How to Apply and Implement JIT – Just in Time Inventory ?

JIT, also known as just in time inventory, controls work flow through carrying in materials and sending out goods on demand. These materials are enough to give what consumer need.

JIT also requires a company to produce or buy only the materials needed for production. With this system, the company’s main goal is to have zero inventory. Business establishments that are employing JIT method reduce the number of materials on hand to the shortest possible levels.

Companies often hold inventory in three different locations. These are the raw materials, work-in-process inventory and shipping of finished products. The just in time inventory is opposed to warehousing large amount of inventory at all times. However, this system has both an advantage and disadvantage. Whether you are new to business industry or not, you should know the different facts about just in time inventory.

Most small and large companies prefer to employ the JIT method. According to experts, this system has multiple advantages that can help you in achieving your preferred business output. To understand the different benefits of this just in time inventory, here they are:

• Less Waste – In traditional method of inventory, companies require numerous pallets of unsold items. In most cases, these unsold items are turned into waste. To market the unsold items, business owners prefer to cut prices. This is an indication that a firm is wasting a great amount of money. With the JIT method, you will be able to decrease any waste. It will easily respond to the needs of the customers and achieves zero inventories.

• Less Space – Just in time inventory helps you in reducing the amount of space. Instead of having a sprawling or huge warehouse to secure your stocks, you can have enough space for other business purposes. It is said that the lesser the space you need, the more you can save money each month. Just like other businessmen, you don’t need to rent a huge building for your unsold items.

• Free Up Funds – Storing a surplus inventory requires a lot of money. Instead of investing more, you can cut your business expenses. This JIT method can help you save a great amount of cash. It will reduce the number of warehouses to maintain and will help in improving your cash flow. This method also gives concentration on other business areas.

• Better Management of Supply Chain – Just in time inventory helps your company to be more competitive and efficient. Through this, you can handle supply chains and handle the business very well. With accurate supply chain, it will provide lower costs not only to manufacturing process but to actual costs of the products as well.

• Better Customer Satisfaction – With accurate implementation of just in time inventory, it allows you to serve customers effectively. It will also help you in connecting your customers and in encouraging them to stick on your offered products and services.

In addition, JIT system will also reduce the number of defects produced in any business establishment. Companies that produce great amount of unused inventory can have a chance to get an increased number of defective items.

Just like in other business operations, just in time inventory method also includes few drawbacks. This system is quite hard to implement, especially for new businessmen. It also requires enough money to implement.

Before deciding to use this method, you need to train your staffs on how to handle the procedure. Another drawback of this method is its potential for delays. Say for instance, if your supplier does not come on time to deliver your needed item, it can delay your business operations.

As a result, you can’t easily sell your products. If you don’t want to experience this, it is always best to follow up your supplies to any authorized personnel. Make sure that the item is delivered prior to the given schedule to avoid complicated situation.

By simply understanding the advantages and disadvantages of just in time inventory, you can easily determine why it often applies by most businessmen. Though there are some disadvantages, these can be easily handled. You can overcome some possible issues of the JIT method through accurate planning and management.

As a businessman, you have to know the right method that you can use to reach your maximum income. Through this JIT method, it is expected that your company can have a zero inventory result. With zero inventories, it shows you are not wasting huge amount of money for your investment. If you are new to this system, you can ask some hints to other experts. You can also ask your business partners to ensure that you business operations are on good hands.

Practicing this just in time inventory is not complicated. It simply on how you handle the in and out of your stocks. If you know your customer’s needs, it is easy for you to decide the exact amount of time you need to order. With adequate supply of items, you can provide the best service and products to your customers.