In formulating your Key Concept Exercise, consider the following questions: What
ID: 2767947 • Letter: I
Question
In formulating your Key Concept Exercise, consider the following questions: What are the benefits of just-in-time (JIT) techniques? What types of organisations use JIT techniques? Should things change if they are running smoothly? In an approximately 500-word response, address the following issues/questions: ‘Things that are running smoothly should not be subject to any control. If you commit yourself to just finding and fixing problems, you'll be able to carry out effective control (within an organisation) with fewer personnel’ (Minoura, 2003). Discuss what the above statement means and whether you agree with it. Describe how an organisation that you have experience of, or have researched, has benefitted from just-in-time (JIT) techniques and with special reference to inventory control. Also discuss whether the potential benefits—and drawbacks—of such JIT techniques are limited to large manufacturing businesses or whether they have wider applications for other organisations. Base your answer on research, your readings and your own experiences. Please cite all references.
Explanation / Answer
Just-in -time techniques is all about delivering on demand. It was introduced in manufacturing organisations for process improvement to minimise costs and maximise profits. It is a production and inventory control system where customer demand dictates the quantity of materials to be purchased and units of output to be produced.
Benefits include-- elimination of waste-reduction in unwanted time- efficiency in production-
-less space requirement as raw materials are stacked in just adequacy- hence less establishment expenses like rent
-lesser working capital requirements as production is to the absolute minimum required
- set-up times between two processes is minimal due to well-planned production process.
2. Smooth running of a system ,in itself indicates, that there is no out-of -the line happenings that need to be attended to. It is a bench-mark and also a trigger for any action. As long as things are moving smoothly, there should be no cause for concern. Monitoring this compliance will do. It takes a maximum of 1 or 2 persons for keeping an eye on the performance for compliance .Where as, if we keep on digging for the presence of any non-conformity, there can be no end to it.. Also it's a waste of men, their time and money. Controls should be at check-points and need not go over all activities time and again.The use of JIT techniques -when action is warranted -is all that is advocated.
JIT techniques in Inventory control - Fixing of Economic Ordering Quantity for the purpose of repeat orders of stock of materials is a good control mechanism when the supervisor's intervention is required only when the actual levels go hay-wire.
This technique helps the organisation to have optimal supply of raw-materials,without any production- waiting time- thereby eliminating labor waste time . There is also no excess material and so reduced carrying costs like storage rent and insurance. Spoliage,pilferage are reuced to the minimum and can also be eliminated.Smooth production flows
Disadvantages of JIT in Inventory control - the company may not be in a position to meet sudden and unexpected orders and hence may lose business and profits
Frequent ordering costs will increase cost of production
Zero tolerance to errors will be very suffocating to employees.
Heavy reliance on suppliers- for last minute supplies.
The above said benefits and disadvantages of JIT techniques like EOQ and ABC controls(System of concentrating on items of Inventory based on their values- A items(Small no. but high value);B items-(Comparatively more in no. but lesser in value)& C items( all & sundry items with least value as a whole); - in Inventory control are almost the same for both big and small organisations. Only the amounts involved will be lesser for smaller organisations.Conceptually , the same.