This document is a term paper submitted by a student for a course on operations and supply chain management. It discusses the just-in-time (JIT) inventory system. The paper includes a literature review on JIT and its advantages such as reduced space needs, waste reduction, and smaller investments. Disadvantages discussed are the risk of stockouts and lack of control over supplier timeframes. The methodology section describes how the student collected primary and secondary data on JIT through surveys and research. Data analysis examines the effects of time management and supplier relationships on JIT. The conclusion states that maintaining timely production is key for JIT and it requires minimal capital.

1. BANGLADESH ARMY INTERNATIONAL
UNIVERSITY of SCIENCE and TECHNOLOGY
Cumilla Cantonment, Cumilla.
Department of Business Administration
Level-3 Term-2
Course Code: OMT 3601
Course Title : Operation and Supply Chain Management
Rebaka Sultana. Fahmida Haque Shorna
Lecturer of Management ID: 4104051
DBA, BAIUS Section: A
Term Paper Topic: Just-In-Time Inventory System &
Advantages and Disadvantages of Just-In-Time Inventory
System.
Submitted to; Submitted by:
Submitted to; Submitted by;
Submitted to; Submitted by;
Submission Date: 22-01-2020
Submitted to; Submitted by;

2. Abstract:
The paper presents the findings of the study that was conducted to investigate the impact of
Application of Just-In-Time (JIT) inventory management system in the manufacturing sector
SMEs. Self-administered questionnaires were distributed to a sample of manufacturing sector
SMEs in the food. The study revealed that the majority of SMEs in the manufacturing sector
were not applying the JIT inventory management principles. It was furthermore revealed that
there are challenges impeding the implementation of JIT principles in the manufacturing
sector SMEs. These challenges include lack of reliable supplier networks, lack of capital and
lack of knowledge of immediate financial gains among others.
Literature review:
The just-in-time (JIT) inventory system is a management strategy that aligns raw-material
orders from suppliers directly with production schedules.
High inventory holdings are commonly identified as poor management (Boute et al., 2004).
JIT has been depicted as an inventory control technique and the Japanese Auto Industry is
recognised as the developer of JIT inventory and management philosophy (Aghazadeh,
2003). It is a systematic approach which minimises inventory by having supplies arrive at
production and distribution points only when needed (Lee and Wellan, 1993). Hunglin and
Wang (1991) claim that JIT production is a philosophy for reducing work-in-progress (WIP)
inventory, it aid process improvement and reduce process variability. It can be seen as a new
way of thinking, planning, and performing with respect to manufacturing (Canel et al., 2000).
Whereas Gyampah and Gargeya (2001) consider JIT manufacturing both as a philosophy and
disciplined method of production.
Stevenson (1996) defines the term JIT manufacturing as ‘a repetitive production system in
which processing and movement of material and goods occurs just as they are needed,
usually in small batches’. JIT implementing firms have to produce and deliver finished goods
JIT to be sold, sub assemblies JIT to be assembled into finished goods, fabricated parts JIT to
go into the subassemblies and purchased materials JIT to be transformed into fabricated parts
(Schonberger, 1982a). JIT philosophy is based on the concept of delivering raw materials
when needed; producing products when there is a need, improve quality of product. The
fundamental objective of JIT is to eliminate all waste from the entire supply chain and to
improve product continuously (Ptak, 1987; Frazier et al., 1988).
The core of the JIT philosophy is CI through the elimination of waste (Chakravorty and
Atwater, 1995). Bicheno (1987) defines JIT as “to produce instantaneously with perfect
quality and minimum waste”. JIT in its broader sense is an approach of achieving perfection
in a manufacturing company based on the continuously elimination of waste. In the narrow
sense, JIT refers to the movement of material at the necessary place at the necessary time
(APICS, 1987). It is a disciplined programme for improving overall productivity and
reducing waste (Voss, 1988). In a JIT environment quality parts in the right quantity and at
the right time are produced, while using a minimum amount of facilities, machinery and
equipment, raw and in-process materials and human resources (Schlesinger and Heskett,
1991).

