Just in time (JIT) Inventory Management

Inventory Management (JIT)

Just-in-time (JIT) inventory management is a strategy used in manufacturing and supply chain management that aims to minimise inventory levels and associated costs by receiving materials and producing goods only when they are needed, rather than keeping excess inventory on hand. JIT inventory management's fundamental tenet is to only make products when there is a demand from the client and to supply them as soon as possible.

This method of managing inventories is founded on the notion that keeping extra inventory wastes resources and ties up cash that could be utilised for other things. Additionally, surplus inventory has the potential to spoil or go out of date. Additionally, JIT inventory management aims to shorten lead times and get rid of waste in the manufacturing process.

To implement JIT inventory management, companies typically establish close relationships with their suppliers and work closely with them to ensure that materials are delivered when needed. This requires a high degree of coordination and communication between the company and its suppliers. Companies may also adopt lean manufacturing principles to streamline their production processes and eliminate waste.

While JIT inventory management can result in lower inventory carrying costs and reduced waste, it can also increase the risk of stockouts and supply chain disruptions, since there is little or no safety stock to fall back on. As such, companies must carefully balance the benefits and risks of this approach and develop robust contingency plans to manage supply chain disruptions.