Inventory Management

Although companies are focus on minimizing costs and increasing the operation profits, one of the risks encountered is inventory management. The ever-changing customers’ demand and preferences makes it difficult for companies to have the stock of goods that satisfy the clients’ needs. Companies have to adopt the JIT management strategy in order to mitigate the risks that they may incur in the process. Filippini & Forza (2016) argue that JIT inventory strategy helps firms reduce the storage costs by discouraging the acts of buying large stock volumes and storing them in the warehouses. JIT inventory encourages production on customer demand. Unlike the traditional inventory management system that kept operation costs so high, JIT inventory management ensures that firms significantly manage their overhead costs. The technological advancement and automation of operations have encouraged companies to move from the traditional inventory methods to JIT.

Response 2

Organizations are currently shifting from the traditional inventory management to JIT techniques of managing inventories. The method brings more benefit to companies to compared to the traditional inventory management. With the increasing level of competition, firms are turning to other areas such as inventory management to minimize costs increasing the contribution margins (Chiarini, 2017). Although firms experience some challenges with the adoption of JIT inventory management in ensuring that customer needs are promptly satisfied, it still gains popularity among various firms who are determined to minimize obsolescence or dead inventories. No single firm wants to be stuck with products that cannot be sold in the market. They adopt JIT in order to reduce the cases of low price sales in order to clear the stocks. Therefore, JIT is becoming popular in organizational inventory management compared to the traditional inventory management techniques.

References

Chiarini, A. (2017). An adaptation of the EOQ formula for JIT quasi-pull system production. Production Planning & Control, 28(2), 123-130.

Filippini, R., & Forza, C. (2016). The Impact of the Just-in-Time Approach on Production System Performance: A Survey of Italian Industry. A Review and Outlook. In A Journey through Manufacturing and Supply Chain Strategy Research(pp. 19-39). Springer, Cham..