What is just-in-time?

Just-in-time is a production approach in which materials and parts arrive only when they are needed, and goods are made only to meet actual demand. It aims to cut the cost and waste of holding stock. It also removes the buffer, so it works best where supply is reliable and lead times are short and stable.

How it works

With little stock on hand, money is not tied up in goods, storage costs shrink and problems such as defects show up quickly, since there is no pile to hide them. The price is exposure: a late delivery or a breakdown stops the line at once. Suppliers must be dependable, close or tightly coordinated, and deliveries are smaller and more frequent.

The approach works as a trade-off between efficiency and resilience. The less buffer a system has, the less it can absorb a disturbance. Some businesses keep a small buffer on critical parts to get most of the savings while reducing the risk.

Example

Say an appliance maker holds 10 days of parts, worth $500,000, and moves to 2 days of parts, worth $100,000. That frees $400,000 in cash and reduces storage costs. But a one-day delay in a supplier truck, which used to be harmless, now leaves only 1 day of parts. If a line stoppage costs $50,000 a day and delays happen 4 times a year, the risk is about $200,000 a year. The savings must be weighed against this. The numbers are an illustration.

How to model it in Machinations

Model parts as a Pool filled by a Source through a Delay for delivery, and drained by a Converter that turns parts into products. Make the buffer size, the target stock level, a Lever. Add randomness to the delivery Delay. Play many times and chart both average stock and the share of Plays in which production stalls.