The issue of JIT is mainly about achieving efficiency in the inventory control system which is part...

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The issue of JIT is mainly about achieving efficiency in the inventory control system which is part of the firm’s overall working capital management policy. As we have learned in the textbook, working capital management is all about managing Current Assets (CA) and Current Liabilities (CL). Firms with a positive Net Current Assets (CA > CL) is usually regarded as healthy firm. However, to what extent this is true is very much subject to empirical validation.Questions: do we really observe firms’ with JIT in place have a healthy working capital management position? In the case of no, what could be the best plausible explanation? Is there any recent practical example/case that exemplify the issues of JIT and working capital management? What can we learn from such example/case? (hint: search Financial Times).

David · Accepted Answer

While analyzing the JIT and working capital management we can understand that use of JIT sometimes helps the company to reduce the working capital and in some cases it also have a adverse effect. The decision is based on the company and nature of the product that they deal with. Just in time reduces the working capital needs of the business. We know the fact that with the help of Just in Time we can able to reduce the wastages and it also helps for providing quality products to the customers. Just In time also helps for cut down the ca
ying cost related with the raw materials and products. Most of the companies are using the technique of Just in Time in the inventory management practices (Abor 2017). If we...

The issue of JIT is mainly about achieving efficiency in the inventory control system which is part of the firm’s overall working capital management policy. As we have learned in the textbook, working...

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