“Just-in-time” refers to a type of delivery in which the required goods are delivered on time and in exact quantities in order to keep warehousing at the processing location as low as possible. The decisive difference to just-in-sequence is that the supplier does not have to pay attention to the correct sequence when packing the goods.

In just-in-time production, the “flow principle” is transferred to procurement planning. Flow principle means that all materials should be in a constant flow. The form of procurement logistics used here is made possible by good transport planning. Transport planning has the task of keeping transport and inventory costs as low as possible. A reduction of these costs can be achieved by determining the optimal delivery size and calculating the correct cycle lengths. Electronic data exchange between buyer and supplier is indispensable to ensure smooth procurement in accordance with just-in-time. The required quantity of materials is not delivered to the assembly line until there is a demand for it. Stock quantities are therefore only created directly on the assembly line.

Advantages and disadvantages of just-in-time

The advantage of just-in-time procurement is the reduction of inventory costs, as the need for storage space is minimal.

The disadvantage of just-in-time procurement is on the one hand the increased communication effort. In the communication between customer and supplier, protocols on the current production status must be constantly exchanged, otherwise the delivery of incorrect parts can lead to cumbersome reworking or delivery delays. On the other hand, environmental influences such as snow, storm damage etc. or traffic obstructions endanger smooth production. Complications on the route, such as accidents or diversions, can lead to the supply not reaching production on time, which in turn can lead to a production stoppage. The decisive disadvantage compared to just-in-sequence is that the need for a storage location is not completely eliminated.

For more information about just-in-sequence procurement go see the article Procurement logistics – Just-in-sequence.

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