STOCK CONTROL

JUST-IN-TIMEJUST-IN-TIME

STOCK CONTROL

TRADITIONALLY COMPANIES HOLD TRADITIONALLY COMPANIES HOLD STOCKS OF:STOCKS OF:

RAW MATERIALSRAW MATERIALS WORK IN PROGRESSWORK IN PROGRESS

andand FINISHED GOODSFINISHED GOODS

STOCK CONTROL

TRADITIONAL METHODTRADITIONAL METHODJUST-IN-CASEJUST-IN-CASE

MODERN METHODMODERN METHOD

JUST- IN-TIMEJUST- IN-TIME

STOCK CONTROL

JUST-IN-CASEJUST-IN-CASE You carry a quantity You carry a quantity

of stock of:of stock of: raw materialsraw materials finished goodsfinished goods

JUST- IN-TIMEJUST- IN-TIME Raw materials are not Raw materials are not

purchased until purchased until requiredrequired

Finished goods are not Finished goods are not produced until you produced until you have a firm orderhave a firm order

STOCK CONTROL

TRADITIONAL TRADITIONAL BUYINGBUYING

few, large deliveriesfew, large deliveries emphasis on priceemphasis on price switch to cheaper switch to cheaper

supplierssuppliers

JIT BUYINGJIT BUYING many small deliveriesmany small deliveries build long-term build long-term

relationshipsrelationships supplier seen as a supplier seen as a

partnerpartner

JUST-IN-TIME

PHILOSOPHYPHILOSOPHY frequent regular small deliveries combined frequent regular small deliveries combined

with long-term relationship with supplierswith long-term relationship with suppliers

STOCK CONTROL

JUST-IN-CASEJUST-IN-CASE You need to carry You need to carry

extra stock to allow extra stock to allow for problemsfor problems

JUST-IN-TIMEJUST-IN-TIME You don’t need extra You don’t need extra

stock because you stock because you have solved problemshave solved problems

If you hit another If you hit another problem you solve itproblem you solve it

STOCK CONTROL

JUST-IN-CASEJUST-IN-CASE

You need safety stock You need safety stock because:because:

machines breakdownmachines breakdown unexpected increase in unexpected increase in

demand for productdemand for product supplier fails to supplier fails to

deliverdeliver

JUST-IN-TIME JUST-IN-TIME You do without safety You do without safety

stock by:stock by: solving problemssolving problems giving workers giving workers

responsibility for responsibility for improvementsimprovements

working closely with working closely with approved suppliersapproved suppliers

ADVANTAGES OF JUST-IN-TIME

saves storage spacesaves storage space money is not tied up in stockmoney is not tied up in stock can pass these savings onto your customers can pass these savings onto your customers

by offering lower priceby offering lower price

ESSENTIAL FEATURES OF JIT

reliable supplierreliable supplier good communications between you and good communications between you and

supplier and you and customersupplier and you and customer good quality control proceduresgood quality control procedures good maintenance of machines good maintenance of machines reliable machinesreliable machines

JIT IS USED BY THESE COMPANIES

MotorolaMotorola Black & DeckerBlack & Decker Hewlett PackardHewlett Packard

CRITICISMS OF JUST-IN-TIME higher transportation costs because of frequent higher transportation costs because of frequent

deliveries deliveries this reduces amount savedthis reduces amount saved requires road transport which is bad for the requires road transport which is bad for the

environmentenvironment only suitable for products where the demand is only suitable for products where the demand is

knownknown increases administration/ordering costsincreases administration/ordering costs difficult to cope with sharp increases in demanddifficult to cope with sharp increases in demand

Questions

What are the features of traditional stock What are the features of traditional stock control (JIC)control (JIC)

Give 3 essential features of JITGive 3 essential features of JIT Give 3 advantages of JIT over JIC.Give 3 advantages of JIT over JIC. Give 3 disadvantages of JITGive 3 disadvantages of JIT Name 2 companies which use JITName 2 companies which use JIT