INDIAN OEMS YET TO ADOPT INVENTORY MANAGEMENT PRACTICE

No Indian auto manufacturer till date has implemented just-In-time (JIT) end-to-end in supply chain, a widely adopted inventory management practice in the auto manufacturing industry, thus running the risk of sudden shifts in orders and bloated inventory which leading to potential disruptions in operations and financial strain.

According to Vector Consulting Group, JIT is a pull-based inventory movement method known for significantly reducing inventory costs, enhancing efficiency, lowering waste, and improving responsiveness. Without a pull system for inventory which is in sync with the market, smaller players (tier 2/3) in the auto supply chain often face the bullwhip effect which reflects in sudden shifts in orders and bloated inventory, leading to potential disruptions in operations and financial strain.

After Toyota pioneered JIT in the 1970s, the company’s resounding success inspired widespread adoption and adaptation of JIT among other automakers worldwide. The India auto industry too created auto hubs to bring suppliers closer, streamline logistics, and foster collaboration. Therefore, this industry (compared to others) is best geared to fully implement JIT (including Kanban and Heijunka) in the end to end supply chain.