Straight to the point: it is a supply chain management strategy developed by Toyota in the 1970s to minimize inventories. But why does it lead to a more efficient process?
A vehicle has more than 20 thousand components. Just try to visualize how many suppliers are part of an automotive manufacturer’s supply chain! Quite a few, right?
One of the main challenges faced by each producer lies in being able to coordinate with each supplier the movement of the parts and guarantee that they’ll arrive at the right place in the time required to avoid stoppages in the production line.
Collaboration between all these parts and component suppliers is not only a challenge for the manufacturer itself, but also a challenge for its logistics operator, who is mainly focused on supplying factories and service workshops.
Automotive logistics is so complex that any small delay will directly impact an entire production chain.
How can you lead the interaction between all the participants of the supply chain of an automotive company to reach that level of precision you require? Well, we’re talking about highly precise logistics here and, therefore, it is essential to fully comprehend the just-in-time (JIT) principle.
JIT, a distinguished practice
The philosophy of the just-in-time method—also known by the acronym JIT—can be summarized as follows: having the exact amount of material in the right place and at the right time to complete a production process.
The just in-time method does not tolerate delays, as they can cause the production line to stop, which would mean losses. To prevent them, there must be perfect synchronization—in terms of communication and action—between the producer, the supplier and the logistics operator.
Implementing a just-in-time methodology in a company in the automotive sector is about carrying out a more efficient production process, optimizing costs and making the supply chain participants respond better and faster. To get there, several challenges must be overcome:
Designing more elaborated logistics plans becomes more relevant, since to meet the objectives, it must be concise, fast and consistent with traffic in the route you choose.
You need backup solutions for storage and transportation processes so that contingency plans can be quickly implemented in the event of unforeseen events.
Fluid communication must prevail between all actors in the supply chain, from the component supplier to the logistics operator.
The JIT implies moving lower volume cargo, more frequently and even with a sense of urgency. Therefore, you must verify if your cargo agent really has the capacity to move small, frequent and/or critical cargo.
To avoid this type of problem and be successful implementing a just-in-time model to the production process of a company in the automotive sector, you need a strategic partner in logistics – a team that understands how this industry works, with market experience and dedicated professionals, one of them being your Key Account Manager (KAM).