Just-in-time (JIT) management of inventory - Advantages and disadvantages table in A Level and IB Business

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Created by: noe
Created on: 31-03-20 11:33

Just-in-time (JIT) management of inventory

Advantages

It improves cash flow since money isn't tied up in stock.
It reduces waste, obsolete and damaged stock.
More factory space available for productive use.
Costs of stockholding reduced.
Links with and the control of suppliers improved.
Supplier base reduced significantly.
Motivation of workers improved - they are given more responsibility and encouraged to work in teams

Disadvantages

Lot of faith places in the reliability and flexibility of suppliers.
Increased ordering and administrative costs.
Advantages of bulk buying may be lost.
A break in supply of machinery breakdown can be disastrous as production stops.
Difficult to cope with sharp increases in demand.
Possible loss of reputation and customers if let down by late deliveries.

Evaluation

JIT reduced the need for high levels of working capital as it involves raw materials being delivered JIT to be made into goods and goods being produced and delivered JIT to be sold.

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