The FINANCIAL implications / impacts of JIT implementation - Essay Example

Planning for any business enterprise implies to different techniques which are helpful in running the business smoothly. In modern approach, there is special concern over saving the resources and JIT Technique is one of these approaches. JIT (Just-In-Time) is to schedule manufacturing activities in a manner to minimize or even eliminate inventories of direct material and finished goods. The concept of JIT reveals access of major goals within the limited time frame so as to save the time and cost.

In a manufacturing business, companies interact with JIT and avail advantages of time and cost saving. The implementation of JIT may vary upon the nature of operations that are performed by the enterprise. There can be two applications of JIT to manufacturing operations. Many operations involve arrival of direct materials just in time when the manufacturing process is ready. Secondly; it can be applied to the completion of manufacturing process within the time frame so as to ship finished goods to the market.

The technique is widely accepted for the advantages it offers to the manufacturing enterprises. A company that runs a manufacturing business needs to complete the order of specific goods. Using JIT, it can avoid the need of a finished goods Inventory account or subsidiary ledger. When the order is fulfilled the goods are directly marketed to cost of goods sold avoiding their entry to work in process inventory account. It may reduce the requirement for materials inventory records as well as those for finished goods.

Purchase of material may be debited directly to the work in process inventory account and cost of finished goods may be debited directly to the cost of goods sold. In short, the introduction of JIT brings simplification to the accounting process. It also offers other advantages .The most significant benefit is that the company does not have to tie up money in large inventories of direct materials and finished goods. Also the company doesn't need to maintain storage facilities for these inventories.

These inventories are not only costly to maintain but increase cycle time and inhibit the detection of defective parts. The JIT guides to an easy access to manufacturing operations. This include acquiring of material just in time for production, and then advancing to next stage just in time and the process goes on till the final stage for shipment to customers. All operations are fulfilled just in time and a lot of time as well as money is saved .This saving can utilize for other purposes and thus the extra time and money wasted in traditional methods are saved.

The JIT signifies the value added activities and overwhelms all other unnecessary operations that are of trivial importance and time consuming. The JIT Technique has converted the traditional slow and idle process of manufacturing to highly efficient and cheaper process. It has transform activity in the industrial process. Where JIT has been introduced, these changes are apparent in the sense that there is a huge increase of quality product. It has disengaged all non-value-added costs, such as defective materials, in-process inventories, and delays which were the characteristics of traditional system.

The production cycle time has changed to minutes instead to hours or days in traditional process Even the quality of