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JIT

Written by: Rahul Jain

Article Overview: This articles gives an overview of importance of JIT (Just in time technique)

JIT



JIT -A tool to achieve competitive advantage

Just-in-time is an approach according to which every step in a process should be right at the right time and place. For being ahead in competition one can gain only by offering the customer greater value either by low prices or by making the product worth its value by providing benefits and service. Today JIT is of utmost importance in the cut throat competition scenario of every industry. The margins are going down; the players in each sector are increasing, so to have an edge over the others one needs something that would help to be one step ahead of all. That's when JIT comes into the picture. JIT works on the philosophy of quality cost reductions, reduced lead times, and zero inventory. Inventory is defined to be a waste according to JIT philosophy. JIT believes in minimizing the waste in manufacturing; be it of time, energy, material or errors.

JIT helps in reducing inventories, the new stock is ordered when stocks drop to reorder level. It not only helps in reducing the inventory of raw material but also Work-in-progress inventory. This leads to reducing the operating expenses as the need for a warehouse for inventory storage would be reduced. It also increases the inventory turnover ratio.

JIT fastens the process of quality monitoring and response capability. It stabilizes the operations. The responsiveness to the changing market increases drastically that helps in reducing losses due to fading out of something. For instance, in the fashion industry only "Change" is a word that is constant. Everything is fast-moving and so is the fashion cycle of a product or particular style. With JIT, as soon as demand decreases one can easily stop producing that style as there would be fewer inventories at stake and you can adapt to something new that the customer wants or desires.

To conclude it can be said that JIT is the need of the hour as it helps to increase quality and efficiency. In financial terms we can say, the probability of better Return on investment increases if JIT is adapted and put to use efficiently. Thus it improves the competitive advantage of the business.

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Article Tags: competitive advantage, cut throat, fashion cycle, fashion industry, inventories, inventory storage, inventory turnover ratio, lead times, market increases, operating expenses, quality cost, quality monitoring, raw material, response capability, responsiveness, throat competition, time and place, time energy, utmost importance, zero inventory



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