Define and discuss the Just-In-Time approach, and include the four elements necessary for it to be successful.

Generally, JIT systems are designed to manage lead times and to eliminate waste. Ideally, product should arrive exactly when an organization needs it, with no tolerance for late or early deliveries. Many JIT systems place a high priority on short, consistent lead times. However, in a true JIT system, the length of the lead time is not as important as the reliability of the lead time.

The JIT concept is an Americanized version of the Kanban system, which the Toyota Motor Company developed in Japan. Kanban refers to the cards attached to carts delivering small amounts of needed components and other materials to locations within manufacturing facilities. Each card precisely details the necessary replenishment quantities and the exact time when the replenishment activity must take place.

Production cards (kan cards) establish and authorize the amount of product to be manufactured; requisition cards (ban cards) authorize the withdrawal of needed materials from the supply operation. Given knowledge of daily output volumes, these activities can be accomplished manually, without the need for computer assistance.

Experience indicates that effectively implementing the JIT concept can dramatically reduce parts and materials inventories, work-in-process inventories, and finished product. In addition, the Kanban and JIT concepts rely heavily on the quality of the manufactured product and components and on a capable and precise logistics system to manage materials and physical distribution.

Four major elements underlie the JIT concept: zero inventories; short, consistent lead times; small, frequent replenishment quantities; and high quality, or zero defects. JIT is an operating concept based on delivering materials in exact amounts and at the precise times that organizations need themthus minimizing inventory costs. JIT can improve quality and minimize waste and completely change the way an organization performs its logistics activities. JIT, as practiced by many organizations, is more comprehensive than an inventory management system. It includes a comprehensive culture of quality, supplier partnerships, and employee teams.

By adhering to extremely small lot sizes and very short lead times, the JIT approach can dramatically reduce lead times.