Does your current technology create value through utilizing your ERP / Manufacturing software to capture and analyze data to drive (JIT) Just-in-Time manufacturing?
Let’s start with a brief history of JIT manufacturing and how it’s adoption has impacted the manufacturing sector. Then look at some of the advantages and disadvantages a small to medium sized manufacturer may face implementing such a system. Finally, bringing it all together discussing the value of utilizing new cloud based technologies to drive production within your facility.
Just-in-time manufacturing was made popular by Toyota in the 60’s and 70’s and has evolved being implemented by companies like BMW to this day. While it has been labeled by many different names throughout the years. It is an inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. This method requires producers to forecast demand accurately.
The two major advantages of a JIT inventory model revolve around customer needs and inventory cost. One of the main benefits of automated and efficient inventory replenishment systems is that you can quickly respond to reduced inventory levels.
Companies are now equipped to pull back on stock in a given product category and ramp up inventory in another as customer needs and interests change. Inventory management has costs, and when you reduce the amount of holding space and staff required with JIT, the company can invest the savings in business growth and other opportunities.
You also have less likelihood of throwing out product that gets old or expires, meaning reduced waste. The main disadvantage of a JIT system involves coordination, including proper communication of needs with suppliers and the logistics of having readily available supplies. By nature of what it is, companies using JIT intend to walk a fine line between having too much and too little inventory.
If company buyers fail to adjust quickly to increased demand or if suppliers have distribution problems, the business risks upsetting customers with stock outs. If buyers over compensate and buy extra inventory to avoid stock outs, the company could experience higher inventory costs and the potential for waste.
Technology has evolved with the IIoT (Industrial Internet of Things) where many of the machines on the manufacturing floor are capturing far more data than in the past. Gone are the days of the manual processes or the expensive software systems needed to capture and analyze this data.
MRP (Material Requirement Planning) still plays a major role in establishing the needed resources for production, but it is no longer the only tool utilized. Many cloud based ERP vendors now offer a deeper look into real time production and inventory levels by utilizing the IIoT and big data analysis through partnerships with Microsoft Power BI.
Taking these out of the box tools allows small to medium sized manufactures to operate like the larger organizations by reducing cost and maximizing profits.
About the Author:
Jacob Scism is a Business Development Executive located in Greenville, SC working for AccuPointe Inc. AccuPointe Inc. has over 25 years of experience reselling top ERP systems in the Manufacturing and Distribution sector. For a business process review please contact Jacob at 843-315-9377 or firstname.lastname@example.org.