Analysis Essay on JIT Inventory System

2021-05-25 10:06:14
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University of Richmond
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Essay
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Just-in-time Inventory refers to an inventory system if management which has its objectives focused on having a list readily available to meet a particular demand. The aspect is not in excess where one has to stockpile additional products. The practice takes time and requires a lot of cash to maintain it in a competitive market. The aspect thus motivates many companies to adapt the system as it has many advantages over the demerits. According to (White, Richard and Pearson 334) the heart of JIT inventory is at minimizing the inventory costs while avoiding the aspect stocking out products. One of the benefits of adopting this system is that a company can respond to the point of reduced inventory levels quickly as compared to the otherwise. In the recent market, the businesses that fully utilize the system are now equipped to pull back the stock in an individual product line and ramps up inventory in another regarding the customer`s needs and interests. The paper will entail a detailed discussion on how corporation utilizes the aspect of JIT to meet their clients. The article will also involve a case study on the Toyota Company, investigate how it has employed the JIT inventory system (White, Richard and Pearson 334)

Inventory Costs

The aspect of minimizing inventory management fees is the primary driver and advantage of the JIT practices. The practice usually has some cost, when a company reduces the holding staff and the space that is required by the JIT, it can invest the business savings on other projects such as management of its website as well as improving its accounting levels. The practice is also essential for the management of waste products in the company. A group is less likely to throw out goods that expire or gets old. The aspect helps in reducing the waste products in the organization. The JIT requires maximum coordination between suppliers and retailers. Lack or failure to effectively coordinate these sections in the supply chain of these products causes the company to suffer a loss.

Case Study

JIT in automobile companies as well as in businesses that practice the system means producing what is needed. According to Amasaka and Kakuro (117), the aspect is utilized in Toyota Company to provide at least 30,000 parts that are necessary to produce the amount of products required for a particular period. The perspective has helped the company to eliminate waste as well as avoid inconsistencies in production and unreasonable production that assist in improving the productivity of the enterprise. The Toyota Company uses the Toyota Production System that helps in managing the production of vehicles in the industry. The system is also known as the supermarket method as it utilizes the idea used in supermarkets to merchandise its products. In most a supermarket stock the goods that are required by their customers for a period. The products that are shared are in the quality and the quantity needed. All these items are available for sale at any given time. (Amasaka and Kakuro 116)

Taiichi, a former president of the Toyota Company, introduced the aspect of JIT by equating it with the supermarket idea. The idea enabled the company to produce parts of vehicles that were required as well as in the right quantity. The aspect was essential in the management of the production process since efficiency as well as the quality improved. The production department stopped the practice of producing excess parts thus maximizing on the quality of the products rather than the quantity of the outputs. The method required the production section only to provide the parts that were needed by the customers. The system utilized by the company is the Kanban system where the parts that are required are retrieved when needed. The operator carries the parts to the processing department for production.

The manufacturing process then uses the instruction of the customer to produce the products requested. The parts that are produced are then displayed to the client to collect the products. The show is essential as other visiting customers view the product as its collection. The visiting customers then orders for similar goods and request other new products. The aspect enables the production department to produce only the essential products let alone the goods that are as per the customers request. The continuous process allows the company to identify the most popular parts and maximize their production. The practice enables the company to outdo the other competitive companies as the product produced are of high quality (White, Richard and Victor Prybutok 123)

Advantages of the Systems

The JIT system is very critical for the management of resources as well as waste products. The company only produce the goods that are required by the customers. The aspect allows the company to request the raw materials that are necessary to produce the goods needed. The point minimizes the waste products as there are no excess supplies as well as products. The quality of the products that are produced is of high quality thus having a competitive advantage in the market. The other merit of the system is that it provides enough space for expansion. The aspect is brought up by the fact that the JIT system requires less space as well as staffs required. The company or the corporation practicing the system is in a position to save funds as well as resources that would otherwise be produced if the company didnt use the system.

The company can manage all its sections ranging from its procurement department as well as the sales staff. There is a smooth flow of raw materials and the products. The aspect is brought about by the fact that the company only orders raw materials that are required and produces the products that are requested by the consumers. The point is essential in fostering unity between the business, the customers and the suppliers. The relationship is critical in promoting the growth of the company as the saving realized during the process is utilized in other growth projects that require funding. The company is also in a position to develop concerning its infrastructure as there are no excess products to limit the process (White, Richard and Victor Prybutok 120)

Risks

Some risks are experienced by the businesses that utilize the practice to the latter. The system requires the customers as well as the suppliers to adjust to the new law of supply and demand used by the company. In cases where the buyers fail to improve quickly with the increased demand or if there are problems with the supply system, the company risks upsetting the customers with stock outs. The aspect is brought about by the fact that there are no excess products that are produced and the customers have to wait for their products to be processed. There are cases where some clients buy a lot of goods at a go.

The aspect is disadvantageous to the company as extra inventory costs are experienced. The company is also forced to stock in excess products before they are taken by the customers. There are cases where some clients fail to collect the goods they have ordered. The aspect causes the company to stock a lot of goods in their display section centrally to the intended purpose. The company is at times forced to sell the excess products at a low price and in the long run experiencing losses instead of profits. In some cases, the supply fails to meet the companys orders, and in the long term, the customer may fail to pick the products due to delays

Judgments

The JIT inventory system is crucial to great corporations. Big enterprises utilize the inventory systems and succeed since they have a large customer base. Small scale companies may fail to achieve by the scheme. Large corporations such as Toyota utilizes the system as their current level demands the premises to produce goods of high quality about their competitors. The aspect is also critical since it requires a lot of capital to maintain it. The small companies may fail to keep the system as they dont have a permanent customer base. The other aspect that enables large corporations to maintain the character effectively is the fact that due their large scale production they have their customers that buy them goods at a constant level. These companies are thus able to produce products while required as their rate of production is high about small scale companies.

Conclusions

JIT inventory system refers to a production system that requires businesses and corporations to produce goods needed by the consumers. The aspect enables companies to deliver products in quantity as well as the quality requested by customers. The major advantage of the practice is that the involved company can save on the space as well as the resources it would have spent in case the system was not applied to the latter. The company also risks the aspect of irritating its customers in cases where the supplies fail to meet their deadlines.

Work Cited

Amasaka, Kakuro. "New JIT: A new management technology principle at Toyota." International Journal of Production Economics 80.2 (2002): 135-144.

White, Richard E., and John N. Pearson. "JIT, system integration and customer service." International Journal of Physical Distribution & Logistics Management 31.5 (2001): 313-333.

White, Richard E., and Victor Prybutok. "The relationship between JIT practices and type of production system." Omega 29.2 (2001): 113-124.

 

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