Just-in-time manufacturing is a strategy of production that increases process efficiency by cutting out excess inventory that does not provide some form of value to the customer. In production, this generally means producing each part only at the time when it is needed, rather than stockpiling it for later use, as this requires costly storage space and inventory management. The greatest benefit of properly-implemented just-in-time manufacturing is a reduction in wasted resources and an overall increase in efficiency. Disadvantages include the costs associated with constantly transporting rather than storing parts, potential difficulties in procuring product components at the exact time needed, and instability of price and quality of necessary components over time.
The most significant advantages of just-in-time manufacturing involve increased efficiency, inventory reduction, and decreased cost. Producing all components exactly when they are needed, or “just in time,” prevents inventory buildup. The space, time, and personnel required for inventory storage and management is largely unnecessary when just-in-time manufacturing is implemented properly, as there should be little or no excess inventory buildup. Furthermore, reducing inventory can reduce the organizational difficulties of inventory management, thereby minimizing the risk that certain necessary components could be misplaced and could slow down the production process.
Many potential disadvantages of just-in-time manufacturing exist, which can, in some cases, lead to an overall decrease in efficiency and cost-effectiveness. Avoiding inventory storage often necessitates frequent transportation of necessary components and finished products to and from the manufacturing space. This frequent transportation has the potential to be both costly and environmentally damaging, particularly if transportation over a significant distance is necessary. When material transportation on a daily basis is necessary, problems such as road blocks, storms, and other unpredictable obstacles can cause substantial delays and interruptions in production. Maintaining at least a small emergency inventory can ensure short-term productivity even in the face of delivery delays.
Price and quality volatility are also important factors affecting the viability and practicality of just-in-time manufacturing. Some products rely on components that can vary significantly in price and quality over time. Purchasing a significant stockpile of certain components of a certain quality level at a certain price can allow for the manufacturing of goods of consistent quality and price for an extended period of time. Just-in-time manufacturing methods, on the other hand, make a company highly susceptible to short-term price and quality changes. As such, end products produced through just-in-time manufacturing may also vary in price and in quality.