Just in time pp

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Just in time pp

  1. 1. STOCK CONTROL JUST-IN-TIME
  2. 2. STOCK CONTROL <ul><li>TRADITIONALLY COMPANIES HOLD STOCKS OF: </li></ul><ul><li>RAW MATERIALS </li></ul><ul><li>WORK IN PROGRESS </li></ul><ul><li>and </li></ul><ul><li>FINISHED GOODS </li></ul>
  3. 3. STOCK CONTROL TRADITIONAL METHOD JUST-IN-CASE MODERN METHOD JUST- IN-TIME
  4. 4. STOCK CONTROL <ul><li>JUST-IN-CASE </li></ul><ul><li>You carry a quantity of stock of: </li></ul><ul><li>raw materials </li></ul><ul><li>finished goods </li></ul><ul><li>JUST- IN-TIME </li></ul><ul><li>Raw materials are not purchased until required </li></ul><ul><li>Finished goods are not produced until you have a firm order </li></ul>
  5. 5. STOCK CONTROL <ul><li>TRADITIONAL BUYING </li></ul><ul><li>few, large deliveries </li></ul><ul><li>emphasis on price </li></ul><ul><li>switch to cheaper suppliers </li></ul><ul><li>JIT BUYING </li></ul><ul><li>many small deliveries </li></ul><ul><li>build long-term relationships </li></ul><ul><li>supplier seen as a partner </li></ul>
  6. 6. JUST-IN-TIME <ul><li>PHILOSOPHY </li></ul><ul><li>frequent regular small deliveries combined with long-term relationship with suppliers </li></ul>
  7. 7. STOCK CONTROL <ul><li>JUST-IN-CASE </li></ul><ul><li>You need to carry extra stock to allow for problems </li></ul><ul><li>JUST-IN-TIME </li></ul><ul><li>You don’t need extra stock because you have solved problems </li></ul><ul><li>If you hit another problem you solve it </li></ul>
  8. 8. STOCK CONTROL <ul><li>JUST-IN-CASE </li></ul><ul><li>You need safety stock because: </li></ul><ul><li>machines breakdown </li></ul><ul><li>unexpected increase in demand for product </li></ul><ul><li>supplier fails to deliver </li></ul><ul><li>JUST-IN-TIME </li></ul><ul><li>You do without safety stock by: </li></ul><ul><li>solving problems </li></ul><ul><li>giving workers responsibility for improvements </li></ul><ul><li>working closely with approved suppliers </li></ul>
  9. 9. ADVANTAGES OF JUST-IN-TIME <ul><li>saves storage space </li></ul><ul><li>money is not tied up in stock </li></ul><ul><li>can pass these savings onto your customers by offering lower price </li></ul>
  10. 10. ESSENTIAL FEATURES OF JIT <ul><li>reliable supplier </li></ul><ul><li>good communications between you and supplier and you and customer </li></ul><ul><li>good quality control procedures </li></ul><ul><li>good maintenance of machines </li></ul><ul><li>reliable machines </li></ul>
  11. 11. JIT IS USED BY THESE COMPANIES <ul><li>Motorola </li></ul><ul><li>Black & Decker </li></ul><ul><li>Hewlett Packard </li></ul>
  12. 12. CRITICISMS OF JUST-IN-TIME <ul><li>higher transportation costs because of frequent deliveries </li></ul><ul><li>this reduces amount saved </li></ul><ul><li>requires road transport which is bad for the environment </li></ul><ul><li>only suitable for products where the demand is known </li></ul><ul><li>increases administration/ordering costs </li></ul><ul><li>difficult to cope with sharp increases in demand </li></ul>
  13. 13. Questions <ul><li>What are the features of traditional stock control (JIC) </li></ul><ul><li>Give 3 essential features of JIT </li></ul><ul><li>Give 3 advantages of JIT over JIC. </li></ul><ul><li>Give 3 disadvantages of JIT </li></ul><ul><li>Name 2 companies which use JIT </li></ul>

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