Introduction
Just-in-time production and pull system is an effective industrial production strategy aiming to reduce costs and maximize profits. Under this production system, parts and components are only produced when they are needed prompting the need to assess market and customer demand. This essay will discuss the advantages of such system and how they are achieved as well as its major limitations.
Advantages of Just-in-time Production and Pull System
The major advantages of just-in-time production and pull system include reduced costs in storage and inventory management, increased efficiency of production and improving customer service levels.
First and foremost, production is based on customer or market demand meaning inventory is never too high or too low. This reduces the need for additional storage space and associated costs as well as the cost of inventory management. Inventory levels must be accurate to avoid overproduction of components which may put pressure on limited resources. Furthermore, since only the supplies needed are produced, the production process is more efficient than having large amounts of inventory ready for production. This means that the resources needed for the production process are used more effectively resulting in less wastage.
Moreover, the potential to produce customized parts or components is much higher with just-in-time production and pull system as production is more flexible. This can lead to improved customer service as orders can be processed with more precision leading to shorter lead times. Customers’ satisfaction levels are also improved as they receive products that are adapted specifically to their needs (Heizer and Render, 2009).
Limitations of Just-in-time Production and Pull System
Although the just-in-time production system and pull system has many advantages, it also carries certain risks and limitations.
One of the major risks is of an external shock or disruption to the supply chain. If the supply chain is interrupted at any point or external factors lead to an increase in demand, production can be disrupted. The supply chain could be disrupted due to factors such as a supplier facing bankruptcy, a fall in demand, natural disasters such as floods etc. If the supply chain is interrupted, the production process will come to a halt, leading to a sudden decrease in production levels. This not only affects profits but also creates problems for customers whose orders may not be fulfilled.
Another risk faced by the just-in-time production system and pull system is that of inventory inaccuracy. Unexpected changes in demand may lead to inaccurate inventory forecasting which may in turn lead to production delays or shortages. It is also difficult to plan resources as production is based on fluctuating customer demand. This can lead to losses in terms of cost as resources may be underutilized.
Conclusion
In conclusion, the just-in-time production system and pull system has many advantages such as decreased costs in storage and inventory management, improved production efficiency and increased customer service levels. However, it is important to consider the risks and limitations associated with such a production system. Despite the limitations, it is still a viable option for organizations looking to reduce costs and improve customer service levels.
