Dells Just In Time Inventory Management system

dells exactly In Time Inventory Management scheme of rules but-in-time (JIT) manufacturing is specific type of account product strategy that is used to modify a guilds return on investment through a cutback of contrast held. The primary goal of JIT is the achievement of zero inventory, not just with inwardly the confines of a singe organisation but ultimately throughout the entire hang on chain (Hutchins 1988). Many companies ar making the modulation into adopting JIT manufacturing however it was the automotive application sector that initially pi onenessered the principle. It was first real by Toyota in the 1980s and it is now frequently used indoors the production of a diverse range of different goods. Nowa old age companys inventories ar shrinking to almost nothing mainly because of the large increase of JIT manufacturing. dingle is probably the most wellhead known job that had implemented the range manufacturing process. Therefore for the purpose of this rep ort I am going to boil down on how dingle the data processor producer has integrated JIT, a special type of inventory counsel into their firm.2.1 dingle company analysisThe Dell Com raiseer Corporation is one of the leading sellers of PCs with its main rival existence the Hewlett Packard Company. (Mintel 2009) claims that Dell is the the number two supplier world crosswise-the-board. It is a very winning firm that has gained exceptional sales accomplishments because of its unique draw a bead on marketing model. They realise had the right amount of resources deep down their bloodline to develop an extremely victorious inventory production model. As a result Dell has gained agonistic edge and many rival estimator companies are now kickoff to replicate Dell. However simply imitating Dells strategy without fully investigateing the management possibleness behind it is not an ideal approach for separate firms to adopt. Most of the enterprises that hurl tried to do th is devour not succeeded, to much of a point in time that Dell has. The competitive advantages of Dell everyplace its competitors are that Dell has well thought out JIT inventory arranging and very good supplier integration. This has helped in cutting down inventory cost indoors the fear and has in like manner reduced the lead time in serving node orders for computers and laptops. This had caused Dell to gain a very successful process rise inwardly their enterprise.2.2 Dell JIT strategyIt is quite clear that these JIT inventory systems suck up evolved over the years. (Helo 2004) states that JIT is believed to enhance productivity and build a leaner manufacturing system which minimises inventories. This is because Just-in-time makes production operations much more efficient compared with other methods of production, as it is a cost effective approach. Dell realised that this would be a excellent opportunity for their business processes in the lead any other computer firms did and have in that respectfore have cut their inventories from having 20 to 25 days of inventory to having no warehousesand no more than two hours of inventory in its factories (Mishra 2009). By doing this Dell r each(prenominal)ed one of their main goals of constantly improving motion of their business. They also recognized that they could reduce expenditure by integrating and optimizing their computer manufacturing system. Overall much(prenominal) a system builds a leaner supply chain for Dell, so that their inventories are minimized.2.3 Requirements for JIT manufacturingEstablishing a JIT company like Dell requires commitment from every department and a lot of support from the companys strategical management team. A pull production method of work period needs to be put into practice for JIT systems to be useful within Dell. The entire supply chain system is built around the flexibility and speed therefore customer motivation is the factor that activates production of D ell computers. Normally this is fine within Dells business as they use the direct marketing model to sell their computers. However sometimes demand for computers canful rapidly increase without any world-shattering explanation. Dell has to have a contingency plan in place in case this happens unexpectedly. even off though inventory is low Dell still have the capability to stretch and push the factory processes to the capacity at times when demand succeeds supply.Table 1. Key Requirements for JIT Production (Lubben 1988)1.High quality standards2.Demand or pull plan3.Level production schedules4.Sufficient lead time (minimum setup time) to change to peeled products5.Long condition contract commitments from customers and with suppliers6.Contiuous improvement of the production process7.Minimum inventory in the manufacturing system2.4 Advantages of Dell adopting a JIT systemThere are a roomy range of benefits that JIT manufacturing can have on an enterprise. Firstly JIT appeals to a wide variety of businesses as it helps to prevent manufacturers from getting stuck with outdated or unuseable inventory. Dell only has 2 hours worth of inventory in their manufacturing plants. This ensures that they are controlling their production of computers fully. In addition to this it has been found that JIT adoption has significant positive results on the