s paper will examine the relationship of JIT and the accounting process, to see in which ways JIT impacts the recording of a company's assets, sales, and profits.
Inventory, for this analysis, is considered to include two classes: raw stock (commodities, parts, components) and actual products. Within this analytical breakground are two subsets of pricing situations -- the price raw stock and the price of products. Tracking inventory in a just-in-time system is critical. Whether the business assembles components (as in an auto plant) or manufactures from raw materials, resupplying the line just-in-time to keep it running requires exquisite control and coordination. Nothing can come up short. Shortly after a shortage occurs, either the production line will stop and production will cease, or the retail operation will be unable to sell or deliver products it has advertised.
The "asset" concept of just-in-time management is that it prevents the need for extensive and costly inventory purchasing as well as the costs of storing the inventory and establishing controls to prevent pilferage or damage (Cadeaux, 1997, 200). The "debit" concept of JIT inventory control is that it becomes a constant necessity and requires good employee support simply because the company does not have any standing inventory or safety margin from which to draw, as in the traditional system.
For the manufacturer, adopting a JIT management theory, the result is walking a knife-edge daily, balancing incoming parts inventory with production demands on the assembly line in order to remain in operation. To perform tracking correctly within a just-in-time system, all of the functions which, in the traditional system, would have to be performed weekly, monthly, or quarterly must be performed daily or weekly -- and perhaps even hourly. Tracking inventory through such a system demands that every facet of assembly be highly organized. Only in that way can a ...