Just In Time Inventory Essay

3185 words - 13 pages

IntroductionAn integral part of the success of any organization rests upon its ability to implement an effective financial and accounting process. In an effort to provide readers with an example of an effective financial/accounting process, Team A has developed this report focused around a process known as the "Just-In-Time" (JIT) process. This paper will analyze the JIT production system in which the production and movement of goods are expedited in a more efficient method, while effectively improving upon the financial/accounting process of the organization. This paper will cover various issues pertaining to the JIT process, providing readers with an increased awareness of how the JIT process affects the financial/accounting process of an organization.Definition and History of Just-In-Time InventoryWhile researching an accounting and finance topic, team A collaborated many ideas about just-in-time inventory. This topic was chosen because of its reality in the ever-changing business world. Just-in-time inventory is a system in which a company schedules production just in time to satisfy needs. Materials are purchased and finished goods are completed only as needed to satisfy customer demand. (Financial Analysis for Managers II) It can be grasped conceptually as for everything happens just in time. Let us explore a journey to Laker's game: I left my house just in time to get a bus to the airport, just in time to catch the plane, just in time to arrive at Staples center, just in time to get into the auditorium, just in time to catch the games tip off. (http://mscmga.ms.ic.ac.uk/jeb/or/jit.html) This concept is also known as a technique/philosophy way of working or a lean production system.This concept of JIT began in Japan. It is usually associated with the Toyota motor company. This was originally known as the "Toyota Production System".This way of doing business was completely different than the traditional way of production systems. (Difficult to implement/Expensive/Timely) It eliminates and helps reduce raw material inventory. Years ago Toyotas manufacturing of cars was in low demand and with fixed prices, they were unable to increase profit mark up. Therefore, Toyota then focused on cost reduction. Production leveling was then created between the products coming in and the finished goods going out. Machinery was also moved around and instead of the same machinery all in the same areas; they focused on more of a line flowing technique to produce at a quicker rate. The workforce then had to learn to operate different machines. Hewlett Packard implemented the JIT process and it was known as the "stockless production".Anheuser-Busch used JIT with breweries and retailers. Finished product loss (FPL) also known as, out of code, is an ongoing expense at Anheuser Busch (AB). Due to the ongoing concern about quality and freshness to the consumers, AB began to pick up this huge expense with the born on date. This born on date was a great idea but...

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