JIT production is a production scheduling system components or products on time, quality, and in accordance with the required amount by the next production stage or in accordance with customer demand.
JIT production can reduce the time and cost of production by:
1. Reduce or eliminate work in process in each workstation (work station) or the stages of product processing (the concept of zero inventory).
2. Reducing or eliminating “Lead Time” (waiting time) of production (the concept of zero wait time).
3. Continuously pushing hard to reduce machine setup costs at each stage of processing products (workstation).
4. Emphasis on the simplification of processing the product so that activities are not value-added production can be eliminated.
Companies that use JIT production can increase efficiency in the field:
1. Lead time (waiting time) manufacturing
2. Material inventory, WIP, and finished products
3. Time displacement
4. Direct labor and indirect
5. Factory space
6. Cost of quality
7. Purchase of materials
Application of JIT production can have an influence on the cost and management accounting systems in several ways as follows:
1. Direct traceability of a fee may be increased
2. Eliminate or reduce the cost (cost pools) for activities not directly
3. Reduce the frequency of the calculation and reporting of information the difference in cost of labor and factory overhead individually
4. Reducing of detail of information recorded in the “work tickets”