FREE ESSAY ON J.I.T. MANUFACTURING AND INVENTORY CONTROL SYSTEM

J.I.T. MANUFACTURING AND INVENTORY CONTROL SYSTEM

Since the dawn of human existence evolution in all sectors of society has occurred due to
Economic factors. This has mainly happened due to the fact that all technological
achievements have occurred in favor of money. Specifically we can admit that Economy is
the main reason for growth and development. By these means it is in our interest to
establish strong economies either as societies (macroeconomics) or as individuals
(microeconomics). For these reasons several techniques and methods have been initiated in
order help modern individuals to develop. Such techniques are usually Accounting or
Managerial in their nature. However one of the most important technique is both an
Accounting and a Managerial technique and is called The just in time method. 
Just in time manufacturing was an inventory control approach that was developed by
Taiichi Ohno at Toyota Motor Company of Japan. Specifically it requires that the exact
quantity of defect-free raw materials, parts and subassemblies are produced just in time
for the next stage of the manufacturing stage (Ivancevich-Lorenzi-Skinner, p 427). That
actually means an inventory is never large and by this way cost is being reduced due to
the fact that there are no losses of materials due to bad demand or spoilt. This method
is totally a demand - driven process since inventory value represents the exact value of
raw materials, parts or subassemblies that must be spent to satisfy orders that have
already taken place. By these means the company is never overstocked and that has as an
affect that the company will never have a liquidity problem since assets as stock of
goods are smaller and cash is bigger. Another reason for this to happen is the fact that
Just in time manufacturing is a philosophy of eliminating non value added activities and
increasing product quality throughout the manufacturing process (Meigs, Bettner, p.
804).
But how can we control if our Just in time manufacturing system is efficient? The answer
to that is given by Meigs and Bettner : A widely used measure of efficiency in a Just in
time system is the Manufacturing Efficiency ratio (p. 805). This ratio is given by the
Value Added Activities time over the Cycle time. The cycle time is the time of
processing, storing, moving and inspecting that is spent on the material before their
usage. If the ratio is equal to one then we have the perfect Manufacturing efficiency
ratio. This means that the smaller the number the less efficient is our Just in Time
manufacturing method and the larger are the Value added activities.
Finally we can conclude that if we perform the Just in Time manufacturing the right way
we diminish cost and that is the ideal case for every company of producing nature. Toyota
once again initiated a revolutionary technique on the field of Management that was widely
copied by many companies around the world.
Bibliography
? Lorenzi, Peter , Skinner, Steven J. , Ivancevich, John M. :
Management Quality And Competitiveness. Irwin McGraw-Hill (1997).
? Williams, Meigs , Bettner, Haka : Accounting The Basis For Business Decisions. Irwin
McGraw-Hill (1999).
? Garrison, Noreen : Managerial Accounting: Concepts For Planning, Control And Decision
Making. Irwin McGraw-Hill (1997).