Just in Time Inventory Management Essay

Just In conviction crinkle Management descriptionJust-in- conviction (JIT) chronicle wariness is the carry through of say and receiving register for production and customer sales only as it is need and not before. This means that the lodge does not hold safety acquit and operates with low archive levels. This strategy helps companies lower their entry reading be.Just-in- metre parentage way is a cost-cutting inventory caution strategy though it gutter prevail to stock- bulge outs. The goal of JIT is to improve return on investment by simplification non-essential costs.http//bizfinance.about.com/od/glossaryj/g/Just-In-Time-Jit- enumeration-Management.htmhttp//small logical argument.chron.com/advantages-disadvantages-justintime-inventory-21407.htmlAdvantages & adenine Disadvantages of Just-in-Time breedby Neil Kokemuller, prerequisite MediaCompanies upset signifi burn downt inventory control to suppliers with just-in-time inventory. Related Articles* The Advantag es of Just-in-Time archive Systems * Advantages & Disadvantages of dissipation chronicle * Examples of Just-in-Time Inventory* Just in Time Inventory Definition* Advantages & Disadvantages of Matrix Organizational Structures in Business Organizations * The Disadvantages of Buy-Hold-Sell InventoryJust-in-time (JIT) inventory refers to an inventory management system with objectives of having inventory readily available to live up to demand, but not to a point of excess where you must express unembellished products. Maintaininginventory takes time and has costs, which is what motivates companies to implement JIT programs. Ads by GoogleProduction managementComprehensive SCM, SRM & WMS Suite from Epicor. Learn More.Epicor.com / Distribution Customer involveBalancing the goals of avoiding stock outs while minimizing inventory costs is at the midpoint of just-in-time inventory. One of the main benefits of automated and efficient inventory replenishment systems is that you can quickly respond to littleen inventory levels. Companies are now fit out to pull back on stock in a assumption product category and ramp up inventory in some other as customer needs and interests change. Inventory CostsMinimization of inventory management costs is a primary driver and benefit of just-in-time practices. Inventory management has costs, and when you slash the substance of holding space and staff compulsory with JIT, the company can invest the savings in business growing and other opportuni reaps, points out the Accounting for Management website. You similarly have little likelihood of throwing out product that gets old or expires, meaning constrictd waste. CoordinationA disadvantage of managing a just-in-time inventory system is that it requires significant coordination amid retailers and suppliers in the scattering channel. Retailers often put major trust in suppliers by syncing their computer systems with suppliers so they can more directly proctor i nventory levels at stores or in distribution centers to initiate rapid response to low stock levels. This usually means build up of technology infrastructure, which is costly. This coordinated effort is more involving on the whole than less time intensive inventory management systems. RisksJust-in-time inventory is not without gambles. By nature of what it is, companies using JIT intend to walk a fine line between having too much and too little inventory. If company buyers go to adjust quickly to summationd demand or if suppliers have distribution problems, the business risks upsetting customers with stock outs. If buyers over compensate and buy extra inventory to avoid stock outs, the company could experience higher inventory costs and the potential for waste. Sponsored LinksMYOB Accounting softwareSimple, Reliable & Secure Solutions Call Now for a Free Demonstration www.globalbiz.com.sg web Database App SoftwareDeploy data-driven web applications straight from your data base Try it www.ironspeed.comPrimavera P6 PPM SoftwareSoftware Consultation Implementation Support www.crownsys.com.sg / PrimaveraIT Help Desk SoftwareWeb-based IT Help Desk with plus Mgmt. Free version too. Try Now www.ManageEngine.com / Help_DeskReferences (2)About the AuthorNeil Kokemuller has been an spry writer and content media website developer since 2007. He wrote regular feature articles for LiveCharts for three historic period and has been a college grocery storeing professor since 2004. He has four years of superfluous professional experience in marketing, retail and small business, and he holds a Master of Business Administration from Iowa State University.http//smallbusiness.chron.com/disadvantages-inflating-inventory-38062.htmlThe Disadvantages of Inflating Inventoryby Cynthia Myers, Demand MediaCarrying a rotund inventory incurs certain costs.Related Articles* Disadvantages of Buying Inventory in December* Advantages & Disadvantages to a Manual Inventory operate System * The Disadvantages of Buy-Hold-Sell Inventory* Disadvantages of High Inventory Levels* Advantages & Disadvantages of Excess Inventory * The Disadvantages of the Continuous Inventory SystemIncreasing inventory in quantify of rising costs allows you to take advantage of lower prices now, which can number in increased profits as you sell off the inventory. precisely inflating inventory also carries significant disadvantages. The right inventory strategy for you depends on the business youre in, your profits and losses and your ability to comfortably carry an inflated inventory. Analyzing your individual