JUST IN TIME (JIT):
JIT is a method to plan the time and optimize the complete supply chain from raw material (production) until the purchase of the good to the end customer.
The basic idea of this method, which was developed in the years around 1980 in Japanese companies, is to decentralize the material procurement and to adjust it in the short run, depending on the manufacturing and order situation. Thus, stocks can be reduced and resulting cost reduction takes place. JIT is mainly used in high volume industries such as automotive industry.
JIT Case example: Production and Logistic of SMART
Smartville located in Hambach (FR) is unique in view of logistics, because they have completly no stock. only a small buffer at the assembly line. Nearly all suppliers are located around the assembly line within Smartville and deliver their parts just-in-time or even just-in-sequence. The assembly line looks like a “+” and the suppliers are located in the corners between the lines. Have a look on the following graphic. Nearly all supplier equip smart with ready modules. This is called “Modular Sourcing”.
Smart is the car-manufacturer with the lowest vertical integration, worldwide (only 10%). About 70% of all needed materials are produced from suppliers within Smartville and delivered straight to the production line. 20 % is delivered in JIT-principle from suppliers located outside of Smartville.
As a positive result, no warehousing is needed at all. Every supplier has access to the individual Order-data of each car. Thus, they can deliver the modules in the exactly needed order. Even ready cars are stored only few days, as smart only produces on order. Smart has its own train station to ship their cars worldwide.