Just-in-time (JIT) and just-in-sequence (JIS) are two closely related inventory management strategies designed to improve efficiency and reduce waste in the supply chain. JIT focuses on producing and delivering goods precisely when they are needed, thereby minimizing inventory holding costs and reducing the risk of obsolescence. This approach emphasizes tight coordination among suppliers, manufacturers, and distributors to ensure a smooth, timely flow of materials. JIS builds on JIT in a few crucial ways to make the entire production process as efficient as possible.
What Is Just-In-Time (JIT)?
Just-in-time (JIT) is an inventory management strategy that seeks to optimize the production process by minimizing inventory levels and reducing waste. This approach is based on the idea that raw materials, components, and finished goods should be produced and delivered exactly when they are needed. Before this approach became common practice, inventory was being stored in large quantities which had the unintended consequence of increased inefficiency and bloat which taxed the entire production line. JIT, which has its roots in the Toyota Production System was created to eliminate inefficiencies in this manufacturing process.
Advantages of JIT
One of the core principles of JIT is the reduction of inventory holding costs, such as storage, insurance, and depreciation expenses. By producing and delivering goods only when they are needed, businesses can avoid tying up capital in excess inventory and minimize the risk of obsolete or damaged goods. This approach also helps to free up valuable warehouse space and reduce the amount of capital invested in inventory.
Another key aspect of JIT is the focus on continuous improvement and waste reduction. By identifying and eliminating non-value-added activities, such as excessive transportation or overproduction, companies can streamline their operations and increase efficiency. This lean and efficient approach to manufacturing encourages businesses to constantly evaluate their processes and identify areas for improvement.
While JIT creates unparalleled efficiency, it requires a high level of coordination and communication among suppliers, manufacturers, and distributors. In order to ensure that goods are produced and delivered on time, Tier 1s and OEMs must closely monitor their supply chains and maintain strong relationships and open lines of communication with upstream producers. This often involves sharing information and collaborating on forecasting, production schedules, and demand planning.
Disadvantages of JIT
However, JIT is not without its challenges. The strategy relies heavily on accurate demand forecasting and a stable supply chain which, as learned during the COVID pandemic, are anything but constant. Any disruptions, such as natural disasters, pandemics, or supplier issues, can lead to production delays. Additionally, the reliance on frequent, small deliveries can increase transportation costs and the risk of delivery delays in the event of a missed delivery.
What Is Just-In-Sequence (JIS)?
Just-in-sequence (JIS) is an advanced inventory management strategy that builds upon the principles of just-in-time (JIT). JIS ensures that components are delivered not only at the right time but also in the precise sequence required for assembly or production. By synchronizing the delivery of parts with the assembly line’s requirements, JIS may further enhance efficiency, minimize waste, and streamline the production process.
Advantages of JIS
Just-in-sequence (JIS) features several notable advantages that make it an appealing inventory management strategy. One of the key benefits is the reduction of inventory levels. Reduced inventory levels minimizes holding costs and frees up valuable warehouse space. By delivering components as needed and in the precise order required for assembly, JIS helps companies maintain lean and efficient operations.
Another advantage of JIS is its potential to improve production efficiency. When parts arrive in the exact sequence needed for assembly, manufacturers can eliminate the need for additional sorting and handling, thus saving time and resources. Furthermore, JIS enhances quality control by enabling manufacturers to identify and address component defects more rapidly. This is possible because issues can be spotted and resolved before parts reach the assembly line. JIS also promotes greater supply chain visibility, as the strategy requires close collaboration and information sharing among suppliers, manufacturers, and distributors.
Disadvantages of JIS
Despite its numerous benefits, JIS also has some disadvantages that businesses must consider. One of the main challenges associated with JIS is its reliance on accurate demand forecasting. Any discrepancies between forecasts and actual demand can lead to production delays and increased costs, as the correct sequence of parts may not be delivered. Much like JIT, JIS is also vulnerable to supply chain disruptions and the effects of a delay can be outsized.
Factors such as natural disasters, labor strikes, or supplier issues can significantly impact the delivery of components in the correct sequence. These stoppages may cause delays and stockouts that affect the entire production process. Moreover, JIS can result in increased transportation costs since shipping intervals become more frequent with smaller deliveries rather than bulk shipments. This can be particularly disadvantageous for businesses located far from their suppliers or in areas with inadequate transportation infrastructure. Implementing JIS also requires a high level of coordination and complex logistics management. Managing the logistics of delivering components in the correct sequence can be both challenging and resource-intensive. JIS is common practice in the automotive industry between Tier 1 Suppliers and OEMs. However, their counterparts in other industries must do their own calculation to identify the point at which the benefits of JIS are outweighed by additional administrative costs.
Combining JIT and JIS
Effectively integrating JIT and JIS inventory strategies involves several key elements. First, robust coordination and communication among supply chain partners are crucial. A comprehensive information-sharing system covering demand forecasting, production schedules, and delivery requirements ensures timely and sequenced component delivery. Both strategies focus on continuous improvement and waste reduction, making supply chains more efficient and responsive.
Building strong supplier relationships is vital for successful JIT and JIS implementation, enabling strategies for timely, sequence-specific deliveries. Combining JIT and JIS demands a flexible production system, adaptable to demand fluctuations and component sequencing according to production requirements. This advanced coordination and flexible system requires investment in advanced technologies, employee cross-training, and modular production lines. Suppliers and OEMs must also develop risk management strategies when running JIS/JIT production. This helps mitigate supply chain disruptions and may involve supplier diversification, strategic inventory buffers, or contingency planning.
How Seraph Can Help with JIT and JIS
By using JIT and JIS, businesses achieve an efficient production process that minimizes waste, reduces costs, and improves supply chain responsiveness. These approaches demand coordination, communication, continuous improvement, and investment in advanced, flexible production systems. However, the tight coordination can often become disrupted, requiring immediate action and deep expertise to solve. Our team of specialized operational consultants can work alongside manufacturers and act as a support structure to optimize JIT/JIS production and operations. Our advisors are former management at many suppliers and OEMs and are experts in JIT/JIS production as well as many other areas of operations. Contact us today to schedule a discovery call, or see our case studies for more information.