The term “inventory” is the place where all the goods are held for selling in the market. If an inventory is not handled properly then it can cost financial statements because too much inventory takes up more space. So, to prevent this inventory management becomes important to balance too little and too much inventory.
In the market, there are innumerable tools available that help to tackle these kinds of situations. For a company that sells products and goods, inventory management becomes critical. To optimize inventory levels there are two popular systems available and they are JIT and Kanban.
JIT vs Kanban
The main difference between JIT and Kanban is that JIT or just in time is an inventory control system, whereas Kanban is a scheduling system. JIT aims to increase turnover and reduce the holding cost of inventory. On the other hand, Kanban identifies potential bottlenecks and fixes them in your process to make the workflow cost-effective.
JIT (Just in Time) is a concept of manufacturing workflow methodology. Its main aim is to reduce time flow and cost within the production system. Also, it aims for zero inventories among the supply chains of the organization. It maximizes ROI (Return on Investment) and organizational capabilities are fully utilized. This system was successful in Japan.
Kanban which means the sign is a Japanese word. It is used in Just in Time to control inventory by helping to track production and order new shipments. Its main goal is to limit the excess buildup of inventory at the production line. It was developed by an industrial engineer namely Taiichi Ohno of the Toyota. Visual cues are used to prompt the action which is required for the process flowing.
Comparison Table Between JIT and Kanban
|Parameters of Comparison||JIT||Kanban|
|Name||JIT is an abbreviation of Just In Time||“Kanban” is a Japenese word that means a visual card|
|Invented||In the 1970s||In early 1940s|
|Definition||It is a management strategy that aligns raw-material orders by suppliers with production schedules.||It takes the help of colored cards for a name that orders new shipments and tracks production.|
|Purpose||To reduce time flow and cost within the production system.||To limit the excess buildup of inventory at the production line.|
|Kind of system||Inventory control system||Scheduling system|
What is JIT?
JIT is an abbreviation of Just in Time. JIT is a management method of inventory in which the required amount of goods is supplied from suppliers. This method is useful in increasing inventory turnover and reducing its holding costs. It can improve the organization’s competitiveness by minimizing waste and by improving product quality.
JIT is a process of manufacturing management. Toyota manufacturing plants were first to develop and apply it. The Father of JIT (Just in time) is Taiichi Ohno of Japan. With the help of this management approach, Toyota met its challenges for survival. This approach would be successful if an organization’s staff is involved and committed to it.
Advantages of Just in Time includes the elimination of waste, minimum level stocks holding costs, level of minimum reordering can be set, less working capital needed, higher customer satisfaction, the better relationship among production chain, elimination of overproduction. It also emphasizes the concept of the right first time, high-quality products derived, greater efficiency, ROI can be high and works on basis of demand-pull.
Disadvantages of Just in Time include high reliance on suppliers, production line idling, not meeting the increase in orders are unexpected, production downtime, costly transportation. The transaction costs are high, frequent deliveries led to the consumption of fossil fuels, and no buffering led to an effect on the production process.
What is Kanban?
Kanban can also be spelled as “kambon” and can be translated into “billboard” by Japanese. It is a simple concept that is related to Just in Time (JIT) and lean. It is used in the scheduling system in which it tells about what, when, and how much to produce. It visualizes the workflow and the actual work which are passing through that process.
As Taiichi Ohno was the introducer of Kanban but it was applied firstly to software development, knowledge work, and IT by David J. Anderson in 2004. Debit built on tasks with others such as Eli Goldratt to define the Kanban method he successfully launched his book namely “Kanban: Successfully Evolutionary Change for your Technology Business” in 2010.
The process of the Kanban method includes improving whatever you do. It can be anything such as IT, recruitment, software development, marketing, and sales, etc. If Kanban method principles are applied to any business function it will be going to benefit for sure. The knowledge of the Kanban body has benefited and abstracted from the works by thought leaders.
Benefits of Kanban consist of increased productivity, increase team focus, improved efficiency, preventing team overburden, better visibility, reduced waste, improved collaboration, more predictability, increased team focus, flexibility, and improve company culture. Whereas its disadvantages are quality miscues, less effectiveness in shared resource situations, the product mix may cause problems, does not eliminate variability and production flow problems.
Main Differences Between JIT and Kanban
- The philosophy of JIT is to produce or procure the right items at the right time in the right amounts. On the other hand, Kanban is a production system that is developed to achieve Just in Time.
- When it comes to advantages, JIT helps in the production of waste, needed space reduction, and small investments. While Kanban improves flow, increases output and in production provides flexibility.
- To prevent costs related to inventory, JIT uses Kanban as Kanban is one of its elements. On the other hand, Kanban is a scheduling system with the type of demand or pull in the form of bins, cards, boxes, or palettes.
- JIT is an inventory control system to upgrade manufacturing firm return on every investment. While Kanban is a scheduling system rather than an inventory management system. It tells what, when, and how much to produce.
- In terms of disadvantages, there is a risk of running out of stock in JIT, the requirement of more planning, and dependency on suppliers. On the flip side, Kanban lacks timing, the inability for an iteration, and cannot be used independently.
So, it can be concluded that both the JIT and Kanban are much helpful in managing inventory. They both play different roles while inventory management tasks. It can be said that Just in Time is the goal whereas the Kanban system is the tool. The similarity between both of them is that Taiichi Ohno was the inventor of JIT and Kanban.
JIT or Just in Time is an inventory control system. Kanban is a Japanese word that means visual card and it is a scheduling system. JIT helps to reduce time flow and cost within the production system whereas Kanban limits the access buildup of inventory at the production line. Hence, Kanban is a system that is developed to achieve Just in Time.