Just-In-Time

Introduction

An integral part of the success of any organization rests upon its ability to implement an effective financial and accounting process. In an effort to provide readers with an example of an effective financial/accounting process, Team A has developed this report focused around a process known as the "Just-In-Time" (JIT) process. This paper will analyze the JIT production system in which the production and movement of goods are expedited in a more efficient method, while effectively improving upon the financial/accounting process of the organization.

Definition and History of Just-In-Time Inventory

This concept of JIT began in Japan. It is usually associated with the Toyota motor company. This was originally known as the "Toyota Production System". This way of doing business was completely different than the traditional way of production systems. (Difficult to implement/Expensive/Timely) It eliminates and helps reduce raw material inventory. Years ago Toyotas manufacturing of cars was in low demand and with fixed prices, they were unable to increase profit mark up. Therefore, Toyota then focused on cost reduction (Macaulay 55-70). Production leveling was then created between the products coming in and the finished goods going out.

Dell used JIT with breweries and retailers. Finished product loss (FPL) also known as, out of code, is an ongoing expense at Anheuser Busch (AB) (Emerson 31- 41). Due to the ongoing concern about quality and freshness to the consumers, AB began to pick up this huge expense with the born on date. This born on date was a great idea but brought about a large expense as well. To improve this FPL expense a JIT system was structured in the brewery, wholesalers, and with retailers. AB had to keep better track of their inventory and keep a specified amount of inventory depending on if the season is busy or special events are happening. This does occasionally cause problems with retailers because of out of stock issues. However, the product sold is always fresh. AB has been around for over 125 years and has many years to come. Since this is the case FPL saving due to a justified JIT will result in increase profits down the road.

Just-In-Time Inventory Suitable Environments

In order for a company to satisfy its needs regarding JIT issues, standardized practices must be implemented at the production level to achieve a steady production system. The company's production system will purchase raw materials and other purchased items when they are needed so that the waste of production materials does not occur (Naylor 248-324). Any blanket purchase order should cover the terms and conditions of any production contract procurement.

Clearly defining product standards is also essential in determining the type of raw materials to produce the products. The supplier must ensure a smooth flow of material is imported to the company's production center in order to support production of the company's defined products (Podolny 829-872). Optimum communication and coordination between the manufacturing plan and supplier is essential to ensuring the smooth flow of production materials into the company's production center (Harrison 41-55).

Maintaining a disciplined ...