Verified Document

Just In Time Essay

¶ … Accounting The just-in-time inventory model has become popular in both retail and manufacturing situations in recent years, because it has many advantages that appeal to companies, and because technological innovation has made this system easier to implement. The just-in-time (JIT) system involves receiving goods only when they are needed, in order to avoid a buildup of inventory (Investopedia, 2014). The traditional inventory method was to have a buffer of inventory. This provided security for managers, knowing that they would not have outages (in retail) or downtime (in manufacturing). The buffer approach to inventory, however, comes with high costs that are associated with carries this inventory -- in particular warehouses, additional staff and the risk that the inventory becomes obsolete (MindTools, 2014). This paper will examine the just-in-time inventory concept, and the case study of Wal-Mart, one of the earliest proponents of JIT, will be used.

Just in Time

A just-in-time inventory system seeks to control workflow by ensuring that materials arrive right when they are needed. To implement this system, companies need to anticipate demand, and they need to have close relationships with their suppliers. In many cases, the supplier should be nearby -- it is much harder to implement JIT when your suppliers are overseas. Companies that rely on overseas suppliers, like Wal-Mart, implement JIT more at the retail level, but they also benefit from having a substantial sales volume, so that containers can arrive with a high level of frequency. Smaller companies cannot do this with overseas suppliers.

The just-in-time system therefore makes heavy use of information systems. It is relatively easy to anticipate demand in a manufacturing organization with static demand -- you can do this pretty easily with Snickers bars or Coca-Cola. It is much more difficult when you are running a retail operation with 20,000 SKUs. For such companies, there is tremendous...

Working with the demand projections and with suppliers, the company can then take delivery when needed. A company that is running a successful JIT system will have only a few days' inventory on hand, and will therefore have a very high inventory turnover ratio.
Modern technology has made the implementation of JIT much easier. Not only do "big data" applications have the ability to process massive volumes of information to deliver more accurate demand forecasts, but RFID technology has been employed to help companies track their inventory throughout their system. Wal-Mart uses RFID technology to track goods throughout its supply chain, which allows the company to execute its JIT system with an even higher level of accuracy than ever before, redeploying goods to wherever they are needed within the system (Millsap, 2012).

There are a number of advantages to running a just in time inventory system. These systems allow companies to minimize inventory, which reduces overall operating costs and it also helps the company to operate a lower footprint, something that improves the company's sustainability measures. Further, with retailers in particular having less inventory means less risk of having inventory that has to be deeply discounted. The JIT system also allows organizations to be more flexible to operational challenges like a buildup in inventory -- orders can be halted quickly in response to this, something Wal-Mart has done from time to time in response to variable demand conditions (Dudley, 2013).

Wal-Mart

Wal-Mart is a leader in supply chain management, and has pioneered a number of techniques with respect to just-in-time inventory management. The company has a massive amount of data from which to derive demand projections. More important, the company has an inventory management system that allows store managers to understand to the minute…

Sources used in this document:
References

Dudley, R. (2013). Wal-Mart cutting orders as unsold merchandise piles up. Bloomberg. Retrieved May 14, 2014 from http://www.bloomberg.com/news/2013-09-25/wal-mart-cutting-orders-as-unsold-merchandise-piles-up.html

Investopedia. (2014). Definition of just-in-time (JIT). Investopedia Retrieved May 14, 2014 from http://www.investopedia.com/terms/j/jit.asp

Millsap, D. (2012). Wal-Mart's use of RFID in global supply chain management. Daniel Millsap. Retrieved May 14, 2014 from http://www.danielmillsap.com/research/rfid-in-wal-mart-global-supply-chain-management.html

MindTools. (2014). Just in time (JIT). MindTools.com. Retrieved May 14, 2014 from http://www.mindtools.com/pages/article/newSTR_78.htm
Cite this Document:
Copy Bibliography Citation

Related Documents

Time Management Inside Out Julie Morgenstern Has
Words: 1064 Length: 3 Document Type: Essay

Time Management Inside Out Julie Morgenstern has some very useful advice for anyone that is living with a busy schedule, and that includes students taking a full load of classes in colleges or universities. In Morgenstern's book, Time Management Inside Out, the author offers step-by-step instructions for those who are harried by deadlines or otherwise are unable to get important things done on time. What Morgenstern presents is almost deceivingly simplistic,

Time Management at Rescare Inc. The Time
Words: 1200 Length: 4 Document Type: Essay

Time Management At ResCare Inc. The time consumed between the auditing processes and conducting training is substantial. This time could be used more efficiently and there are opportunities to reduce the time frame between those two processes. There are methods that can be used to manage and reduce this time which fall under the realm of time managing process. Time management is processes of planning, creating awareness, and harnessing control over

Time Management and Department Integration Are Two
Words: 1185 Length: 4 Document Type: Term Paper

Time management and department integration are two of the things crucial in a company and which determine the final outcome of any action or project one may embark upon. As is the case here, Carl Robins found himself in a difficult situation because he was no able to properly schedule the activities that needed to be performed in his department so that the project could go on at the planned

Time Management: A Proposal I Once Read
Words: 1226 Length: 3 Document Type: Essay

Time management: A proposal I once read in a biography about Benjamin Franklin that he rested for 45 minutes per day around 2.00 in order to rejuvenate his energy. A treatise on cognitive neuroscience affirmed his belief albeit in a different way and with elaboration. It opined that particular moments of the day carried specific energy levels; that the morning provided the greatest resources of energy intensity, that midday (between 1:00

Time Management Is Typically Defined As the
Words: 1362 Length: 4 Document Type: Research Paper

Time management is typically defined as the process of exercising control over the amount of time we spend on specific activities -- more specifically in how we can increase our own efficiency and productivity. There are a number of ways that one can increase their time management skills, a number of tools to help, and certainly a large number of books designed to do just that. It is interesting to

Time Management in Organizations: A Review of
Words: 1358 Length: 5 Document Type: Dissertation

Time Management in Organizations: A Review of Literature Time management as a process and research construct have numerous dimensions that makes it dynamic and, from the researcher's perspective, susceptible to being measured incorrectly when tested for cause-and-effect study types. In this review of related literature on time management, focus would be on how this process and construct is implemented at the organizational level. Application of time management in organizations would be

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now