Just-in-Time Flashcards
What is just-in-time?
This is an alternative a
approach to inventory management.
It involves ordering supplies only when they are either required for production or when an order is placed by a customer.
What are the advantages of just-in-time?
Allows production to be lean i.e. there is no wastage as all inventory is used for production.
Much less money is tied up in inventory, improving cash flow and working capital.
No warehouse is required, saving costs.
The business is more responsive to changing external factors.
What are the disadvantages of just-in-time?
If deliveries are late then the business will face the negative consequences of understocking.
Requires excellent relationships with suppliers to work effectively, which can take time to develop.
Relies on a good infrastructure between the business and suppliers e.g. roads.
No room for error in production.
