fm - Inventory Strategy Just-in-time Just-in-time or to be...

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Inventory StrategyJust-in-timeJust-in-time or to be known as JIT is one of an well-known inventory strategy which is designed to increase efficiency and decreasing waste by receiving goods as they areneeded in the production process (Combe 2014, p. 194). For just-in-time methods can reduce waste by not producing surplus stocks, or no any safety stock and able to markdown the lead times. Hence, it is able to enhance the quality of the products and capable of minimize the production costs of the products. For instance, JIT system is one of most significant production management approaches that is to be used in the production system at Toyota. In Toyota, supplying what is needed, when it is needed and in the amount needed is able to eliminate waste, inconsistencies and unreasonablerequirements, resulting in improved productivity of the company (Toyota Motor Corporation Global Website, n.d.). Under the principle of total quality management, JIT system recognize all defects have costs and prevent smooth operations. Therefore, it is better to ensure no defects are produced (Waters 2003, p.345). If any equipment are broken down, most organization may start to remake a new product. However, JIT systems is based on uninterrupted production, mangers is required to recognize the problems with reliability and find out the reason of breakdown and ensure it will not happen again (Waters 2003, p.346).Advantages of JITsystemThe main benefits of JIT system is there are less scrap and wastage are produced. Dueto JIT system keep a low stock, the organization can reduce consumption and physicalwaste in the form of discarded stock (Issprorack, 2012). When business keep low stock, the business is able to save the cost which associated with holding stock such asthe rental of warehouse, insurance, utility and so forth. For instance, McDonalds’s holding cost for the ingredient are fairly high due to the spoilage costs, so they do not begin to produce the food until the orders are being placed. Furthermore, JIT systemscan build a better relationship with suppliers. In this systems, business need to reach aconsensus with the suppliers for a clear, effective communication in order to eliminatethe possibility of misunderstanding and miscommunication. When the business achieve a long term relationship with the suppliers, it can eliminate the needs for
inspection of received goods in ensuring the compatibility and standardized products (Nayab, 2013).

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Term
Summer
Professor
Soo Kee Heng
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