Final answer:
The just-in-time inventory system offers savings on warehousing, improved quality control, and greater efficiency compared to traditional materials-requirement-planning systems.
Step-by-step explanation:
Benefits of Just-In-Time Inventory System
The just-in-time inventory system, compared to a traditional materials-requirement-planning system, offers various benefits for businesses, particularly in the automotive industry. One key advantage is considerable savings on warehousing costs, as parts are delivered as they are needed rather than stored long-term. This also allows for improved quality control, since defective parts are identified immediately, preventing a large batch of faults from entering the production chain.
Another significant benefit of the just-in-time system is the reduction in ‘waste’ or excess inventory, leading to a more efficient and streamlined production process. For consumers, this translates into better productivity, a greater variety of goods, and potentially lower prices as cost savings can be passed on. Additionally, the just-in-time approach can create a leverage for non-union labor, as the need for workers at sub-assembly plants becomes critical to the uninterrupted operation of the entire supply chain.
Despite the efficiencies, just-in-time systems can be vulnerable to disruptions, as evident when workers at a parts plant go on strike, causing a domino effect that brings the entire manufacturing process to a halt. Overall, while the traditional materials-requirement-planning systems ensure stability with ample inventory, just-in-time inventory systems optimize resource usage and can lead to a more adaptable and cost-effective manufacturing environment.