Question

JIT has also influenced small companies by pushing them to change their planning and systems. In other words, though JIT was originally designed for large manufacturing firms it is applicable to both large and small manufacturing firms.

Discuss whether you agree or disagree with the above statement and why. What are the main difficulties of JIT implementation in small firms?

Answer 1

JIT means just in time. It is planning and inventory system where the inventories required for production are bought at time when a production is started. JIT is implemented to reduce the unnecessary carrying of large inventory at times and to reduce carrying cost of inventory.

No, JIT was originally designed to implement in large companies, but it can be implemented in small companies as well. This reduces the carrying cost of inventories where ever it is implemented. There are certain difficulties in implementing JIT system. Under JIT system goods are produced after receiving an order. In small companies suddenly the orders for goods may increase or decrease. Due to constraints of production they can benefit with implementing JIT as the inventory received when production started can reduce cost of carrying and labor. Under JIT organizations don’t keep finished goods inventory.

So, by implementing JIT in small companies lead to difficulties in meeting the orders. To meet increased orders in small companies it costs huge amounts. Under JIT the inventory cost is more due to lack of discounts on purchases of inventories, as inventory purchases depend upon the order received for production.