The Just In Time (JIT) inventory system is an inventory strategy used by businesses to increase productivity, quality of product and sales, while decreasing labor costs and space. JIT allows a company to purchase materials only as needed to meet actual customer demand. When using JIT, inventory can be reduced to the bare minimum, even to zero. To successfully implement the JIT inventory system you must carefully schedule material to arrive when needed at the correct time.
There are advantages and disadvantages of the JIT inventory system. One advantage of JIT is the funds that were used to buy inventory for forecast consumer demands can be used for something else within the company. Another advantage is availability of space, which could help with employee be more productive because they have more breathing room. output and response time because employees have more space to use. Third advantage is the reduction in time used on storing and maintaining excess inventory, saving money for the company.
Most importantly, the reduction of defects this is very important because your company has less waste and greater customer satisfaction. Unfortunately, there are disadvantages of JIT like having no stocks to fall back on. Another disadvantage, introducing this inventory system will be very difficult and expensive. Around 1920, Henry Ford and Ernest Kanzler played a major role in developing JIT production methods. Ford Motor Company continues to use JIT with a little help fromt he RFID inventory system.
There are several car companies that use the JIT inventory system because it helps reduce costs and space. When Ford uses the JIT inventory system this means they have many small shipments, this is because they “make it when you order it”. Now, this means an increase in shipping and transportation costs. To prevent the costs from increasing consolidation centers were introduced, where full truckloads were consolidated from supplier deliveries.
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