Inventory System Just in Time

Inventory Systems Summary Team C

Inventory Systems Summary Team C

In preparation for subsequent assignments in this course, four inventory systems will be discussed, analyzed, and compared. The advantages and disadvantages of the systems will be detailed.

Inventory System - Just In Time

The Just-in-Time (JIT) is an inventory system that companies use to deliver a finished product to customers in the quickest time possible to reduce the overall ordering and inventory holding cost (Atkinson, 2005). The main purpose behind a Just-In-Time system is to have the supplies a firm needs at the exact moment that they are needed. In order to accomplish this goal a firm must constantly be seeking ways to reduce waste and enhance value.

Companies can look at their inventories, materials, staffing, processing steps, and activities to find innovative ways to reduce this waste. By reducing labor and production times, a company can increase their efficiency and productivity. This can lead to greater competition and revenues.

Dell Computer Systems is an example of how using the JIT system reduced cost and improved the performance of the company. A computer loses value as it sits in inventory; therefore, Dell realized that they need to supply their customers with the products as they are ordered (Atkinson, 2005). Kevin Rollins, CEO of Dell states that “The longer you keep it the faster it deteriorates. Because of their short product lifecycles, computer components depreciate anywhere from a half to a full point a week. Cutting inventory is not just a nice thing to do. It’s a financial imperative.” (S.F. Gate, July).

The table below shows Dell’s Inventory Turnover Data (Atkinson, 2005).

Dell’s Inventory Turnover Data

Year Inventory Turnover Week's Inventory

1992 4.79 10.856

1993 5.16 10.078

1994 9.4 5.532

1995 9.8...