What is Do It Right The First Time - DRIFT
Do It Right The First Time (DRIFT) is a theory from managerial accounting that relates to just-in-time (JIT) inventory where a company only receives goods as they are needed to cut down on inventory costs and production management. The idea behind DRIFT is that management wants all of the processes that make up the JIT philosophy to be done correctly and efficiently, so there are no delays in the production process.
BREAKING DOWN Do It Right The First Time - DRIFT
The importance of Do It Right The First Time (DRIFT) arises from the fact that a JIT production system is heavily reliant on the movement of parts and information along the production process. Subsequently, if there is the slightest error at one of the stages of production, the whole production process will be affected. By "doing it right the first time" a company is able to run a smooth production process without the need to carry excessive inventory, which will help diminish the costs of production.
DRIFT, JIT and Potential Hazards
While a company may realize greater gross margins from DRIFT, there are potential hazards in this production strategy. First, with no back stock of inventory or materials, any supply chain issue or unexpected surge in demand for the finished product can lead to delivery delays to end customers. Second, a JIT buyer gives up purchasing economies of scale that typically enables quantity-based discounts. The business may pay more per item because it makes smaller, more frequent orders that do not qualify for price breaks. Finally, additional shipping and handling charges that accompany more frequent ordering may erode profit margins that the DRIFT production method is meant to boost to begin with.