situation will tell you if the disadvantages of inflated inventory apply to you. Ads by GoogleExcel Spreadsheet TemplatesFill-in the blanks & easily get any business document Download NowBiztree.com Increased CostsThe costs of inventory go beyond the get price of the goods or materials in your inventory. You must pay for space in which to store your inventory. If the inventory is perishable, youll rack up utility bills to heat and cool the space. You may need surplus personnel to handle the inventory. If you buy materials or goods at a elevated enough discount, your savings may be enough to offset these special costs, but in many cases the cost of adding to your inventory cancel out your savings. Increased TaxesThe Internal R flushue Service considers your inventory to be an asset, and youre required to pay taxes on the inventory in stock at the end of the year. This is the reason you see many businesses hold Inventory decrease Sales at years end. These businesses are looking to reduce their tax burden by selling off excess inventory. If, instead of selling off inventory, youre steeringed on accumulating it, you could find yourself with a bigger tax bill. Before you build up your inventory, you should consider the achievable tax implications of doing so. Spoilage LossesMost goods have a shelf life a period after which they begi n to deteriorate and spoil. For perishables much(prenominal) as food this can be a relatively victimize period. Durable goods have a longer shelf life, but even these can lose value over time. Fashions or household goods go out of style, fabrics fade or are susceptible to damage from dust, insects or fire. If you build up too much inventory, you could be left with a quantity of useless goods on hand, resulting in a loss. Other ConsiderationsWhen you increase your inventory because you come across a good deal on goods or materials, or because you think the prices will increase in the future, youre gambling that your predictions about the future will come true. If, for example, the price of the goods and materials falls, youre left holding an inventory of items for which you paid more than the current market rate. If you decide to inflate your inventory, double and triple check the information that be given you to believe doing so was a good idea, and consider all the implicat ions to your fall into place line. What Is the Purpose of Just-in-Time Inventory Systems?by Luanne Kelchner, Demand MediaJust in Time reduces stored inventory.Related Articles* Inventory & Work Order Systems* An Introduction to Inventory Management Systems* The Advantages of Just-in-Time Inventory Systems * Examples of Just-in-Time Inventory* Just in Time Inventory Definition* Advantages & Disadvantages of Just-in-Time InventoryCompanies use a Just-in-Time manufacturing and inventory management system to improve the efficiency of the company and reduce costs. The system requires manufacturers to purchase only when customer orders reach a demand. Companies must develop a relationship with vendors to ensure parts reach the facility in time to manufacture products for the customer request. Businesses only produce inventory when there is a customer order in place. The system does not allow the business to produce or store excess inventory. Just-in-Time systems gain in large and small organizations and those that produce products or services. With adjustments, the principles of Just-in-Time inventory management and manufacturing can work in anybusiness. Ads by GoogleSystems engineeringProduction & appendage Manager Jobs Submit Resume to Apply NowMonster.com.sg / Systems+engineering wither Inventory CostsUsing a Just-in-Time inventory system reduces the amount of material on hand in the production facility. Companies can reduce the cost to store and maintain excess inventory and eliminate the risk of materials becoming obsolete while in storage. High inventory quantities tie up company funds, which could otherwise benefit other areas of the business such(prenominal) as the research and development of new products. With the reduction in inventory costs, companies can expand and grow their businesses. Lead Time ReductionJust-in-Time manufacturing also uses a pull system to incite materials through the production cycle. For example, in a manufacturing bu siness, materials do not move to the next step on an assembly line until that step or station is ready. This reduces the stockpiling of unsanded product at any stage in the production process. When the company eliminates bottlenecks, production speed or lead-time is faster. Process engineers must determine the supreme quantity any station in the production process can have waiting. While workers may sit idle waiting to move production to the next step, the process is more efficient. Efficient Manufacturing LayoutCompanies must create a layout on the production floor to move materials through the process efficiently. Some companies must move workstations closer together to eliminate steps in the work process. This leads to a more efficient manufacturing layout that can importantly reduce lead tIme. Building products efficiently is a primary focus for a company implementing a lean manufacturing system. Improve Customer gratificationCompanies implement a Just-in-Time system or lean manufacturing to satisfy the demands of customers. The sound of the customer is always present in a Just-in-Time manufacturing environment. Reductions in lead time and costs can help a company confront a product to the customer faster and for a lower price.