Overview

Date: 2015-10-07; view: 447.

Just-In-Time Inventory Management

Think ahead

1. Why do you think the decision on how much inventory to have is of great significance for efficient production?

2. “There is a link between the demand for a product and the method used in its production”. Do you agree? Why?

3. “Flow production is efficient only when a large number of requirements have been met”. What are the important requirements for efficient flow production?

Text 2.4Read the text and explain the idea of just-in-time production.

Just-in-time is a management philosophy that has gained a wide acceptance in business. Just-in-time production(JIT) is a system in which nothing is bought and produced until it is needed. Each section of the production process makes the necessary units at the necessary time – only when they are required by the next stage of the manufacturing process, or by distributors or customers. So, components are delivered just when they are needed and there is no inventory. In order to accomplish this goal a firm must try to reduce waste, cut costs and increase value.

The system is usually credited to Taiichi Ohno, vise-president for manufacturing with Toyota in Japan in the early 1950s, but he said he got the idea from looking at American supermarkets. The Japanese variation of JIT production is kanban. It is a just-in-time manufacturing process in which the movements of materials through a process are recorded on specially designed cards. American companies have developed versions of JIT, which they call lean production, or stockless production, or continuous flow manufacture.