JUST IN TIME AS A MODERN PRINCIPLE OF INVENTORY MANAGEMENT

Abstract

Modern inventory management implies various techniques, policies, as well as procedures that are needed to achieve an economical level of inventory, and these are primarily those inventories that reduce the total cost of production and business to a minimum. Inventories make up a large part of the total business assets in a large number of companies, which is why they require relatively large investments. In order for these investments not to be unnecessary and unjustifiably high, inventories must be managed efficiently. Material stock strategy and tactics aim to keep the costs produced by material stocks to the lowest possible level. In order to achieve all this, we should strive to keep material stocks as low as possible.
This is achieved by shredding orders, which increases the number of orders in the time period when the arrival of materials coincides with the consumption of materials from the previous order, how to monitor or control efficient inventory management. Inventories allow for business flexibility and should be increased while the savings from holding inventories are greater than the costs of keeping them. It would be ideal if the company did not have stocks until the moment of their consumption (materials and semi-finished products), ie until the moment of sale (goods and finished products), but that ideal is difficult to achieve.
That is why the strategy and tactics of stocks come down to keeping stocks at the lowest level, but that this level does not jeopardize the continuity of the production process (stocks of materials and semi-finished products) and sales (stocks of goods and finished products). It is this level of inventories that enables good financial stability and thus solvency, with the costs of financing the holding of inventories being reduced to the lowest level, which is reflected in an increase in gross profit. Inventory-free production is based on the delivery of goods and materials exactly when and where required. Flow through the distribution channel or supply chain should be easy and without waiting.