Using the article below and other information, how would one complete the following assignment concerning Just-In-Time Inventory (JIT): Conduct research to find a company that is successfully...

Using the article below and other information, how would one complete the following assignment concerning Just-In-Time Inventory (JIT):

Conduct research to find a company that is successfully using JIT systems in its operations.

  • Describe the company briefly: product/services, locations, and customers.
  • Describe the company’s operations briefly: type of process.
  • Describe how JIT is being used and how it has benefited this company.

Algonquin College, "Lesson 11: Just-In-Time Inventory and Lean Operations": http://ccol.algonquincollege.com/mgt2320/lesson-11/lesson-content/

Asked on by jayson94

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Tamara K. H. | Middle School Teacher | (Level 3) Educator Emeritus

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The Just-in-Time Inventory (JIT) system refers to an inventory strategy many companies use to reduce inventory costs and maximize profit. Using the system, companies only order materials as they are needed to manufacture goods and only manufacture enough goods to fill a specific need. Companies will not order excess materials to fill any future orders or create an excess stock of goods to fill specific orders but only receive materials and manufacture goods on a needs basis. The reason is to cut down on inventory costs.

The article "Lesson 11: Just-In-Time Inventory and Lean Operations" provides us with the example of a wagon manufacturer. The wagon manufacturer only produced 700 wagons and then 800 more wagons over 5-week and then 6-week periods and only ordered enough materials to produce those wagons; the materials ordered also arrived at the exact time that the company would begin assembling the wagons. The article poses a series of very legitimate questions to help one better understand the reasons behind this process:

Why doesn't the company produce all of the 1,500 wagons together earlier? Also, why produce just exactly what was ordered by the customer? Why not produce even a few extra just in case more are required? Also, why have parts arrive just in the exact amount and the exact time when assembly will begin? (Algonquin College)

The answer to all of the above has to do with cost of inventory. It costs the company much more to hold all 1,500 wagons than it does 800 wagons. It also costs the company much more to hold all of the parts needed to make either 1,500 wagons or even more than 1,500 wagons. As the article phrases it, "There are immense cost savings in capital, rent, heat, electricity, and lighting." If it costs a company much less to produce and sell a good, then the company is also ensuring it maximizes on profit. The inventory system also limits profit losses with respect to supply and demand. Say the company produces a number of wagons beyond what was ordered in anticipation that the demand for its wagons will increase when in reality the demand decreases. If demand decreases, the company is not only left with covering the cost of inventory, the price of the wagon must also decrease, resulting in significant profit loss.

To complete your assignment, you want to think about what sorts of companies use JIT to maximize profits. The article gives us an example of wagon manufacturers; we might think of toy wagons. Therefore, you might consider researching other toy manufacturers. Investopedia also gives us the example of car manufacturers; therefore, you could also research different car manufacturers and pick a company you like out of the car manufacturers. Other examples you might consider are that restaurants must keep limited stocks of inventory and only fill orders as they are placed. Once you have chosen your company, you should have no problems describing the company's product or services, location, type of customers, type of operation process, and how using JIT benefits the company.

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