![]() Just-in-Time Inventory: Disadvantages High Institutional Learning Curve Since they don’t acquire or assemble supplies until a computer or product has been purchased, Dell is able to respond quickly to market trends and customer feedback through its JIT system. Dell has leveraged a JIT inventory strategy in order to provide quick customer responsive times. It also supports a company’s strategic agility due to the ease of obtaining resources in a less expensive yet efficient manner. By contrast, a JIT inventory system makes it easy to respond to new needs as they emerge. This is especially true for large manufacturing companies that have to make many machining changes to shift the focus of production. Under less than ideal conditions, responding to new customer needs can take months. After implementation, Harley Davidson increased productivity and reduced inventory by approximately 75%, due to their newfound ability to quickly locate and solve manufacturing inefficiencies. ![]() Harley Davidson has successfully reduced inventory waste through a JIT inventory system. Under a mature JIT inventory regime, a significant amount of money can be saved due to saved space and little to no inventory loss. Furthermore, inventory requires a great deal of space. Components or finished goods might be stolen, damaged, or misplaced, and in some cases, parts may sustain damage simply with the passage of time. When inventory is maintained in a distribution hub or plant, there are a number of potential dangers. This allows Toyota to maintain only the inventory that is needed so that they can easily pivot when there are changes in consumer demand. Toyota’s JIT inventory is a great example of this as raw materials are placed on the production floor only after a customer has placed an order. It also shifts the operational focus to other aspects of the production process, which can make it easier to implement large-scale process improvement projects that can yield a high return on investment. A well-run JIT inventory system makes it possible to function effectively with virtually no inventory. The central goal of a just-in-time inventory strategy is to cut the total cost of the supply chain in order to reduce an organization’s inventory and capital footprint. Just-in Time Inventory: Advantages Reduced Logistical Costs Although rewarding, this multi-step process can be challenging to implement, so it’s important to closely consider the benefits and challenges of a JIT inventory system. Managers then seek to streamline the inventory process by making small inventory purchases to stock up on only what’s needed. ![]() The first step is to assess and document current inventory, marking materials and parts that are needed, as well as those that may potentially be needed in the future. Implementing a JIT inventory system is a process that has multiple steps. ![]() ![]() These slight but powerful changes in Toyota’s approach to production have resulted in decreased inventory and lower costs. As a part of their production strategy, materials are not only prohibited from the production floor until needed, but parts are not even able to be placed at a station unless the assembly process is actively in place. Toyota is a leading company efficiently utilizing a JIT inventory system. Just-in-time inventory (JIT) is a production system designed to cut costs and optimize logistics by delivering and receiving materials and parts right when they are needed, never too early or late. ![]()
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