JIT (Just in Time) KANBAN in Automotive Supply

We often hear the saying “time is money” in business life. In the supply chain, providing the right product or service at the right time and on-time delivery is one of the most critical issues. Due to the Covid 19 pandemic, the supply chain has been tested with this problem the most. While the crises in logistics and inventory issues were faced one after another, many companies failed in stock management and inventory strategies. Most companies that want to increase their efficiency and not to be defeated by time have changed their basic strategic management models in order to save business resources correctly and have turned to implement the Just in Time strategy. We have summarized this strategy, which offers savings and benefits in many areas in the automotive industry, end-to-end operations in the supply chain.

In the automotive sector, supply chain management practices are expanded with various strategies. In order to avoid disruptions due to uncertainties in the supply of products, it is important to determine the demand clearly and accurately and to direct the inventory management accordingly. JIT has emerged in order to increase the profitability levels that decreased during the oil crisis in 1973.

Just in Time is an inventory strategy that is one of the derivatives of the Japanese Kanban system, which is a production type determined according to time criteria in order to minimize the inventory cost in the supply of parts required by companies during the production phase. This method is based on producing the product with the desired characteristics at the desired time in the desired quantity.

Unlike other production systems, JIT is a system in which the flow of information proceeds from the end to the beginning. This system, which the Japanese carried out with cards called Kanban, was digitized over time and turned into the Kanban Card used today. This strategy, which provides convenience to companies in order to minimize costs in increasing competition conditions, provides great benefits especially in the automotive field.

Meeting the customer’s expectation of receiving high quality products at reasonable prices and on time with maximum efficiency is critically important for the sustainability of trade and commercial relations. How customer expectations and demands are met is critical to the successful execution of the JIT marketing strategy. Just in Time strategy contributes to improving quality, reducing cost, using time effectively in production preparation and production processes, providing convenience and savings in transport, stocking and related inventory issues, and achieving minimum failure rate in industrial organization.

JIT ensures just-in-time production of the product in the supply chain. It is a production philosophy created with the strategy of providing efficient response to customer demands at the highest level in minimum time with the use of minimum number of resources. In the supply chain, the product entering the production line just in time reduces the possible problems that may be experienced in stock. This saving in the production process prevents waste.

In the JIT strategy, where the ultimate goal is zero stock, production efficiency is tried to be revealed at the highest possible level. In addition to all these benefits, it enables a more environmentally friendly production that creates less waste. The focus is on continuous improvement of both product and product-related processes. This is the main reason why the JIT strategy is one of the modern production approaches of our age.

In addition to all these advantages of this method, there are also some disadvantages. JIT is not applied by some brands in the automotive industry because it requires continuous supply of raw materials from the supplier. JIT, which requires accurate sales forecasting, risks losing continuous customer demand. On the other hand, the potential for downtime is another risk. If a component is damaged or defective, a breakdown on the assembly line can cause a general disruption in production, the team needs to maintain a teamwork (not something that every brand can achieve) that does not cause this risk. It is also a system of work that requires a high dependence on the supplier, it requires co-operation with a large number of suppliers rather than relying on a single supplier.

Brands such as Mercedes, Ford, Toyota and Harley Davidson Motorbikes are produced with the just in time strategy. The JIT Caban production philosophy developed in Japanese business culture is synonymous with the Toyota brand. The Toyota production system has a global reputation among the actors of the automotive industry, vehicle manufacturers and other production facilities.

The JIT concept was born in the 1930s by Kiichiro Toyoda as a “concept of producing the right parts in the right quantities when needed” that differentiated it from the American automotive industry. It was realized as a production system by Taiichi Ohno in the 1950s.

For Toyota, JIT is not just about on-time delivery. JIT, which is seen as much more than a strategy, is a philosophy in the sense that all elements that do not increase the value of the product are seen as waste. It is essential to create automotive products that do not cause waste, that are realized with teamwork, that operate without malfunctioning at the requested time and quantity with minimum consumption. If the manufacturing flow is not managed correctly to meet the fluctuations in demand, the cost of stock and the excess labor spent will cause waste. For this reason, JIT, which is a fluid and balanced production style, is adopted at Toyota as a business philosophy that aims to produce excellent quality production with a perfect teamwork that does not cause malfunctions through various values and principles.

Note: Kanban (Japanese for sign) is an inventory control system used in just-in-time (JIT) manufacturing to track production and order new shipments of parts and materials.