Question- Explain the risks of JIT.

Ans.

Risks of JIT

These are as under-

1. Missed Opportunities : With few or no finished goods on hand, a company may not be able to meet massive and unexpected orders immediately.

2. Unexpected Price Changes : In JIT, the cost for parts is constant. When costs rise, profit margins drop.

3. Undisciplined Staff : Team members that are not on board with JIT can affect productivity quality and other issues.

4. Supplier Dependence : A supplier who does not deliver goods on time and in the right amounts can disrupt the entire production process.

5. Acts of Nature : A natural disaster that interferes with a vendor's flow of goods can halt production.

6. Lack of Preparedness : The business's entire workflow needs to convert to a lean framework. These actions affect the organization and the supply chain, which may need to change its procedures and practices.

7. Supply Chain Disruptions : Disruptions in the supply chain can stall the production process.

8. Local Sourcing Costs : JIT relies on local sourcing, which can cost more for a number of different reasons. This dependency can also affect profitability in the pursuit of reliability.

9. Time Pressure : Scheduling may increase the cost of goods sold (COGS) because there's no guarantee a company will always have the best price for raw materials from a supplier.

10. Overreliance on Forecasts : Adapting to sudden surges or declines is difficult because of the reliance on forecasting.

11. Order Issues : Shortages and stock-outs can disrupt inventory systems.

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