What are the pro’s and con’s of JIT inventory control?
JIT is Just-in-Time production is a coordinated processing system where goods are produced and serves are rendered just when they are needed, achieving a smooth flow of goods through the system. The pros of JIT are eliminate disruption, make the system flexible, and eliminate waste. In the JIT system there is a minimal amount of inventory, there can be small and many deliveries, there can be small lot sizes, the vendors can partner with the manufacturer, and the workers/employees are assets to the company thus having high quality, flexibility, reduced lead times, and increased productivity.
Eliminating disruptions is a cost saying feature of JIT. Without disruptions the work can flow smoothly keeping the employees time effective. With JIT changes can easily be made to the system since it is very flexible. With JIT a uniform constant work load helps to reduce waste. Having vendors partner with the manufacturing can reduce inventor and put quality assurance on the shoulders of the vendors. Along with a close working relationship with vendors and set up times being reduced smaller lot sizes can be produced along with smaller deliveries. There is an increased productivity when workers/employees are treated as assets.
The cons of JIT are that suppliers may resist committing resources, a partnership with a vendor one might have delays in materials, the vendor might increase the cost of their products since they would be proprietary, and the quality of control shifts towards the suppliers. If a company wanted to change their processing to JIT their suppliers may balk at the idea. If one could not get their suppliers on board then other more costly supplies may need to be sought. Since most JIT supplier relationships are with one vendor, if the vendor has a interruption in service this could drastically harm the company’s production. Since there is usually one vendor that vendor could charge a premium to the determent of the company they partnered. With JIT the quality of control shifts to the vendor and this quality of control might not be up to the manufacturing company’s vision.
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