- 5 Marks
Question
Just-In-Time (JIT) is an inventory management system in which goods are received from suppliers only as they are needed. The main objective of this method is to reduce inventory holding costs and increase inventory turnover. Despite the benefits of JIT, it has some disadvantages.
Required:
Examine THREE (3) challenges associated with the implementation of JIT Inventory Management System.
Answer
Challenges of Implementing JIT Inventory Management:
- Supplier Reliability:
JIT relies heavily on the timely delivery of materials from suppliers. Any disruption in the supply chain, such as delays in transportation, strikes, or supplier issues, can halt production entirely since there is minimal inventory to cover any shortfalls. - Demand Uncertainty:
In industries where customer demand is unpredictable, it becomes difficult to implement JIT. Sudden fluctuations in demand can lead to stockouts, which may result in missed sales opportunities and customer dissatisfaction. - Quality Control:
JIT emphasizes minimal inventory, so defects or quality issues in delivered materials can significantly disrupt production. Ensuring defect-free supplies is crucial, as there is no buffer stock to cover any delays caused by returning defective goods or resolving quality issues.
- Tags: Inventory Management, JIT, Operational Efficiency, Supply Chain
- Level: Level 2
- Topic: Decision making techniques
- Series: MAR 2024
- Uploader: Joseph