JUST IN TIME vs. STOCK

In a business is very important to manage and storage stock in an effectively way in order to maintain production and sales. To have an efficiently control of it, in this essay will we explained the advantages and disadvantages of having or not having stock and having the Just In Time method applied in your business.
By stock we understand that is any item stored by a business for use in production or sales. There can be different types of stocks, one, raw materials and components which are the ones that are waiting to be used in the manufacturing process, number two, finished goods which are held in store so that a customer order can quickly be met from stock.
To manage your stock successfully, you need to find a balance between the costs and benefits of holding stock. The costs of holding stock include the money you have spent buying the stock as well as storage and insurance. The benefits include having enough stock on hand to meet the demand of your customers.
We have to be aware that having too much stock equals extra expense for you as it can lead to a shortfall in your cash flow and incur excess storage costs or that having too little stock equals lost income in the form of lost sales, but not just that, also undermining customer confidence in your ability to supply the products you claim to sell
Holding stock incurs warehouse storage costs and ties up working capital. Funds must be found to pay for materials, components and unsold goods with interest.
Running out of one item of stock could bring the whole factory to a halt. Employees must still be paid even though they do not have the parts to carry on production
Because all of this there has been some methods created that can benefit you to have a controlled stock according to your business, giving you a balance between your sales and your customers demand. One of these methods is the Just In Time, this method is based on not holding stock, instead relies upon deliveries of raw materials and components to arrive exactly when they are needed.
This requires a carefully planned scheduling and flow of resources through the production process. Modern manufacturing firms use sophisticated production scheduling software to plan production for each period of time which includes ordering the correct stock.
Some of the advantages of applying the JIT method in your business are: * Lower stock holding means having a reduction in storage apace whci saves rent and insurances costs * As stock is only obtained when it is needed, less working capital is tied up in stock * Avoids to build up of unsold finished product that can occur with sudden changes in demand * Less time is spent on checking and re-working the product of others as the emphasis is on getting the work on time.
As it has advantages it also has some disadvantages, these are: * There is little room for mistakes as minimal stock is kept for re-working faulty product * Production is very reliant on suppliers and if stock is not delivered on time, the whole production schedule can be delayed * There is no spare finished product available to meet unexpected orders, because all products are made to meet actual orders.

In my opinion I believe that the just in time method is very beneficial for businesses stock control, it just depends on you and the way you run your business and how you have your stock managed to see if this method will run good.