Learning about Just In Time manufacturing

Holding too much inventory can be a huge burden to your company. If you are carrying a large inventory and your customers aren't buying the inventory in a timely manner, it will tie up your cash reserves and this leads to problems with the day to day manufacturing process. You won't have free money to pay for other needs of the business because you are waiting around for customers to come in and buy the products you have already produced.

A number of companies make this fatal mistake and they think that they will make more money per product sold as they are paying less to have the product manufactured. For products that are in high demand, this type of thinking is smart. For products that are not in high demand, you will end up hurting the company more than helping it. You want to look into your sales numbers to find out just how much money you really should be putting toward reordering more products.

Introducing just-in-time manufacturing. Just-in-time manufacturing is one of the best ways to improve the return on investment for your products. You will eliminate the high amount of inventory you usually carry and you will instead focus on making products to order. If you order a lot of products and let them sit in inventory, they lose their value because you are paying for them with your money until the customer finally orders them. A lot of companies even make a worse mistake and they end up discounting all of the products to get rid of them because they need the money so they can sustain their cash flow again.

With just-in-time manufacturing you will end up using a process commonly called Kanban. Kanban is a part of lean manufacturing and it has been successful for a number of companies. What you will do is create a visual system so you know when you need to reorder products. Have you ever gone to a soda machine and you noticed some of the beverages had red lights above the button to indicate that they are out of stock? This is kanban. You can implement a system similar to this one by using visual control tools that allow you to see when your inventory levels need to be replenished.

Kanban commonly uses notes or tickets to let you know when you need to reorder inventory. The ticket system works just like the light system as you can easily see that you are out of stock and you need to order products.The ticket method is common for a lot of companies that sell big products like televisions and couches. This way the customer simply collects an "out of stock" ticket and they take it to the register with the intent to buy the item that day if it is possible. As long as you have a bin system when you can quickly satisfy this order and then go back to ordering more products to replenish your inventory, you will be able to keep your customers happy.

Besides keeping on top of your inventory, why should you consider using just in time? Just in time helps you to see where you are wasting money. With just in time you will be able to easily see how you are wasting money on the production of products or on the cost of raw goods. This is a great way to take positive steps toward improving your company.Inventory is considered an incurred waste not a value to the company.

If you want to have better control over your inventory and you want to focus on saving money, use just in time today and you will start to see the benefits quickly.