Last updated on Mar 31, 2024

What is the best way to manage inventory and demand planning for just-in-time manufacturing?

Just-in-time manufacturing (JIT) is a production strategy that aims to minimize inventory and waste by producing and delivering goods only when they are needed. It is widely used in the automotive industry to reduce costs, improve quality, and respond to customer demand. However, JIT also poses significant challenges for inventory and demand planning, as any disruption or variation can cause delays, shortages, or excesses. In this article, you will learn some best practices to manage inventory and demand planning for JIT manufacturing.

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1 Understand your supply chain

The first step to manage inventory and demand planning for JIT manufacturing is to understand your supply chain and its potential risks. You need to map out the flow of materials, information, and money from your suppliers to your customers, and identify the key factors that affect your lead times, capacities, and costs. You also need to assess the reliability, quality, and flexibility of your suppliers, and establish strong relationships and communication channels with them. By understanding your supply chain, you can anticipate and mitigate any issues that may disrupt your JIT production.

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2 Forecast your demand accurately

The second step to manage inventory and demand planning for JIT manufacturing is to forecast your demand accurately and regularly. You need to use reliable data and methods to estimate the current and future demand for your products, and adjust your forecasts based on market trends, customer feedback, and seasonal variations. You also need to share your forecasts with your suppliers and customers, and collaborate with them to align your expectations and plans. By forecasting your demand accurately, you can optimize your production schedules and avoid overproduction or underproduction.

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Sunil Razdan

Healthcare Professional with 30 years experience in || Business Devlopment || Customer Retention || Brand building || P&L
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Demand and supply are the two important aspects in production and sales Good coordination between two can help at many levels from inventory to P&L..

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3 Implement pull systems

The third step to manage inventory and demand planning for JIT manufacturing is to implement pull systems that trigger production based on actual customer demand. Pull systems are opposite to push systems, which produce goods based on forecasts or targets. Pull systems use signals, such as kanban cards or electronic messages, to indicate when a product or component is needed, and how much is needed. Pull systems help you reduce inventory levels, improve flow, and eliminate waste.

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4 Maintain safety stocks

The fourth step to manage inventory and demand planning for JIT manufacturing is to maintain safety stocks for critical or high-demand items. Safety stocks are buffer inventories that protect you from unexpected fluctuations in demand or supply. They can help you avoid stockouts, satisfy customer orders, and maintain your reputation. However, safety stocks also incur costs and occupy space, so you need to calculate them carefully and review them periodically. You can use formulas, such as the reorder point or the economic order quantity, to determine the optimal level of safety stocks.

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5 Adopt lean principles

The fifth step to manage inventory and demand planning for JIT manufacturing is to adopt lean principles that aim to eliminate waste and maximize value. These principles include defining what customers value and focusing on delivering it, identifying steps and activities that create value and eliminating those that do not, ensuring products and processes flow smoothly and efficiently without interruptions or bottlenecks, producing and delivering goods only when they are requested by customers, and continuously monitoring and improving performance and quality. By doing so, you can enhance your JIT manufacturing and achieve higher customer satisfaction and profitability.

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