3. Advantages ofjust in time inventory management
Companies like to use JIT as it is seen as a more cost efficient method of holding stock. Its
purpose is to minimise the amount of goods you hold at any one time, and this has numerous
advantages:
Less space needed: With a faster turnaround of stock, you don’t need as much warehouse or
storage space to store goods. This reduces the amount of storage an organisation needs to rent
or buy, freeing up funds for other parts of the business.
Waste reduction: A faster turnaround of stock prevents goods becoming damaged or
obsolete while sitting in storage, reducing waste. This again saves money by preventing
investment in unnecessary stock, and reducing the need to replace old stock.
Smaller investments: JIT inventory management is ideal for smaller companies that don’t
have the funds available to purchase huge amounts of stock at once. Ordering stock as and
when it’s needed helps to maintain a healthy cash flow.
All of these advantages will save the company money.
Disadvantages ofjust intime inventory management
JIT unfortunately comes with a number of potential disadvantages, which can have a
significant impact on the company if they occur.
Risk of running out of stock: By not carrying much stock, it is imperative you have the
correct procedures in place to ensure stock can become readily available, and quickly. To do
this, you need to have a good relationship with your supplier(s). You may need to form an
exclusive agreement with suppliers that specifies supplying goods within a certain time
frame, prioritising your company. JIT means that you become extremely reliant on the
consistency of your supply chain. What if your supplier struggles with your requirements, or
goes out of business? Can you get the products quickly from somewhere else?
Lack of control over time frame: Having to rely on the timeliness of suppliers for each
order puts you at risk of delaying your customers’ receipt of goods. If you don’t meet your
customers’ expectations, they could take their business elsewhere, which would have a huge
impact on your business if this occurs often.
Methodology:
I used primary and secondary data methods were used to collect the requisite information.
My surveys aimed to determine what are the advantages and disadvantages of JIT system. I
used some question to finds out the information. I used to find out which subject help to
management the JIT system and which make a gap in planning the JIT system. I also used
secondary data to find out some information. I used internet, and other term paper to find out
related information about JIT system.

4. Data Analysis:
Here we can see that the just-in-time inventory management system needed less space,
because in JIT there are no inventories in a business. There only produce product when the
order is taken.
The main advantages of JIT system is smaller investment, because there are gap in purchase
of row material and selling the product. It also reduces cost.
The risk of running out of stock is control by time and supplier management.
34%
58%
0% 0% 8%
JIT Inventory System Needed
Less Space Agree
Strongly Agree
Disagree
Strongly disagree
Neutral
8%
34%
58%
0%
Advantages of Just-in-time
Wast Reduce
Cost Reduce
Smaller
Investment
Others
58%
0%
42%
Control the risk of running out of
stock
Time management
supplyer
management
Both

5. Time is very important in JIt system, because it the process of producing product in order
base and delivered in time. So time has an effect in JIT inventory management system.
The management system is depend on manager who make the plan in daily, weekly, monthly
and seasonal wise.
The struggles with the supplier is controlled by the avoid it and find out new one is used most
in jit system. And there are some manager who used to support with the demand, continues
the relationship.
50%
25%
9%
8%
8%
Time has an effecton JIT system
Agree
Strongly agree
Disagree
strongly diagree
Neutral
16%
50%
17%
17%
Management System
Daily
Weekly
Monthly
Seasonal
37%
37%
11%
15%
Struggles with the supplier
Avoid it
Find out new one
Accept the demand
Give another chance
or deal

6. We see that most of the jit system doesn’t have backup support in their business.
Problems with the customer when they can’t supply product in time, jit manager handle them
by ask for more time in most of the time. Other time they cancel the deal with the customer.
Here the time frame of jit system is weekly basis most of the time, because of the main focus
of jit system is zero inventory.
17%
83%
Backup support
Yes No
15%
75%
10%
Controlingthe problems
Cancel the deal
Ask for more time
Get the product from
other sources
8%
67%
25%
Time frame
1 day
1 week
1 month
Qatar basis
Half year

