Is the just in time method of stock management compatible with flow production?

Answer 1

JIT only works if items are readily available from stocks held by alternative sources, otherwise ensure

• item is in continuous production and readily available from reliable supplier/s; and/or
• for long production lead time, that you remain in close contact with supplier, providing real delivery deadlines and continuously monitor supplier
• prepayment may be necessary if items are prohibitively expensive to produce and represent a major investment for supplier
• if critical to your production and available from limited sources, especially if equally desirable to your competitors, arrange transfer of title at partial completion points, make sure partially completed items and component parts procured for you are labelled as your property
• perform due diligence on potential suppliers before hand, arrange a plain English term contract and confirm every exchange in writing

In summary, any decision to abandon holding buffer stock in order to achieve savings must take in to account that such strategic procurement arrangements are complex and require a high order of expertise and experience and involve tremendous administrative effort. The more critical the components the greater the risk and therefore higher the cost.