Just-in-time inventory management is an inventory strategy that is primarily used to increase efficiency. In simplest terms this strategy means ordering inventory as you need it, this way you aren’t stuck with a surplus that you don’t need. It is a very good cost cutting strategy as well. A very big disadvantage of this is that if your inventory supplier has a breakdown and can’t deliver your goods on time, you basically have no way of selling your inventory. In order to make money you need your inventory to be present. This management strategy would be much more useful for small businesses.
Key Takeaways:
- Just-In-Time inventory management is also known as The Toyota Production System and lean manufacturing.
- With JIT, manufacturers must be extremely accurate with their product demand forecasts.
- JIT is a cost-cutting inventory strategy, however, it can result in stockouts.
“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.”
Read more: https://www.thebalancesmb.com/just-in-time-jit-inventory-management-393301
