How JIT Manufacturing and ERP Systems Work Together

Just-in-Time Manufacturing (JIT) is a pivotal strategy in modern manufacturing, emphasizing efficiency and waste reduction by aligning production with real-time demand.

In this article, we’ll explain JIT’s fundamentals, history, benefits, challenges, and its synergy with Enterprise Resource Planning (ERP) systems. Discover how integrating JIT principles with ERP capabilities can drive operational excellence in today’s dynamic market landscape.

What Is Just-in-Time Manufacturing (JIT Manufacturing)?

Just-in-Time Manufacturing, also called JIT Manufacturing, is a manufacturing strategy aimed at optimizing efficiency and reducing waste during the production process. The method entails strategically receiving goods and materials only when they are needed in the production process, much like the strategy of lean manufacturing. The goal of JIT manufacturing is to minimize inventory costs, streamline production processes, and improve how responsive your team can be to customer demand. It’s a pull-based system in which production is triggered by real customer orders and other demand signals rather than forecasts and inventory levels.

This contrasts with traditional manufacturing strategies that hold large inventories of materials and products as a buffer against unpredictable demand. This means that while JIT manufacturers lower costs via reduced waste and holding less inventory, it increases risks in case of fluctuations in customer demand, variations in market trends, and disruptions in the supply chain.

The History of JIT Manufacturing

JIT manufacturing was first developed in Japan in the 1950s and ‘60s by Toyota. The “father” of just-in-time manufacturing was Taiichi Ohno who pioneered the Toyota Production System (TPS). This system is also credited for the development of lean manufacturing.

It wasn’t until the 1980s that these systems gained international attention. Now, JIT manufacturing is at the center of many automotive manufacturing practices and has even been adopted by related industries, like electronics, aerospace and defense, and consumer goods. 

How JIT Manufacturing Works

Just-in-Time manufacturing is exactly how it sounds, but that doesn’t mean it’s simple to implement and manage. The basic principles revolve around the “just in time” delivery of materials, components, and finished goods. In other words, items are procured and produced only when needed, reducing excess inventory and associated carrying costs. Let’s break it down a little further:

• Pull-based production: Production is driven by customer demand. Production doesn’t start until a customer places an order or expresses a similar signal, like intent to buy. Goods are produced based on actual orders rather than demand forecasts.
• Small batch sizes: With JIT manufacturing, your team is producing smaller batches to minimize inventory, reduce the size and costs of large warehouses and facilities, and improve production flexibility.
• Consistent improvements: Because JIT manufacturing means your team is walking a tightrope, you must focus on continuous improvement. This means finding new was to reduce waste, optimize processes and workflows, and improve quality.
• Supplier and vendor relationships: If you’re implementing Just-in-Time manufacturing, it’s crucial that you have strong relationships with suppliers. You need to know who you can depend on to receive materials and distribute products in a reliable and timely manner.

Benefits of Just-in-Time Manufacturing

There a many benefits of Just-in-Time manufacturing that make the risks worthwhile. Here are five:

1. Boosted bottom line: Because JIT focuses on reducing costs, you can expect an improvement in your overall revenue. JIT offers lower holding costs, fewer storage expenses, and minimized waste.
2. Quality improvements: JIT gives your team more time to focus on excellence in production, resulting in a higher quality of products. Because you only order materials when you need them, you have less room for error. Your team must be focused on quality at every stage of production which leads to fewer defects and higher customer satisfaction.
3. More efficient processes: JIT emphasizes efficiency in every aspect of production. By streamlining the production process, you can expect reduced lead times, optimized workflows, and improved operational efficiency.
4. Be more flexible: You no longer have to push products that aren’t selling simply because of overstock. Instead, your focus can change with market demand, customer interest, and production requirements with ease.
5. Reduce waste: Perhaps the most noticeable benefit of JIT manufacturing, waste reduction means eliminating excess inventory and non-value-added activities, promoting sustainability, and ensuring you stay compliant with environmental rules and regulations.

