As the global marketplace becomes more competitive and profit margins tighten, companies are looking toward a future that takes advantage of lean manufacturing principles and Just-In-Time inventory management for greater efficiency, cost savings and better service to customers. This revolution in manufacturing methods began when Toyota perfected JIT, a method to reduce waste in time and materials along the entire production line from suppliers to consumer.
The JIT methodology aims to reduce waste, create time efficiencies, free up cash flow and deliver increased customer responsiveness. Its strict inventory management system ensures that only the minimum amount of stock is warehoused and items are only ordered and received when necessary for a sales order. Although pioneered in the auto industry, the benefits of JIT extend to many industries such as fashion, sporting goods and luxury. Here, summarize successful examples of using JIT to save money, speed production, and remain flexible enough to adapt to future marketplace changes.
Nike
When Nike examined its worldwide operations it found areas to improve. It had many disconnected production facilities spread across SE Asia, many operating independently in production and procedures. In order to streamline operations and cut costs, the company embarked on a massive global centralization project to integrate its ERP (Enterprise Resource Planning), supply chain, and CRM software. The goal was to apply lean inventory techniques and Just-In-Time production. The company’s approach has had impressive results: lead times were reduced 40%, productivity increased by up to 20%, and new model introductions are 30% faster.
Zara
The Zara success story is well known. The retail apparel giant uses a carefully controlled and integrated process to deliver clothing to stores within 2 weeks of design. They use vertical integrations in their supply chain, keep production and sales geographically close by and implement strict lean inventory practices that ensure each store receives only the stock that they need. The company concentrates on small batches of sought after new fashions to avoid deadstock and create scarcity. Their system is highly efficient and uses centralized logistics to coordinate their fast supply chain.
This dizzyingly fast fashion model gives the company flexibility in the amount, variety, and frequency of new collections launched, allowing them to respond to market changes virtually instantly. Zara’s unique fast-fashion model enhances the customer experience and increases profitability.
Dell
Beginning in the 1980’s, Dell did the unthinkable…they took on computer giant IBM from a college dorm room. They sold directly to consumers, offering customized builds. They set themselves apart by using an innovative online builder that allowed consumers to create the machine of their choice. Dell succeeded by running lean and fast – only placing orders for parts as the customer made the purchase rather than stocking a warehouse full of pre-assembled computers. By reducing inventory costs and cutting lead times, their JIT approach to the personal computer business made Dell a household name.
Grayton
For any luxury watch company competing in a market of legacy brands, finding a competitive edge is essential. Grayton formed a strategic partnership with Montrichard Group to implement FINS: the first lean manufacturing and Just-In-Time system for the watch industry. Using FINS created key advantages for Grayton. It reduced inventory by 4x, maintained lower operating costs, increased cash flow by 70% and minimized risk for new product launches. It seamlessly connected their company ERP to synchronize sales and production and optimized their entire supply chain for speed, quality and efficiency. Using the first Just-In-Time system for the watch industry was a game-changer for Grayton, giving them a fast, flexible, and futureproof system for watch production.
Although pioneered in the auto industry, Just-In-Time inventory management has proven effective across a variety of industries. It’s an essential way to stay competitive and responsive in an uncertain global marketplace. Although general JIT and Lean principles apply across industries, the most effective supply chain optimizations are realized by using industry-specific solutions such as the FINS Lean Manufacturing Solution for the Watch Industry.
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The FINS manufacturing software solution for the watch industry.
