This document discusses inventory management strategies like just-in-time and kanban. It defines inventory, inventory management, and common strategies. It also discusses how mismanagement can lead to financial and supply problems. Key terms are defined, like kanban cards and the kanban scheduling system. Implementation of strategies at companies like Toyota and Dell are summarized, noting how both effectively deliver products when needed through supply chain visibility and minimal inventory.

2. WHAT IS INVENTORY?
INVENTORY can be defined as
the goods and materials a
business holds for the
ultimate purpose of resale

3. WHAT IS INVENTORY
MANAGEMENT?
The overseeing and controlling of the
ordering, storage and use of components
that a company will use in the production
of goods it will sell, as well as the
supervision of quantities of finished goods
for sale

5. COMMON INVENTORY MANAGEMENT
STRATEGIES
JUST – IN – TIME
(JIT)
MATERIALS
REQUIREMENT
PLANNING

6. MISMANAGEMENT OF INVENTORY LEADS TO:
• FINANCIAL PROBLEMS
• INVENTORY SURPLUS (GLUT)
• INVENTORY SHORTAGE

7.  Barcode Scanner
 Mobile Computer

8.  Inventory Software
 Barcode Printer
 Barcode Label

9. Prevent Spoilage of Goods
No Need to Pay Hidden Cost

10. Satisfying Customers
Saves Time
Future Planning

12. Just in time (JIT)
• A production strategy used to improve
business by reducing in-process inventory
• Based on the philosophy: Inventory is waste
• A shift away from the older “Just In Case”
strategy

13. Definition
“Just In Time is an inventory strategy which
companies employ to increase efficiency and
decrease waste by receiving goods only as
they are needed in the production process,
thereby reducing inventory costs.
This method requires that producers are able
to accurately forecast demand.”

14. KANBAN
 Literally means “signboard” or “billboard”
 Created by Taiichi Ohno
 It is not an inventory control system but a
scheduling system
 It uses the rate of demand to control the rate
of production

15. DEFINITION
“A specific type of inventory control system. The
kanban system is based upon a series of colored
cards. These cards denote such factors as quantity,
the type of part and the manufacturer. A card is
placed in the bin or other container with each
group of manufactured items as an identifier for
those involved with the next phase of production
or distribution.”

16. KANBAN SCHEDULING

17. In the manufacturing kanban system, a machine shop
supplies components with little setup and procedures
in lot sizes of one, to customer requirements.

18. KANBAN CARDS
 Move Card/C-Card (Yellow)
 Production Card/P-Card (Green)
 Signal Card/Material
 Supplier Card
 Rework Authorization Kanban (Orange)
 The Startup Excess Kanban (Pink)
 The Other Authorization Kanban (Blue)
 the Emergency Authorization Kanban (Silver)

20. • Japanese word for “improvement” or “change for
better”
• Has been applied in psychotherapy, life-coaching,
government, banking, etc.
• It is a daily process and its purpose goes beyond
simple productivity improvement
• Toyota production system is known for Kaizen
KAIZEN

21. DEFINITION
“A philosophy that sees improvement in
productivity as a gradual and methodical
process. Kaizen is a Japanese term meaning
"change for the better". The concept of
Kaizen encompasses a wide range of ideas: it
involves making the work environment more
efficient and effective by creating a team
atmosphere, improving everyday procedures,
ensuring employee satisfaction and making a
job more fulfilling, less tiring and safer.”

22. 5 MAIN ELEMENTS OF KAIZEN
Teamwork
Personal discipline
Improved morale
Quality circles
Suggestions for improvement

23. CYCLE OF KAIZEN ACTIVITY
The cycle of kaizen activity:
• Standardize an operation and activities
• Measure the standardized operation (find
cycle time and amount of in-process inventory)
• Gauge measurements against requirements
• Innovate to meet requirements and increase
productivity
• Standardize the new, improved operations
• Continue cycle ad infinitum

24. JIT IMPLEMENTATION DESIGN
1) Design Flow Process
• Redesign for flow
• Reduce lot sizes
• Link operations
• Balance workstation
capacity
• Preventive maintenance
• Reduce setup times
2) Total Quality Control
• Worker compliance
• Automatic inspection
• Quality measures
• Fail-safe methods
• Worker participation

