Pros and Cons of Just in Time Inventory System: Lava Rocks Example

Lava Rocks has presented me with the question of whether the just-in-time inventory strategy would be beneficial to the organization or not. With all of the problems of trucks arriving at different times of the day to over stocking and understocking of materials, I think the JIT inventory strategy needs to be considered. Let's take a look at the pros and cons of the JIT inventory system so Lava Rocks can make a decision.

The Pros of JIT Inventory System

According to Wikipedia (2007), "Just In Time (JIT) is an inventory strategy implemented to improve the return on investment of a business by reducing in-process inventory and its associated costs". The products that are manufactured will be produced according to the amount of products needed. Products will be shipped out as soon as they are completed eliminating the need for storage. Once the costs from the storage facilities are eliminated, the company will see an increase in profits. Implementing a JIT inventory system also allows the same products to be produced which means there will be less mistakes. The quality of the products will increase since the same products are made every time without any changes to them.

The Cons of JIT Inventory System

JIT has more pros than cons signifying that it may be a better idea to implement than not. One of the cons of a JIT inventory system is when a malfunction occurs in the equipment or the products. How long will it take to repair the parts of the equipment? You have to remember that there is money involved in every process so when the equipment breaks that is less products being produced. Another con to implementing a JIT inventory system is if the product is altered during production. The whole set would need to be thrown out and the process started all over again.

Lava Rocks JIT inventory system