Relier Pairs Just in time vs. just in caseVersion en ligne This section attempts to address the question of how much stock a company should hold. par Emilio Sebastian Estrella 1 Limitations just in case 2 Limitations: -Purchasing economies of scale may be lost because order sizes are reduced, leading to higher costs. -There are high risks. Production may halt if a small part of the supply chain breaks down. Any delay in delivery becomes critical for production. -It restricts a firm’s ability to react to significant, unexpected orders. 3 If a company follows a just-in-case ethos, it will keep large quantities of stock and will be able to meet unexpected orders quickly 4 Benfits: -Reduced stock holding improves cash flow -It encourages staff to be more careful; with no additional stock, staff know they need to get things right first time. -There are positive benefits for stock-holding costs. With less warehouse space needed and with less chance of waste and damage, costs are reduced. -With less stock holding, there may be more space available for production, which could increase capacity. 5 Benefits just in case 6 A just-in-time strategy aims to minimise stocks so that cash is freed up and can be used in other areas of the business Limitations of just in time Benefits of just in time: -Storage costs are higher. -There is an increased risk of wastage. -Working capital is tied up in stocks, which reduces liquidity -Production can continue if the supply chain is disrupted. -Larger orders should lead to purchasing economies of scale, reducing average costs. -Unexpected orders can be fulfilled quickly.
Créer jeu