Just-in-time or commonly referred to as JIT is an approach to reduce the inventory to the minimum level thereby improving the return on investment of an organization. Developing and operating an efficient manufacturing system is the basic concept behind JIT manufacturing.
Total elimination of the waste and reduction in the inventory level are the two most sought out advantages of JIT manufacturing. It is all about manufacturing the right product at the right time and in the right quantity. Although sounds like a very effortless and easy application, the implementation of JIT requires a deep thought and a heavy monetary investment by the organization. Thus, a performance measurement tool can act as a complementary method for its effective implementation. One such corresponding route is the use of Key Performance Indicators (KPIs).
KPIs provide a platform for a successful development of a balanced scorecard (BSC). In the context of JIT manufacturing, a balanced scorecard can have various KPIs categorized into four broad perspectives. KPIs such as total cost savings, % increase in revenues, etc. together form the financial perspective. Operational efficiency perspective includes number of on-time deliveries, % increase in productivity and % decrease in scraps & reworks, as its indicators. Internal processes perspective includes such indicators as reduction in idle time, % increase in inventory turns, etc. Indicators such as number of training sessions, number of new machines, etc. are included in learning & innovation perspective. All these perspectives together provide a focused and purposeful direction to the organization, thereby making it strategy focused.
Implementing a new concept requires a constant support from each and every aspect of the organization. JIT is not an exception in this context. It demands a complete support from every department operating in the organization, especially the human factor. Human factor is the balancing and supporting system present in any organization, thereby providing a great challenge that needs to be effectively handled by the JIT manufacturing system. Meeting the changing requirements of the customers, producing the right product with only reasonable cost involved, etc. are some of the challenges faced by this emerging concept. Thus, proper implementation of JIT manufacturing system by highlighting its advantages is vital for the success of this concept. Therefore, a performance measurement and balancing tool is very important for the proper synchronization of JIT with the operations of the organization.
Meeting the challenges and overcoming all the problems is very necessary in order to reap the maximum benefits out of this latest concept. In this regard, KPIs can be quite helpful as they provide a focused direction to the organization by making it aware of the critical success factors. KPIs make an organization stratagem-focused and result-oriented. It considers all the aspects that determine the success rate of any concept.
Thus, it can be concluded that JIT manufacturing is a balanced approach that can help an organization to enjoy several benefits by using KPIs as a supporting tool. These KPIs help JIT manufacturing system to synchronize easily with the pre-determined objectives of the organization, thereby making its implementation and use easy in the organization.
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