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Just-in-Time Inventory Control (JIT)

April 12, 2010

The Dictionary of Business Terms defines Just-in-Time (JIT) as a method of close coordination with suppliers maximizing the relationship between production and sales levels with inventory, reducing carrying costs. Often JIT is linked with a computerized Point-Of-Sale System and inventory levels are maintained through an automated reordering system connected to suppliers, so that stock-outs are minimized.

On the other hand, the Dictionary of Marketing Terms defines JIT as a strategy of retailers who maintain almost no excess on-hand inventory, relying upon suppliers to deliver inventory as needed. JIT delivery is most beneficial to retailers with high inventory, financing, storage, and insurance costs. The retailer may transfer sales data directly to suppliers via point-of-sale terminals.

For both disciplines –Business and Marketing– the main point is focused in make benefits higher thanks to the same inventory management strategy: Just in time that allows minimize the costs associated with inventory control and maintenance.

The Just-in-Time is a Japanese industrial management method developed in 1950. It was first adopted by Toyota manufacturing plants by Kiichiro who can be regarded as the father of JIT.

Something that led the Just-in-Time was developed with other production techniques, was that after the Second World War, Japan was completely destroyed. In a small nation like Japan, the most valuable asset is the physical space (Japan has an area =369,883 km2 and a population = 123,000,000). The Japanese people could not sow, and they had no capital to start manufacturing, so the only thing that remained them was to maximize the few resources they had.

THE HISTORY OF TOYOTA

Part I:

If in the 50s the technological and industrial development were owned almost exclusively of the United States, largely due to his victory in the Second World War, in the 80s this trend was reversed towards Japan.

The first company to introduce this method of production, Toyota, quickly became a world leader in its sector. The effectiveness of the JIT rushed them to improve and refine their philosophy, which came to affect all areas of the company, not only Production but also Human Resources, Management… 

Part II:

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One comment

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