But implementing this practice successfully into your operations is a completely different story. Understanding what this inventory management technique means is pretty simple. You are only placing inventory orders when you have a buyer. In the case of JIT, deadstock is avoided. The problem with the Just in Case inventory technique is that you end up with a lot of deadstock (inventory that does not sell) and therefore higher costs of goods. The JIT method, also known as Lean Manufacturing, Just in Time Manufacturing, and the Toyota Production System (TPS) is completely opposite from the Just in Case inventory strategy, which consists of ordering large amounts of inventory upfront. If that is the case, they can easily go to a competitor who can deliver the product much more quickly with a more efficient inventory system. A customer who orders the windows doesn’t want to wait for weeks to receive their order. In order for the efficient aspect of this method to kick-in, your business needs to be able to deliver the inventory very quickly. You then order them from your supplier and deliver them to the customer on the exact date they need them by. So instead, you wait until a customer places an order for the exact windows they want. And the cost for all that storage space to hold windows that you might not even sell can add up quickly. You could order large amounts of windows at a time, but because of how fragile they are, the longer they sit in a warehouse, the greater the chance of them getting broken. Here’s a Just in Time example: Your construction company installs windows. ![]() When there is a buyer, you make an inventory order. An easy way to remember this is to think of JIT as being made to order. ![]() In order to keep inventory amounts at their absolute lowest point, that means ordering inventory when a customer makes a purchase. The JIT inventory system is about having the lowest inventory amounts possible in order to minimize inventory costs, increase efficiency and reduce waste. In this article, we’ll define JIT and delve into some potential pros and cons of using JIT for your business. The Just in Time (JIT) inventory system is a method some businesses use to cut costs, get organized, and operate more smoothly.
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