Just-in-time Inventory

What is Just-in-time Inventory?

Just-in-time (JIT) inventory is a strategy aimed at improving a business's return on investment by reducing in-process inventory and associated carrying costs. It operates by scheduling the arrival of inventory as close as possible to the time it is actually needed in the manufacturing process, effectively minimizing waste and ensuring a lean inventory system.

Short Description: An inventory strategy that aligns raw-material orders from suppliers directly with production schedules to reduce inventory and increase efficiency.

• Efficiency: It reduces the costs of holding inventory by minimizing warehousing expenses.
• Waste Reduction: It cuts down waste by only ordering what is needed for production.
• Supplier Coordination: It requires strong relationships and coordination with suppliers to ensure timely delivery of materials.
• Risk Management: Less buffer stock, meaning any disruptions can impact the production process significantly.

Adopting a JIT inventory system optimizes resource utilization but demands meticulous planning and a reliable supply chain to function effectively.