JIT and JIC
Essential idea:
Just In Time and Just In Case are opposing production strategies utilized by the manufacturer.
Nature and Aims of Design
Nature of Design
While inventory creates a safety net for companies, maintenance and potential waste of resources can have significant implications for companies and the environment. Manufacturers must evaluate and analyse each market and determine whether a JIT or JIC strategy is the best to follow. (2.7)
Aims
Aim 2: An in-depth knowledge and understanding of the potential success of a product can lead manufacturers to decide in favour of JIC or JIT. This can vary from one product to the next and requires experience and intuition.
Guidance
As DP Design Technology student you should:
Understand the differences between JIC and JIT
Guidance:
Understand the advantages and disadvantages of JIC and JIT
Concepts and Principles
Just in Time (JIT) and Just in Case (JIC) are strategies for managing production. Specifically, they are focused on managing the raw materials and parts needed for production and the inventory, with the goal of reducing storage costs and ensuring there is always enough inventory to meet customer demand.
Manufacturers will select a strategy based on factors such as the type of product being manufactured, the state of the economy, and the market.
Just In Case (Push to the market)
In JIC, manufacturers focus on creating products in anticipation of market demand. Their goal is to reduce costs by taking advantage of economies of scale.
The stock of components or products are stored as inventory. For products that take a long time to produce, having an inventory on hand reduces the waiting time for customers.
Advantages
Timely distribution of parts is always available.
Higher reliability as parts in inventory are ready to be sent
Buffer of items in stock in case there is a production delay, quality control issue, or sudden increase in demand
Ability to respond to market demand as the manufacturer can always meet need.
Lower capital cost as less dependency on complex ICT systems (compared to JIT)
Disadvantages
Large inventory must be managed
Higher capital costs for space to store inventory
Higher wastage due to spoilage (products going bad or expiring such as food or some chemicals)
Risk of changing market demand could mean the manufacturer is left with large quantities of unsalable goods.
Just In Time (Market Pull)
In JIT, manufacturers respond to market needs as the need arises. In this model, goods are made to order when requested.
A JIT system does not carry a large inventory of goods or raw materials; Rather it depends on a network of suppliers and distributors to move raw materials in and products out of the factory. Such a system depends a great deal on IT to coordinate communication between all the parties.
Advantages
Highly flexible manufacturing ideal for short runs
Low waste as there is no over-production, little idle time, and material uses is optimized
Lower costs as there is little to no inventory to manage - raw materials are used almost immediately and products are shipped very soon after manufacture.
Disadvantages
Greater risk of manufacturing delays: production problems and quality control issues in one area can delay the whole system;
Delay between ordering and delivery: Customer must wait longer (compared to JIC) to receive item
Manufacturers cannot benefit from economies of scale to the same degree because they purchase smaller quantities of raw materials.
Why do we keep running out of everything?
Is JIT the right direction of manufacturing and distribution?
While JIT has been celebrated for the efficiencies it brought to manufacturing and distribution, the Covid-19 pandemic has highlighted one of its major drawbacks.
From the Guardian
"The global supply chain seems to be in a perpetual state of crisis. Whether it's groceries, petrol or microchips for electric vehicles, everything keeps running out. But why is it happening? The crux of the matter lies in the way our global supply chain works, and how companies have come to rely on a unique system of efficiency called 'just in time', developed in Japan in the late 1960s and early 70s."
Check out the video for more details about how this system has played a role in the shortages we are experiencing during the pandemic.