20/02/2012

Inventor Management Review: McDonald's, a guide to the benefits of JIT

Inventor Management Review
Charles Atkinson on inventory management topics.
Nov ember 08, 2005

McDonald's, a guide to the benefits of JIT
Just-in-Time (JIT) inv entory is the big thing right now in operations. This, along with lean operations and six sigma are the buzz words being talked most about. But what ex actly is the deal with JIT operations? First of all, JIT is a form of prov iding supplies for customers, as the name suggests, just in time. For ex ample, Dell, whom I wrote about, has become famous for its JIT model which inv olv es not ev en being in possession of the raw materials needed to fulfill an order until that order is placed and y et they are still capable of filling orders in a short period of time. McDonald's is another ex ample of a JIT sy stem wherein McDonald's doesn't begin to cook (well, I should probably say reheat and assemble what may or may not be actual food) its orders until a customer has placed a specific order. What used to be the case was McDonald's would pre-cook a batch of hamburgers and let them sit under heat lamps. They would keep them for as long as possible and ev entually discard what couldn't be sold. The only way to get a fresh hamburger under the old sy stem was to make a special order. Now, due to more sophisticated burger-making technology (including a record-breaking bun toaster), McDonald's is able to make food fast enough to wait until it's been ordered. What both of these firms do is they prov ide a customer with their order as fast as possible while hav ing the finished product sitting in inv entory for as short as possible. What are the benefits for McDonald's? The major benefits for McDonald's are better food at a lower cost. Let's stop here for a second to driv e home a v ery important point: Whenev er y ou can