Question

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Just in time (JIT) inventory management is a form of a lean manufacturing strategy for increased efficiency. JIT is an ordering process where the materials are received to manufacturing as they are needed for production (Vonderembse, & White, 2013). By operating under the JIT inventory management practices, the company operates with lower inventory levels and little or no safety stock. Lower inventory levels promote efficiency, lower costs, and less waste. Companies that use JIT process in real time and only produce products which have been planned and ordered by customers. JIT inventory management can be used by large or small companies to provide products with excess waste and improve the process flow. JIT works best for industries with strong economies of scale and even stronger leverage with multiple suppliers supporting their industry. This is why it works so well for manufacturing-based businesses. JIT inventory practices would not be appropriate for smaller scale service-based companies that cannot predict customer orders or forecast plan easily. These companies many include a consulting business, auto dealerships, and bakeries. Some other companies that may not fair well with JIT inventory are companies that are seasonal in nature. Companies such as tax services, lawn services, and florists cannot always predict business levels from previous data due to seasonal changes and unforeseen circumstances. These companies have in common that they are cyclical and the demand for product is not regular in nature.

Answer 1

The Just-in-Time is that concept of a business module that is undertaken in response to ever changing market demand. When the product life cycle is shorter, in order to remain competitive, this could be a lean manufacturing strategy that is facilitates the manufacturer to cut upon the production lead time, reduce transportation time as well as the set-up time. Hence, the Firm shall indeed operate with lower levels of inventory when resorting to this strategy. The management of the same can only be fruitful thus, if the batch sizes is reduced as there could be an increase in the variety although the total demand may not. Further the inventory level in production as well as in transportation systems must also be in control. It is for this reason that JIT systems use only a few, nearby suppliers for the ease of the system processing and hence may not fare well with companies that have a seasonal business trend. It could further be pull or push oriented demand schedule. But it shall be important in various Companies, wherein operations are mostly repetitive in nature and hence this concept could be well adaptable in such cases. Moreover, if the items dealt with is mostly tangible in nature and also in case of the industry which is linked to the service sector like that of Mc Donald’s, the concept of distribution center add more value to JIT. JIT shall further help in reducing the cost of carrying and stocking the inventory. This aids in in turn, reducing the overall cost of production, thereby improving the scope of margin earned thereupon.