By Karla Que-Sanchez

Ever since Toyota pioneered the concept of just-in-time (JIT) manufacturing, Japanese companies and large Western companies have followed suit with considerable success. The original practice of JIT involves a demand-pull system, which means customer orders prompt production so the company does not produce inventories for stock. Raw materials arrive at the factory floor just in time for production. Needless to say, JIT involves minimal to virtually zero inventories.

Smaller enterprises are put off by the idea of JIT because it seems to entail huge costs and process modifications. With the rising costs of transportation, it is not always feasible for most companies to require their suppliers to deliver just in time since this would mean more frequent deliveries of smaller volume purchases. The company’s suppliers may compensate for the additional transportation expenses by a corresponding increase in prices that the company may either absorb or pass on to consumers. The bottom line is that businesses do not always benefit from mirroring JIT systems adopted by larger enterprises.

What many fail to understand is that more than anything, JIT is a philosophy rather than a procedure—a philosophy rather than a procedure—a philosophy guided by key principles even the smallest companies can adopt to improve operations.

Read the full article in the November-December issue of SME Insight Magazine