Just-in-time production minimizes the time, labor, and materials in a manufacturing process by only producing goods as they are needed. The desired outcome is a streamlined production system that maintains a minimal amount of on-site raw materials, minimal wait times in the production process, and small batch sizes. Several characteristics of a just-in-time production process are:
- Daily or hourly deliveries of small quantities of parts from suppliers
- Certification of supplier quality, so that no receiving inspections are needed
- The use of kanbans to drive the demand at each work station
- The arrangement of the production area into flexible work centers
- The compression of the production area so that in-process goods can be directly handed off to the next work center in a production flow
- On-site inspection of each in-process product from the preceding work center, so that flaws are discovered at once
- The use of rapid machine setups, so that production runs can be as short as one unit
- Production stops as soon as the immediate demand level has been fulfilled
- Immediate shipment of completed goods to customers as soon as an order has been fulfilled
There are several benefits of a just-in-time production system. One is a drastic decline in the amount of working capital needed, since inventory levels are quite low. Another benefit is a reduction in the amount of waste, since inspections are conducted at every work station, not allowing defective goods to pile up anywhere in the process. Further, there is no finished goods obsolescence, since goods are only produced if they can be immediately sold. In addition, the square footage needed by the production area is reduced, since the work area is compressed. There is also a reduced need for materials handing equipment, since the work centers are positioned so close together that parts can be manually handed off from one work station to the next.
The main flaw with a just-in-time system is that an interruption to the system can quickly shut down the process, since there is no buffer built into the system.