Accounting Research Paper
Just-In-Time Inventory PracticesAnthony EntsmingerUpper Iowa UniversityAccounting Principles II/BA 202June 12, 2016Ron GodwinAbstract This paper takes an in-depth look at Just-In-Time inventory from its humble beginnings to the widespread philosophy that has been adapted by manufacturers world-wide. Formally beginning in Japan in the 1940’s, JIT has grown and adapted to become a process saving both time and money for companies everywhere. While JIT can lead to great profit, it can also stumble upon loss if not managed and done in a way to benefit a company. With thought and time, a JIT manufacturing concept can mean the difference between success and failure for a company.Just-In-Time Inventory To some people, the concept of just-in-time inventory means little to nothing but in the world of manufacturing and production, this process can mean the difference between huge profit and huge loss. The concept of just-in-time inventory manufacturing is the process in which profits are increased in manufacturing by reducing the costs of both the inventory and the costs that go along with it through various mean of reduction. This system can be helpful in places where resources are scare or hard to come by and when a profit is to be made with little inventory. This system also goes by the name Toyota Production System.
A History of Just-In-Time Inventory While some may think this process is relatively new, it has been around for several decades with its roots stemming from the tumultuous, war-riddled 1940’s. The Toyota Production System alias that JIT manufacturing goes by was not a coincidence or accident. The origins of this system come from Taiichi Ohno, the former Vice President of Toyota Company in 1940 (Lynn, 2013). He created this system to bring down manufacturing costs in times when materials were limited due to war needs and when costs needed to remain low. Though the 1940’s was the formal introduction to this idea of Just-in-Time manufacturing, the origins of it can be researched as far back as Eli Whitney in 1799 (Bodek 2016). During this time, Mr. Whitney pioneered the idea of mass production at a low cost when supplying tools for the United States Army at a price so low that it was astonishing to those who heard it. This process was a first look at how things were produced and the actual costs that went into production per item and how all functions and processes had to come together as a unit to produce the items. This was the earliest and bare-bones root to what would later become a manufacturing phenomenon.