Just in Time inventory is a specific type of inventory thatkeeps inventory levels low by only producing for specific customerorders. The result of this type of inventory is a large reductionin inventory investment and scrap costs. High levels oforganization are required to pull this off as just in timeinventory takes special coordination and understanding forecastingto create the orders required without massive inventory stored.With just in time inventory there are advantages anddisadvantages
Let’s look at the advantages first with just in timeinventory.
Minimal amounts of inventory, no inventory turnover andremaining stock becomes obsolete.
You can change production and production type to meet customerdemands
Minimized warehouse space needed keeping overhead costs down
Mistakes with production can be easily spotted and corrected
Now let’s look at the disadvantages in just in timeinventory.
The product does not get produced on time for the consumer andtherefore could impact the production process.
Failed shipments on time or reasons for inventory not beingreceived I time could take production down.
If a large order is created and the inventory is not available,then this could lead to long wait times for the consumer leavingthem dissatisfied.
Just in time inventory has a different approach and can beextremely successful in many businesses and in others it would faildramatically.
1. What factors should be present for the success of theJIT?
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