![]() Disadvantages of Just in Time Inventory management system : ![]() On the flipside, Just in Time Inventory management has its potential disadvantages. Just in Time Inventory adoption results in the elimination of overproduction of the goods.Īlso Read Quality Circle: Meaning, Features, Objectives, Structure, and Techniques.It ensures higher customer satisfaction owing to the continuous communication with the customers.Better relationships are fostered within the production chain of the firm.Greater levels of efficiency and high-quality products can be derived.It harps on the concept of right-first-time so that the rework costs and the cost of inspection are minimized.As this methodology works on a demand-pull basis, all the goods produced would be sold, and it includes changes in demand with an unexpected ease.Owing to the low level of stocks held, the Return on Investment of the organization is high in general.A minimum re-ordering level is set, and only when that level is reached, order for fresh stocks are made and this becomes a boon to inventory management as well. As under this method, only essential stocks that are required for the manufacturing process are obtained results in the less working capital requirement.It helps to eliminate waste and the chances of expired or out of date products do not arise.The released capacity results in better utilization of the space available and bears an encouraging impact on the aspects of insurance premiums and rent. The approach keeps stock holding costs to a bare minimum level.Less amount of dead stock : As inventory levels mainly rely on customer demand, there is a less risk of unwanted stock left sitting unused in the warehouse.Improved cash flow : As there is no need to store large volumes of inventory at all times, capital expenditure is reduced considerably and the saved cash can be invested elsewhere. ![]()
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