7. For delivery the product to customer in jit system, customer use own transport to get the
product.
Jit manager believe that the cash trangection bring healthy cash flow. Because there has no
inventory in raw material and finished products.
Most of the time the price of the product is depends in product quality in jit system. There are
some jit system who fixed the price of the product by cost basis. And others use their brand
image and unique design to fixed the price.
100%
Transport System
own
Renting
Customars own
75%
25%
Manageting the cash trangection in jit system
bring healthy cash flow ststement
Strongly agree
Agree
Strongly disagree
Disagree
neutral
25%
50%
25%
Manageing the product price
Cost Basis
quality basis
Brand image
Unique design

8. They buy the raw materials with cash deal, most of the time. Others use some exclusive
agreement like if the quality is best of raw materials they will buy more or give extra
payment.
They used social media for making the communication with the customer.
9%
83%
8%
Manageing the deal with supplier
Exclusiv agreement
Cash payment
Time wise
Order basis
100%
Communicationsystem of jit
social media
Media
Newspaper magazine
Other

9. Conclusion:
JIT is practiced widely to minimize the costs and improve the production performance.
Reserving minimum work in process is aimed by JIT system. After find out the data, I
measure that, the maintains of time is the key factors of just-in-time inventory management
system. A business person will use just-in-time inventory management system for its smaller
investment, because JIT need little capital planning for running a business. A manager can
make strategy of its just-in-time inventory management system in daily, weekly, monthly and
seasonal wise. This paper introduces a systematic method to design, perform and evaluate the
systems. The excessive inventory, as a source of cost in SCM, can be limited by appropriate
selection
Reference:
https://www.accountingtools.com/articles/what-is-just-in-time-jit-inventory.html
https://www.investopedia.com/terms/j/jit.asp
https://www.thebalancesmb.com/just-in-time-jit-inventory-management-393301
https://www.unleashedsoftware.com/blog/3-successful-companies-practising-jit-systems
https://www.researchprospect.com/operations-management-dissertation-topics/
https://www.researchgate.net/publication/323129674
2017; 2(5): 74-80 http://www.sciencepublishinggroup.com/j/ajttedoi :
10.11648/j.ajtte.20170205.13

10. Questionnaire
Dear Sir/Madam
I am a student of Bangladesh Army International University of Science & Technology (BAIUST),
Department of Business Administration, Cumilla and presently doing a resources on “Advantages and
Disadvantages of just-in-time Inventory System” I request you to kindly fill up the questionnaire
below and assure you that data generated shall be kept confidential.
Please use (-/) mark.
1. In JIT inventory management system how you control the risk of running out of
stock?
Time management Supplier management Both
2. Do you think in JIT inventory management system will be needed less space?
Strongly Agree Agree Strongly Disagree Disagree Neutral
3. Why you maintain JIT system for….?
Waste reduction smaller investment Cost reduction Others
4. Do you believe that lack of control over time frame is effect in JIT system?
Strongly Agree Agree Strongly Disagree Disagree Neutral
5. What is the management system of your JIT inventory management system?
Daily Weekly Monthly Seasonal
6. What if your supplier struggles with your claim?
Avoid it Find out new one Accept the demand
Give another chance or deal
7. Do you have any backup support?
Yes No
8. If you cannot produce your product in time what will you do?
Cancel the deal Ask for more time Get the product from other sources
9. What is the time frame for your business deal?
1 day 1 week 1 month Qatar basis Half year
10. How you control your transport system for delivery your product?
Own transport Renting Customers own transport

11. 11. Do you give your own collect design to your customer?
Yes No
12. Do you believe that over on all cash transformation in JIT system is bring a
healthy cash flow statement?
Strongly Agree Agree Strongly Disagree Disagree Neutral
13. How you manage the level of product price?
Cost basis Quality basis Brand image Unique design
Features of the product
14. How you manage the dealership with your supplier?
Exclusive agreement Cash payment Time wise Order basis
15. What is the most affect communication system of your business?
Social media Media (TV, radio) Newspaper, Magazine
Others