Jit Vs Tradiional Method

JIT vs Traditional System

In recent years, many businesses have tried to eliminate the need to hold inventories by adopting just-in-time (JIT) inventories management (Atrill, 2010). The issue is whether .........................................................................................................................

Walter (2002) claims that traditional approach insulates each stage from its neighbours so that a problem on one phase will not affect other stages. Rosen (2008) also asserts that JIT requires a large initial investment. This essay will argue that implementation of JIT can result in significant benefits for companies in both efficiency and profitability.

It has been claimed that traditional approach makes each stage relatively independent so that, if, for instance, one department stops operating for some reason, buffer inventories allow other departments to continue operating and achieve high-capacity utilisation (Slack, 2010). This approach seeks to encourage efficiency by protecting each part of the process from disruption. However, Johnston (2011) sees this situation as s "blanket of obscurity" that lies over the production system and prevents problem being noticed. In lean process any stoppage will affect the whole process, but the responsibility for solving the problem is shared by all staff, considerably improving the chances of the problem being solved in a relatively short period of time.

It is fair to argue that initial investment in JIT system and cost of its implementation is high (Chamber, 2009). However, JIT inventories management enables companies to operate with the least amount of inventory, and thus, reduces storage costs including renting, lighting and heating warehouse as well as insuring the inventory expenses. The inventory-holding cost of La Rochelle products is 25%, so when the company reduced in stock of lipstick by $1 million, it saved $250.000 a year (BBC, 2009). Holding a little inventory also provides an opportunity for a company to raise working capital which either could be in a bank and earning interest or could be reinvested in a business.

In conclusion, there is no clear evidence ...................................................................

Implementation of JIT involves significant expenses; nevertheless lean synchronisation saves money after putting it into practice by reducing the amount of holding inventory. Some companies reduced their stock by 75% using JIT (Smith, 2009). Applying traditional system does not allow to identify and solve the problem in a short period of time, while JIT is designed so that it is easy to notice the problem and resolve it quickly.