Pros and cons of business using JIT inventory system

Pros and cons of business using JIT inventory system

Introduction

Just-in-time inventory system is an innovative procedure and thought, which in modern era of business world has gained tremendous popularity and recognition (Adeyemi, 2010). With increasing competition level among the companies operating across United States, and frequent increase in the competition level of companies operating from across the globe, particularly Japan has forced numerous companies to adopt innovative tools like Just-in-time inventory system to reduce the cost of production.

The prime theme of implementing just-in-time inventory or lean manufacturing is to ensure that production companies received raw material and other supplies at the right time, and at right quantity. However, for successful implementation of this tool, it is imperative for the organization to use innovative technique for reducing the generation of waste material and enhancing the product value (Alternburg et al, 1999). According to the recent survey, it was observed that almost 71 percent of well-known companies have implemented JIT tools in their production system.

It has been clear from the recent survey that Just-in-time inventory system cemented its place in the global business environment, and numerous companies are striving hard to reduce the cost of production, and gaining competitive advantage over its competitors by implementing the JIT system in their organization. As described above, the major component of JIT inventory system is to reduce the quantity of waste material and to enhance the quality of products. Meanwhile, reduction in the quantity of waste is not easy as for that company has to monitor numerous other activities like times at which excessive waste is obtained, overstated inventories, overstaffing of employees, unexpected movement of inventories, needless steps in production, and others (Azadeh et al, 2005).

For example, Caterpillar Company is planning to introduce a new plant in coming years, by sinking the period during which a bucket was initially relocated to the welding procedure. In addition to this, Caterpillar was competent enough to reduce the period during which a bucket was used in welding line, was able to reduce the cost of labor reformulating their work responsibilities and by ensuring that labor takes minimal time from one end to other end of the production process (Chen et al, 2004). Meanwhile, layout and inventory aspect of JIT tool appears to be the rational approach for reducing waste and enhancing the value of product.

For instance, an organization by reformulating the process of some of the service can affectively decrease the period it requires to move towards the next step and reduce the cost of this progress. Another way of reducing the cost is to arrange the entire production process in such a manner that all of its activities are interrelated to each other, and connecting each process with the lowering amount of inventories, thus, through this an organization can affectively reduced the cost (Fullerton & McWatters, 2001).

There is no denying the fact that by reducing the amount of inventories, organization can gain numerous advantages like reduction is sizes ...