Just-In-Time Inventory
Midland Motors, an American Original Manufacturer Equipment company (OEM) recently placed a large order for Electronics Component Units (ECU) and Radio Frequency Identification Device (RFID) tags order for the facilitation of inventory control in its factory. (Working Capital, 2007). Kuiper Leda will need to increase its inventory in order to meet the demand, which in turn will increase inventory costs. (Aquilano, 2005, p589). The most efficient method for Kuiper Leda to adopt is a Just-In-Time (JIT) method of inventory control in order to address this challenge. Just-in-time inventory (JIT) is the concept of only carrying as much inventory as needed to supply customers or consumers. The relationship of inventory and accounts receivable is accelerated in a JIT system, so companies such as McDonald’s and Wal-Mart are using JIT to reduce inventory costs and increase gross profits. Kuiper Leda should explore this opportunity as well. JIT is a process for optimizing manufacturing processes by eliminating all process waste including wasted steps, wasted material, and excess inventory. JIT inventory systems depend upon logistics that include: transportation, warehousing and several strategies for handling the potential supply chain uncertainties. Companies, such as Wal-Mart and McDonald’s, have turned inventory management into a fine art. Maintaining inventories at just the right level, so that they rarely run out and rarely order too much inventory thereby saving money due to reduced storage requirements. This eliminates the need for safety stocks, and reduces inventory on hand. Computerized inventory management software extends all the way to the manufacturers of products. The Wal-Mart model features a super, efficient production process in which each operation in the process (buying products from manufacturers, distributing them to the retail stores, and selling them to customers) is connected to the next one to form a continuous...