just in Time) model?

Thank you in deed!

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  #2  
Old 3rd December 2006, 04:27 PM
Randy's Avatar
Randy

 
 
Posts: 8,244
Re: Just in Time Problems

Uh, the stuff doesn't get there in time?
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  #3  
Old 3rd December 2006, 06:25 PM
Steve Prevette's Avatar
Steve Prevette

 
 
Posts: 2,345
Re: Just in Time Problems

Quote:
In Reply to Parent Post by Eng. Lutfi View Post

Greetings every body

May any of you provide me with some disadvantages of JIT (Just in Time) model?

Thank you in deed!
The idea of JIT evolves from inventory management. I need to balance three costs - the cost of holding and processing inventory with the expected cost of having a "stockout" (you need the part, but don't have it, and now everything is stopped until you can get the part), and the cost of processing orders for parts. Two primary things affect the probability of a stockout - how variable is the demand for the part, and how variable is the delivery schedule for the part. The cost of ordering parts (administrative, overhead) tends to cause you to order infrequent, large batches, but this increases inventory holding costs.

So, if you can get your administrative costs down such that you can make frequent, small orders (or establish a very regular delivery schedule) and if you can predict the demand for the parts with little error, then it is worth going JIT. The opposite becomes the downside of JIT. If you don't have predictable demand, you may easily end up with a shortage of a part and have a work stoppage. If you administrative costs are high, it becomes cost prohibitive to make frequent, small orders. If you can't control the delivery schedule (especially if they are from a vendor) then you will likely have a parts shortage develop some day.

JIT is one answer to optimizing inventory and stockout costs. If your conditions don't allow for JIT, then the true optimum lies with a different inventory control policy.
  #4  
Old 3rd December 2006, 08:30 PM
Wes Bucey's Avatar
Wes Bucey

 
 
Posts: 10,960
Re: Just in Time Problems - Disadvantages of JIT (Just in Time) model?

Long before I had the tools or incentive to buy the tools or hire someone who already owned the tools (risk assessment tools), I used a "seat of the pants" judgment when trying to implement a "semi-JIT" purchase/inventory policy.

When products were "off-the-shelf" from multiple producers, I bought only the quantity I estimated I would use in the LONGEST lead time from any producer and made sure to reorder before my own shelves were bare.

When it came to custom-made products, all bets were off. Depending on product and its price, I arranged for either supplier or me to carry "safety stock" in a secure third party facility to guard against events (force majeure) which could stop our production flow.

As a supplier of custom made products, I not only arranged "safety stock" of our products (only with guaranteed blanket order from customer), but I also contracted with production equipment manufacturers and competitors to be able to get back into production with same or similar equipment if a disaster destroyed our machines. The overriding theme is "Never leave a customer holding the bag." It is important to use this in marketing AND to charge for the "security" it gives the customer. An important facet is to demonstrate the "knowledge" concerning the product is not lost if a disaster occurs.

So, in retrospect, it seems to me the TOTAL risk assessment of ever being without critical materials should be the most important aspect of JIT (just in time) inventory planning. Administrative costs of multiple ordering can be ameliorated by issuing blanket orders for estimated annual usage and releasing delivery quantities and frequencies against the blanket order (i.e. only negotiate price and contract review once per year.)
  #5  
Old 4th December 2006, 10:57 AM
wmarhel

 
 
Posts: 641
Re: Just in Time Problems - Disadvantages of JIT (Just in Time) model?

Quote:
In Reply to Parent Post by Eng. Lutfi View Post

Greetings every body

May any of you provide me with some disadvantages of JIT (Just in Time) model?

Thank you in deed!
The problem is that people look at JIT as an entity unto itself, and fail to understand all the support mechanisms that need to be present in order for it to succeed.

Perhaps part of the problem stems from lack of understand of the original pillars in the Toyota Production System: JIT and Jidoka or autonomation (automation with a human touch).

I remember from the period of the telecom boom how was everybody was to be "JIT". The reality was that the supplier typically got stuck with holding inventory that the customer didn't want to have to deal with. Fortunately the industry was robust enough for a period of time that it didn't matter. Once sales dried up, much of the inventory stored up (basically overproduction) contributed to putting many of the contract manufacturers out of business.

While JIT is a great goal, it also doesn't mean that inventory can't be present in the entire system/value stream. It just needs to be carefully considered what potential negative impacts could be incurred should inventory not be available (customer dissatisfaction, lost revenue, etc.) JIT is a by-product of being diligent about improving processes internally and externally.

Wayne
  #6  
Old 4th December 2006, 12:44 PM
Bev D's Avatar
Bev D

 
 
Posts: 2,979
Re: Just in Time Problems - Disadvantages of JIT (Just in Time) model?

you captured it perfectly.
  #7  
Old 4th December 2006, 01:01 PM
Tim Folkerts's Avatar
Tim Folkerts

 
 
Posts: 975
Re: Just in Time Problems - Disadvantages of JIT (Just in Time) model?

A deceptively simple yet challenging example of supply change management is the "Beer Game". You can google it or look at this old thread. The game shows some of the difficulties of balancing supply and demand. I also highlights the problem of JIT ordering when the production takes some time to ramp up to meet changes in demand.


http://elsmar.com/Forums/showthread....ight=beer+game

Tim F
  #8  
Old 4th December 2006, 01:30 PM
Eng. Lutfi

 
 
Posts: 21
Re: Just in Time Problems - Disadvantages of JIT (Just in Time) model?

I really can't thank you enough for your great response
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