The document discusses Xiaomi's use of a just-in-time inventory system like Toyota to minimize costs and maximize efficiency. It operates on a build-to-order model where manufacturing begins only once a certain number of orders are placed. This eliminates excess inventory and reduces costs compared to traditional retailers. While it lowers prices, the limited supply can frustrate customers during flash sales.

1. Just-in Time System
PRESENTED BY:
KOMAL AGARWAL
MBA II

2. Concept
The just-in-time (JIT) inventory system is a management strategy that
minimizes inventory and increases efficiency.
It is also known as the Toyota Production System (TPS) because the
the car manufacturer Toyota adopted the system in the 1970s.
JIT production systems cut inventory costs because manufacturers
do not have to pay storage costs. Manufacturers are also not left with
with unwanted inventory if an order is canceled or not fulfilled.

3. About Xiaomi
Xiaomi was founded in 2010 by serial entrepreneur Lei Jun based
on the vision “innovation for everyone”.
The "MI" logo stands for “Mobile Internet”. It also has other
meanings, including "Mission Impossible”.
It is now No. 1 smartphone brand in India.
It designing innovative products with best specs, highest quality &
honest price.

5. Just in time Operating Model
Many still wonder how Xiaomi manages to selling high-end phones at rock-bottom prices,
which it claims to be just above cost. What Xiaomi has done, is as follows:
1.Procurement of Components: To lower procurement cost and shorten the process,
takes components from other companies.
2.Manufacturing: The manufacturing is completely dynamic based on orders. Once Xiaomi
gets a particular number of orders, only then will they begin procuring the components.
3.Inventory: Since demand drives the manufacturing process, there’s no surplus raw
to be managed. Inventory costs are automatically reduced.

6. Just-in-time, with just-the-right-amount

7. Advantages of JIT
Decrease cost on storing raw material.
Less investment in raw material.
Eliminate wastage (in terms of time, inventory, transportation, etc.)
“We are a company which works on a wafer-thin margin. The just-in-time
model will allow us to reduce the inventory and reduce the working
capital margin,” said Manu Jain, head of India operations.

8. Disadvantage of JIT
You have to queue up
several times in a flash sale
just to get hold of the device.
Shift of customer to another
brand.
Unable to meet any
unexpected order from its
customer.

9. Conclusion
Xiaomi rely purely on the internet sales.
Since Xiaomi’s price would typically be 20%-30% of the price of a Samsung or
Apple phone with similar specifications, this competitive price creates a huge
demand in the market.
It puts only limited quantity of phones for sale. In a sense, all new models are
sold in limited volumes as “batch sales”.