5.5.3 Just-in-time (JIT) inventory management

• Just-in-time (JIT) inventory management aligns raw material orders with production schedules
• What does inventory minimization in JIT involve?

  Only immediate needs
• Supplier partnerships in JIT require strong and reliable relationships with suppliers.
• Process improvement in JIT aims to eliminate waste
• What is one objective of JIT regarding production efficiency?

  Improve it
• Reduced storage costs are a key advantage of JIT inventory management.
• Objectives of Just-in-time (JIT) inventory management:

  1️⃣ Reduce inventory holding costs

  2️⃣ Minimize waste

  3️⃣ Improve production efficiency

  4️⃣ Enhance supplier collaboration
• Match the JIT principle with its description:

  Inventory Minimization ↔️ Reduces raw materials to immediate needs

  Supplier Partnerships ↔️ Requires strong, reliable relationships

  Process Improvement ↔️ Focuses on continuous improvement

  Demand Forecasting ↔️ Synchronizes supply and production
• What is the term for waste in JIT known as?

  Muda
• One advantage of JIT is reduced storage costs
• JIT improves cash flow by reducing the resources tied up in inventory.
• What is the primary goal of inventory minimization in JIT?

  Reduce raw materials
• Demand forecasting in JIT relies on accurate forecasts
• Supplier partnerships in JIT require strong relationships for timely deliveries.
• What are two advantages of JIT in terms of financial management?

  Improved cash flow, reduced storage costs
• Inventory minimization in JIT aims to keep raw materials and work-in-progress to what is immediately needed.
• Reduced storage costs in JIT result from lower inventory
• How does JIT contribute to greater flexibility in operations?

  Quick responses to demand
• Match the drawback of JIT with its description:

  Reliance on Suppliers ↔️ Depends heavily on their reliability

  Supply Chain Disruptions ↔️ Vulnerable to natural disasters

  Potential for Stockouts ↔️ Low inventory levels risk shortages

  Setup Costs ↔️ Significant upfront investments needed
• Just-in-time (JIT) inventory management minimizes inventory levels and storage costs
• What is the primary goal of JIT inventory management?

  Minimize inventory levels
• Inventory minimization in JIT means reducing materials to what is immediately needed.
• Why are supplier partnerships important in JIT inventory management?

  Timely deliveries
• One key benefit of JIT is improved cash flow.
• Vulnerability to supply chain disruptions is a major challenge of JIT.
• Match the JIT principle with its description:

  Inventory Minimization ↔️ Reduce raw materials to what is immediately needed

  Supplier Partnerships ↔️ Maintain strong relationships for timely deliveries

  Process Improvement ↔️ Eliminate waste and streamline production

  Demand Forecasting ↔️ Rely on accurate forecasts to synchronize supply
• Greater flexibility in JIT allows quick responses to changes in customer demand.
• How does JIT reduce waste in inventory management?

  Minimizes obsolete inventory
• Reliance on suppliers is a major drawback of JIT.
• Conditions for successful JIT implementation

  1️⃣ Reliable Suppliers

  2️⃣ Stable Demand

  3️⃣ Efficient Processes

  4️⃣ Strong Communication

  5️⃣ Quality Control
• Which company pioneered JIT in the automotive industry?

  Toyota
• Dell uses JIT to customize products and reduce inventory costs.
• Compare JIT with traditional inventory management:

  Inventory Levels in JIT ↔️ Minimized, kept at zero

  Supplier Relationships in JIT ↔️ Strong, collaborative partnerships

  Order Timing in Traditional ↔️ Orders placed periodically

  Approach in Traditional ↔️ Push system based on forecasts