The Pros & Cons of Operational Efficiency in Jit Manufacturing

Just-in-time (JIT) manufacturing, involves a production process that operates solely on customer demand. In traditional manufacturing, goods are produced, assembled and stored based on a company’s estimate of market demand. In JIT manufacturing, the production process begins at the time an order for goods is received. As manufacturers lean towards JIT manufacturing during tough economic times, it’s important to understand the pros and cons of JIT efficiency.

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Reduced Inventory Costs

JIT manufacturing reduces company inventory costs because inventory is acquired upon customer demand. This relieves the financial burden of stocking inventory for future use, reduces the need for expansive storage solutions, and reduces the risk of maintaining stock that expires or becomes outdated.

Better Use of Cash Flow

JIT manufacturing allows companies to utilize cash for other operating expenses because the necessity of maintaining stored inventory levels is eliminated. The benefit of not restricting cash flow to inventory allocations increases efficiency, reduces capital expenditures and secures a competitive advantage for the business.

Stress on Equipment

A negative aspect to JIT manufacturing is the stress on-demand production places on equipment. Under normal operating conditions, machines are used systematically and controlled to operate with set production requirements. This allows mechanics and operators regular time to perform system checks and repair any deficiencies in the equipment. JIT manufacturing does not present an opportunity for routine equipment processes, as it is often impossible to predict when orders will be demanded and the quantity of items that must be produced.

Quality Control Risks

Another downside of JIT manufacturing is the risk of poor quality control. Large orders or rush production schedules may not allow time for...