JIT (Just-in-Time)
Just-in-Time refers to an important supply chain inventory management approach that suggests that all inventories must be made available during the time when the organization requires them without an extension or reduction of the deadline. JIT approach plays a critical role in managing lead times and reducing wastage caused by maintaining large and costly amounts of inventory (Coyle and Coyle, 2009). Moreover, organizations that implement the JIT inventory approach benefit from a balanced financial performance made possible through continuous cash flow and the presence of a stable supply chain. A production order provides details of the time of manufacturing, quantity manufactured, and the time of production. Therefore; JIT approach makes a close follow-up of the production process to ensure materials are made available at the correct time and in demanded quantity (Nordmeyer, n.d).
Material Requirement Planning refers to an inventory and production planning system that operates on the dependent demand of a product that assists in achieving a master schedule requirement. MRP operates by eliminating excess stock, maintaining low inventory levels, and making products available at the required time by equating the date of delivery to the date time of demand of the product. Additionally, MRP approach to supply chain offers effective plans for purchasing, manufacturing, and delivery leading the proper management of cash flow, production scheduling, inventory and distribution, and labor capacity planning (Nordmeyer, n.d).
The relationship between JIT and MRP in maintaining proper levels of inventory
According to Coyle and Coyle (2009), managing inventory depends on the amount of product to order and the time to order. The present day business environment is characterized by high service requirements, longer product lines, competitive global markets, and increased service requirements calling upon supply chain managers to establish effective strategies to manage the inventory. The relationship between JIT and MRP plays a critical role in maintaining acceptable levels of inventory by combining material usage and time of ordering. MRP projects the usage of materials while JIT establishes when the organization should order for new materials after reaching specific minimum level determined by MRP.
References
Coyle, J. J., & Coyle, J. J. (2009). Supply chain management: A logistics perspective. Mason,
OH: South-Western Cengage Learning.
Nordmeyer, B. (n.d). JIT Vs. MRP. Azcentral. Retrieved Jan. 12, 2017, from
http://yourbusiness.azcentral.com/jit-vs-mrp-17297.html
