Just-in-time (JIT) manufacturing was developed in the 1960’s by the car manufacturing industry in Japan. The norm in car manufacture at this time was the model adopted in America: manufacturers like General Motors and Ford had the money and space to be able to carry huge stocks of parts in a mass-manufacturing method that hadn’t changed since the time of Henry Ford. Japan, by contrast, didn’t have the same access to cash in these post-war years (or space), and sought an alternative process.
The key feature of JIT manufacturing is the minimal levels of inventory that are carried, commonly in the vehicle manufacturing industry parts will arrive in the factory only hours before they’re fitted to the vehicle.
In any industry ‘inventory’ is an expense – it ties up cash and it needs to be stored somewhere. Farming is no different, there’s always a balance between buying-in-bulk to save money and the cost of holding a large volume of stock. Feed is a good example – you may be able to save money by buying your entire concentrate needs once per year but additional feed storage facilities would be needed, it ties up capital as you’ll need to pay for all this feed, and it increases the risk of spoilage. Instead farmers will normally buy feed at regular intervals throughout the year.
What started in Japan as a response to lack of resources has been so successful it has been widely adopted by supply chains around the globe. Critical to the success of JIT supply chains is the ability to move goods around easily, for instance to be able to get component parts delivered from one factory to another ready for further assembly.
Goods can move freely between countries in the European Union and many of the JIT systems have been designed since the inception of the EU. When the UK leaves the customs union there will be a need for checks on goods leaving or arriving into the UK which, regardless of how efficiently they’re executed, weren’t a feature before. It will be necessary for all supply chains which operate on small inventory levels to adapt and this is likely to increase cost in the supply chain: storage costs, insurance, cost of capital, etc.
Sign up to the FAS newsletter
Receive updates on news, events and publications from Scotland’s Farm Advisory Service