Intro to supply chain management Management Essay Paper

A Case on Supply Management Chain
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A demand-based ordering system, also known as just in time (JIT) method, is a strategy of supervising the inventory that prioritizes the purchase of raw materials based on the production schedule. Many companies practice the JIT method to produce products that are directly associated to the purchases being placed, instead of producing unnecessary number of goods to meet the potential demands. Ultimately, this technique saves the company from unwarranted costs of production. Hence, it emancipates the cash flow CITATION Cornd1 \l 13321 (Corporatefinanceinstitute.com, n.d.). As a newly hired manager of consumer products, it is one’s responsibility to discuss the specifics of this method to the employees. This is to help them understand the necessary actions that must be executed in the work environment.
The use of this specific strategy comes with advantages and disadvantages. This is regarded as cost-efficient method of keeping merchandise in stock due to the following reasons: 1) It reduces the use of warehouse space. Secondary to an unhampered turnaround of stock, the company does not need a large space to restore the overproduced products. This is especially beneficial for starting and small businesses that do not have their own space and have to rent warehouses to store their goods. Thus, this method frees up the cashflow in the business; 2) Reduced waste. An unrestricted dispatching of stocks prevents the rising number of damaged or obsolete products that have been broken secondary to a long period of storage. On top of this, it can also save the company more cashflows since it decreases the necessity to replace old stocks; 3) Low inventory level is equal to a smaller investment. JIT inventory management is the model method for small companies or starting businesses that do not have a large capital since it is not necessary to purchase tremendous amounts of stocks at once. This is also be...