fiscal figures of a business. Dell has achieved a cash in conversion cycle from implementing JIT systems. This allows a healthy flow of money within their business, which will have an encouraging impact on their profitability. Another one of the many advantages to just-in-time manufacturing is the reduced cost. This is only achieved after the JIT systems has been in place for quite while, but it reduces capital tied up in stock, which allows a company like Dell to spend money on other areas of the business such as advertising and marketing. Just-in-time also has a much hot setup and saves resources by streamlining prod uction systems. This as a result prevents overproduction of computers, which will therefore help Dell with the elimination of waste within their company. As a further point JIT systems also abolishes costs of warehouse space and storage facilities. This also allows Dell to inject cash into other parts of their enterprise and can also keep travel costs to a minimum.2.5 Limitations of a company such as Dell implementing JIT manufacturingJust as JIT manufacturing has many strong points, there are some weaknesses as well. The Just-in-Time system may not suit every business, thorough research needed to be done by Dell to ensure such inventory management would work in the way they wanted it to, before they executed it. This would have been a very gigantic process as they would have needed to weigh up the risks it could have on their business. In addition to this it is difficult and very expensive to introduce as there is possible large initial set up costs, which may put some businesses off. This did not put Dell off as they knew the long term benefits would mean that they would be get on more profitable if they introduce this method. They also found that it would allow them to gain continuous improvement within their business practices in the future, which could allow them to become the superior computer manufacturer over the Hewlett Packard Company who currently has the top spot in the industry. It is also full-strength that JIT processes can become vulnerable to market demand fluctuations and unforeseen production interruptions. Again Dell had to look in depth into the buying patterns of their customer base, before investing in JIT systems within their firm.ConclusionJust in time manufacturing can have a positive influence on an enterprise such as Dell and by utilizing JIT systems they have gained a competitive edge against similar rivals in the computer industry. The direct merchandising model compliments their JIT systems which could in the future make them the worldwide drawing card in computer manufacturing. However as an important point inventory management systems do not appear to be consistent across all industries. Dell Computer Corporation must critically tax the strengths and limitations of implementing Just-in-time systems within their operations. Nevertheless Dell has done their research correctly and as a result JIT is rather successful within computer manufacturers. It is true that the computer industries do not have the experience of JIT systems that the automotive industry has, but it has successfully implemented JIT principles over the past 20 years and will continue to in the future. In addition to this implementing a new concept such as JIT systems requires a constant support from each and every aspect of the organization. It demands complete support from every department operational in the organisation. If a company like Dell accomplishes the implementation of JIT buy systems it can result in improved productivity. Despite JIT process it ego is not complicated, the implementation stage is not easy to face at all. However it is possible the system can bring high levels of fighting to big companies such as Dell and they have proved this with their financial status in the market. The most important factor Dell has to remember, is that they have to sustain good working relationships with their suppliers for JIT to work within their organisation in the first place. For the reasons highlighted in the paper above I can come to the conclusion that Dell have successfully implemented JIT inventory management within their business processes and they are using continuous improvement within their company to maintain to be one the leading manufacturers of computers and software.References ALPHABETICALLYHelo (2004) Managing light and productivity in the electronics industry Industrial Management Data SystemsHutchins (1988) Overview of JIT Just in TimeLubben (1988) Pull production system Just-in-time Man ufacturingMintel (2009) PCs and Laptops online Available at http//academic.mintel.com.lcproxy.shu.ac.uk/sinatra/oxygen_academic/search_results/showHYPERLINK http//academic.mintel.com.lcproxy.shu.ac.uk/sinatra/oxygen_academic/search_results/show/ boast/id=474522/display/id=475761hit1HYPERLINK http//academic.mintel.com.lcproxy.shu.ac.uk/sinatra/oxygen_academic/search_results/show/display/id=474522/display/id=475761hit1/display/id=474522/display/id=475761hit1 Accessed 30 April 2010Mishra (2009) Just-In-Time production the Dell Way online Available at http//penofaparanoid.blogspot.com/2009/06/just-in-time-production-dell-way_18.html Accessed 30 April 2010http//www.ehow.com/about_5099120_pro-just-time-inventory-system.html