What is a just-in-time inventory system? What are the implications of JIT for
firms that use global sourcing?
International Business: Environments and Operations, 15e, Global Edition (Daniels et al.)
Daniels, 15edition, Global Production and Supply Chains, Global Production, Supply Chain, Chapter18
Chapter 18 Global
Production and Supply Chains
#Daniels #15edition #GlobalProductionandSupplyChains #GlobalProduction #SupplyChain #Chapter18International Business: Environments and Operations, 15e, Global Edition (Daniels et al.)
Daniels, 15edition, Global Production and Supply Chains, Global Production, Supply Chain, Chapter18
Answer: JIT systems focus on reducing inefficiency and unproductive time in the production process to continuously improve the process and the quality of the product. The JIT system gets raw materials, parts, and components to the buyer "just in time" for use, sparing companies the cost of storing large inventories. However, the use of JIT means that parts must have few defects and must arrive on time. That is why companies need to develop solid supplier relationships to ensure good quality and delivery times if JIT is to work. Foreign sourcing can create big risks for companies that use JIT, because interruptions in the supply line can cause havoc. Quality of inventory is important, because inventory with significant amounts of defects will create problems for JIT. If the buyer has to purchase more because of expected defects, there will be not only wasted inventory but also higher carrying costs.
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