Challenges of JIT Manufacturing

While the benefits of Just-in-Time manufacturing are many, it does come with challenges and risk. Here are some hurdles you might encounter while implementing JIT techniques:

1. Disruptions in the supply chain: As we all witnessed in the early 2020s, supply chain disruption can happen without warning and last for many years. Without a store of excess inventory, you become more vulnerable to stockouts.
2. Unplanned downtime: Sudden production interruptions may have a bigger impact on JIT manufacturers than those using traditional methods. With JIT manufacturing, you lack inventory buffers that could keep you afloat during unplanned downtime.
3. Sudden shifts in demand: In a rapidly changing technological environment, fluctuations in customer demand can happen without warning. Demand variations can create problems during production planning and inventory management.
4. Unreliable suppliers: If you don’t have suppliers you can depend on, you may struggle with JIT manufacturing. JIT requires a highly skilled and engaged workforce and nimble, communicative suppliers to ensure your team can operate like a well-oiled machine.
5. Workforce skill level: To properly implement JIT, your workforce needs to be skilled and engaged. Whether this means that you rigorously train your staff in JIT or hire a higher echelon of employees is up to you. But employing staff for low wages to do menial tasks isn’t going to cut it.

How to Leverage JIT Manufacturing with ERP Systems

While handling all aspects of Just-in-Time manufacturing manually was doable in the 1950s through the 1990s, it’s no longer feasible if you want to keep up with your competition. There are simply too many areas that could lead to failure.

To become more nimble, JIT manufacturers use advanced technologies like enterprise resource planning (ERP) systems and the Industrial Internet of Things (IIoT).

Here are a few ways you can leverage new technology to reduce the risks associated with JIT manufacturing.

Production Capacity Planning and Scheduling

ERP systems streamline production scheduling by optimizing production sequences, allocating resource efficiently, and balancing workload across production lines. Typically, ERP systems come equipped with Advanced Planning and Scheduling (APS) modules that offer increased visibility and affecting scheduling into the production process.

For JIT manufacturers, effective production scheduling is critical. It ensures that products are manufacturing just in time to meet customer demand.

APS systems offer dynamic scheduling features based on real-time demand signals, production capacity, and available inventory. This agility in production scheduling allows your team to respond quickly to demand fluctuations and supply chain disruption. It also minimizes lead times and maximized production efficiency.

Advanced Demand Forecasting

ERP systems like Infor CloudSuite Industrial come with advanced forecasting modules. The modules project demand based on historical data, market trends, and predictive analysis. With more accurate insights into demand, you can tighten up your JIT processes to better plan production schedules, ensure optimal inventory levels, and keep procurement management tasks aligned with your production goals.

Leveraging advanced forecasting modules in ERP systems helps your business reduce the risk of overproduction or stockouts, optimize inventory turnover, and improve client satisfaction by making sure you’re able to deliver products in a timely manner.

Streamline Supply Chain Management

Did you know that many of your supply chain partners have systems that integrate into their clients’ ERP systems? Even if they don’t, many industrial ERP systems like Infor offer vendor portals to enhance supplier-manufacturer communication.

In the first case, ERP systems facilitate seamless integration with supplier networks. This allows you to automate communication, collaborate in real-time, and create a more efficient supply chain network.

If you have a strong relationship with a supplier that does not have technology with integration abilities, your vendor portal will ensure proper communication and collaboration.

When it comes to JIT, your relationships with your suppliers must be maintained. ERP systems streamline procurement processes, track supplier performance, manage contracts, and facilities electronic data interchange (EDI).

Real-Time Data Visibility

JIT manufacturers must be agile. That means making impactful decisions in the moment. Don’t leave it up to chance or gut feelings. Instead, use an ERP system that offers real-time visibility into all aspects of the manufacturing process, including:

• Inventory levels
• Production progress
• Demand fluctations
• Supplier material levels
• Distribution delays

When it comes to JIT, real-time visibility is crucial because it helps monitor inventory levels more accurately than even the best employees This ensures that materials are ordered and produced only when needed, reducing excess inventory costs and minimizing waste.

Furthermore, ERP systems can integration with IoT devices and sensors to provide live updates on inventory status, production line and machinery performance, supply chain activities, and more.

Is JIT Manufacturing Right for Your Business?

If you have questions or concerns about implementing Just-in-Time manufacturing, we understand. Implementing new technologies come with as many challenges as benefits. But in our 35 years of experiencing assisting manufacturers like you in implementing ERP systems and optmiizing workflows, we’ve only ever seen the benefits outweigh the costs.

Contact us today to learn how we can help you boost your bottom line in the age of Industry 4.0.