25. 3) Stabilize Schedule
• Level schedule
• Establish freeze windows
• Underutilize capacity
4) Kanban Pull System
• Demand pull
• Backflush
• Reduce lot sizes
• Reduce lead time
• Frequent deliveries
• Project usage requirements
• Quality expectations
5) Working with Vendors

26. 6) Further Reduce Inventory
• Stores
• Transit
• Implement carrousel to
reduce motion waste
• Implement conveyor belts
to reduce motion waste
7) Improve Product Design
• Standard production
configuration
• Standardize and reduce the
number of parts
• Process design with product
design
• Quality expectations

27. JIT II

28. Revamped form of JIT to improve the customer-supplier
relationship.
Places more responsibility with the suppliers for various
functions.
provides the potential to reduce inventories, eliminate
redundant purchasing agents and get cost-saving tips from
having suppliers familiar with their business.
The retailing industry denotes this as ECR, efficient consumer
response.
WHAT IS JIT II?

29. Risks
Stock
out
Over stock
Defective
items
Overpriced
items

30. INDUSTRIAL APPLICATION OF JIT
In context of – DELL and TOYOTA

31. DELL
• only company within its industry to effectively
utilizes just in time.
• It uses a direct-business model whose
fundamental tenets include taking custom
orders directly from customers, thereby
reducing inventory and streamlining
distribution
• They became market leader over Compaq in
2001

32. How do they do it?
Dell's strategy is to focus to reduce inventory and streamline distribution. This
strategy has allowed them to keep only five days of inventory on hand.
It has "created value for their customers”.
Dell has a philosophy to "only manufacture what their customers ask them to
make, when they ask them”
The minimal amount of inventory held by Dell provides them with an economic
advantage

33. • Dell's use of just in time results in cost savings,
superior customer satisfaction, limited waste,
and the ability to provide their suppliers with
more information. In the end these benefits
all result in a cost savings for Dell and higher
revenue.

34. • "master and pioneer" of just in time
• Their goal is to reduce the average time
between dealer order and delivery.
• TOYOTA connects dealers to factories and
factories to suppliers. The integration of the
value chain creates visibility for all members
of Toyota's supply chain
• Toyota has also adjusted their distribution
process effectively.

35. OVERVIEW
• Dell and Toyota are two model companies of
just in time. They effectively get the right
products to their customers when they need
it. Both companies have achieved a
competitive advantage within their industries
due to utilizing the just in time process and
allowing visibility between them and other
members of the value chain.

36.  Factory response fell to twice a day,
improving customer satisfaction.
 Factory began building many vehicles to
order, eliminating the risk that they would
not be sold. Thus, improving company’s
return on equity.
 Dramatic improvement in product quality.

37.  In some cases, company eliminated multiple
suppliers.
It has been widely emulated, but
not always with the expected results, as
many firms failed to adopt the full system.
The just-in-time philosophy was also
applied to other segments of the supply
chain in several types of industries.

38.  Reduced setup time
 The flow of goods from warehouse to shelves
improves
 Employees with multiple skills are used more
efficiently.
 Increased emphasis on supplier relationships.

39.  Production scheduling and work hour
consistency synchronized with demand.
 Supplies come in at regular intervals
throughout the production day.
 Minimizes storage space needed.
 Smaller chance of inventory
breaking/expiring

40. BUSINESS MODELS FOLLOWING
SIMILAR APPROACH
• VENDOR-MANAGED INVENTORY
 Same principles as those of JIT inventory
 Manager of inventory- vendor
 Industry experience and expertise
 Inventory cost on the vendor's books

42. • CUSTOMER-MANAGED INVENTORY
 Customer has responsibility
for all inventory decisions
• EARLY USE OF A JIT SYSTEM
 A type of JIT was used successfully
in the UK by Perkins to supply F3
engines to Ford from 1957 until 1964.

43. CONCLUSION
• In JIT workers are multifunctional.
• Multifunction machines, U-shaped cells.
• Environment is clean and free of waste
• The "PULL" element of JIT
JIT has truly changed the face of manufacturing and
transformed the global economy. JIT is both a
philosophy and collection of management methods
and techniques used to eliminate waste (particularly
inventory).