Page 4: JIT
Just-in-time (JIT) is another Japanese lean production technique. It focuses on timings during the production process. Both storing and waiting for materials can increase costs. Waiting for materials will waste employees’ time and could also delay production. JIT involves ensuring materials arrive just as they are needed. Similarly for outputs, transport must arrive to take finished products away just-in-time, without any waiting or storage costs.
JIT focuses on continuous improvement but only works as part of an overall lean strategy. It can improve the efficiency of processes. It can lead to a better return on investment through improving productivity. JIT also allows for fewer materials to be held at any one point which can reduce working capital needs as less finance is needed for stock, leading to better financial performance. This can lead to better returns to stakeholders such as investors, as any finance invested is yielding a direct return.
Through JIT Nestlé Waters was able to make the most efficient use of storage and time at the new factory. Whilst the old site had to use limited storage and outsourced warehouse space off-site, the new factory eliminated these additional transport needs. At the old site stock had to be requested and then took time to arrive. Enough inputs had to be stored on-site to provide for production over the weekend, adding to storage costs and wasting space. Finished pallets of bottled water had to be held until trucks arrived to transport them. However, at the new site, transport and waiting times have been significantly reduced through raw materials being stored adjacent to the finished goods warehouse.
This greatly improved stock control. Shorter flows for raw material and the collection of waste from the production line also help make sure materials are in the right place at the right time, thus improving efficiency. JIT helps make big efficiency gains for Nestlé Waters. This requires excellent relationships with suppliers and distributors. Suppliers must deliver quality resources on time and distributors must ensure bottles are picked up immediately when they are ready. This aspect required a lot of planning but has delivered great benefits.