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In: Accounting

Find a full text article in the KU library that discusses Just-In-time manufacturing. What do you...

Find a full text article in the KU library that discusses Just-In-time manufacturing. What do you see as the advantages and disadvantages based on your reading. Do not forget APA format on your sources, in-text citations.

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Expert Solution

JIT is a Japanese management philosophy which has been functional in practice since the early 1970s in many Japanese manufacturing organizations. It was first developed and perfected within the Toyota manufacturing plants by Taiichi Ohno as a means of meeting consumer demands with minimum delays. Taiichi Ohno is frequently referred to as the father of JIT.

Just in time (JIT) is defined as an inventory management system which is used to manage the stock that is kept in storage. It involves getting goods from suppliers as and when they are required, in place of carrying a large inventory at once.

Just-in-time production requires intricate planning in terms of procurement policies and the manufacturing process if its implementation is to be a success.

Many organizations like to use JIT as it is seen as a more cost efficient method of holding stock. Its purpose is to minimize the amount of goods you hold at any one time, and this has numerous advantages.

Advantages of just in time Manufacturing is:

  • Less space required: With a faster turnaround of stock, storage space to store goods or warehouse in not needed as much. This reduces the amount of storage an organization needs to rent or buy.
  • Waste decline: Goods are prevented from being damaged or getting obsolete while sitting in storage with a faster turnaround of stock. This reduces waste which in turn saves money by preventing investment in unnecessary stock, and reducing the need to replace previous stock.
  • Lesser investments: Ordering stock as per the need helps to maintain a healthy cash flow. JIT manufacturing is ideal for smaller companies that don’t have the funds on hand to purchase vast amounts of stock at once.
  • ROI would be higher: Due to the low level of stocks held, the organizations return on investment (referred to as ROI) would generally be high.

JIT has a number of impending disadvantages as well, which can lead to a significant impact on the company if they arise.

Following are the disadvantages of just in time Manufacturing:

  • Threat of getting out of supply: By not carrying much stock, it is crucial to have the correct procedures in place to ensure stock can become readily available. To do this, one need to have a good relationship with the supplier that specifies supplying goods within a certain time frame. JIT means that you become extremely dependent on the regularity of your supply chain. There can be a situation if the regular supplier does not have your requirements, or has stopped doing business. In such a case can the product be available quickly from somewhere else?
  • Lack of control over time frame: The customers’ receipt of goods is at risk as the company is relying on the timeliness of suppliers for each order. If the customers’ expectation is not met they can take away the business from the company leading to huge impact on business.
  • Added preparation is vital: Companies are required to closely get in detail with the sales trend while adopting JIT inventory management. The companies that have seasonal demand need to do inventory planning to be able to meet different volume requirements at different times.
  • Higher transaction costs: Transaction costs would be relatively high as frequent transactions would be made.

If conducted efficiently, JIT manufacturing is amongst the best ways of manufacturing. Though the risks prevail, it has considerable rewards too. It is best for those who are capable to plan vigilantly in advance, and build strong relationships with suppliers.



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