Just-in-time inventory management, also known as JIT, involves buying products from suppliers only when necessary. The main objectives of this strategy are to increase the inventory turnover ratio and reduce the cost of maintaining inventory.
Just-In-Time is a production strategy used in manufacturing and supply chain management. The goal of JIT is to produce or deliver goods or services at the exact moment they are needed, neither too early nor too late. This approach aims to minimize inventory costs and improve overall efficiency.
In JIT manufacturing, raw materials and components are received from suppliers right before they are needed in the production process. Finished goods are produced in small batches based on customer demand, reducing the need for storing large inventories. By synchronizing production and supply with customer demand, JIT helps companies avoid overproduction, reduce lead times, and decrease waste.
JIT is closely associated with lean manufacturing principles and is often implemented alongside practices such as continuous improvement, waste reduction, and employee empowerment. It requires a well-coordinated and reliable supply chain, effective communication between suppliers and manufacturers, and close monitoring of customer demand to ensure timely delivery.
While JIT can offer significant benefits in terms of cost reduction and efficiency, it also comes with certain risks. Any disruption in the supply chain or unexpected changes in customer demand can have a significant impact on production and lead to delays or shortages. Therefore, careful planning, strong relationships with suppliers, and robust risk management are crucial for successful implementation of JIT.