Jit ) : An Inventory Management Strategy Essay

2004 WordsDec 6, 20169 Pages
Introduction Just-in-time (JIT) is an inventory management strategy with a goal of reducing inventory carrying cost and increasing returns on investment. This strategy is based on efficiencies achieved by decreasing wastes by receiving inventory of goods just as needed in a production process, and not before. It is also known as the Toyota Production System (TPS). The older “just-in-case strategy” involved producers carrying large inventories in case higher demands had to be met. The JIT differs from the older Just-in-case strategy in that it does not hold safety stock and operates with low inventory levels. Efficiency is thus automatically built in by reducing inventory costs. This method therefore requires producers to forecast their demand accurately. Origin and Background JIT is an operations management concept that originated in Japan and is attributed to Toyota. The exact origin is unclear but it is believed to be a function of Japan’s post-World War II economy. The nation was rebuilding itself with the constraints of a lack of cash to finance large production, a lack of space to build factories and to store inventory and finally a lack of natural resources. As a result of these constraints, the Japanese had to “lean out” their processes by building smaller factories and keeping only as much inventory as was required in a process and ensuring quick return on investments to be able to purchase addition materials. JIT’s attribution to Toyota dates back to the

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