Assume Portion

Assume the inventory ratio is based on a traditional inventory system, but globalized markets and the supply chain make it critical to adopt lean principles to create a more efficient system. Discuss what a change to a Just- In- Time inventory system would have if adopted.

The JIT or Just in time inventory system is an inventory strategy in which the company brings in inventory just at the time that it is needed, not before or after the start of production. This will reduce the high inventory level but will require a strong supply chain. The idea behind JIT is to help company reduce inventory since it will reduce storage and staff. It also help reduce waste for materials that have expiration dates so there will be less products to throw away. Since large manufacturing companies work off a forecast of future sales it is necessary for them to have as close as an accurate forecast as possible since this will determine what products they will need to have and when. Not only will this method minimize excess inventory it also help manufacturing companies to adjust their manufacturing strategy accordingly to customers demand since the global market is always changing and people’s needs changes. Since the company can reduce cost in managing inventory they can use that resource to invest in other areas to improve business.