In the preceding chapters, a great deal of space was dedicated to the importance of materials requirements planning (MRP) to contemporary SCM. Although a functional model, the biggest knock against MRP is its emphasis on carrying inventory to avoid disruptions in the supply chain. Just in time (JIT), on the other hand, has come to the forefront of SCM in recent years due to its goal of zero inventories. While very appealing on paper, the execution of JIT models in global markets is extremely challenging and can be likened to walking a tightrope without a net. A comparison of the principles of MRP and JIT is presented in Table 7.1.

Noting that the DuPont formula was first utilized on a wide scale in the automotive industry, it is probably not a coincidence that JIT also has its origins in this sector. With large investments in raw materials, work in process and finished goods, it's no wonder that automotive executives have worked for years to devise methods to reduce inventories any way they can. However, the value of JIT has been somewhat discounted because of managers' obsession with eliminating inventories. The reality is that JIT is much more than a mere inventory exercise. The JIT philosophy encompasses an entire body of...