Just in Time

Just in Time could refer to both production and inventory management.

In reference to inventory management, it's a strategy that businesses use to increase efficiency. The process involves ordering and receiving inventory for customer sales only as it is needed, and not before. For production it is the same thing, items are only produced as the customers demand them and they will always receive them just in time.

This type of inventory management provides many benefits, but is not without its downsides, and relies heavily on factors such as a strong, fast and efficient network of suppliers.

The Purpose and Benefits of JIT

Ordering inventory on an as-needed basis means that the company does not hold any safety stock, and it operates with continuously low inventory levels. This strategy helps companies lower their inventory carrying costs, increase efficiency, and decrease waste. JIT requires manufacturers to be very accurate in forecasts for the demand for their products.

Just-in-time inventory management is a positive cost-cutting inventory management strategy with the goal of it to improve a company's return on investment by reducing non-essential costs, reducing storage space, while still delivering the product needed at the proper time.

The JIT inventory system represents a shift away from the older "just-in-case" strategy, in which producers carried much larger inventories of stock and raw goods, in case they needed to produce more units because of higher demand.