Lowering warehouse costs by owning or renting a smaller storage facility.Reducing staffing needs for inventory management, which lowers wage and salary expenses.Reducing investments tied up in non-liquid stock and improving cash flow.Preventing over-production and overstocking.Cost savings from JIT inventory management include: The primary benefits of JIT inventory management are cost and space savings.

While JIT offers many benefits, increased risk in the supply chain has made some supply chain leaders rethink the strategy. Since manufacturers only order raw materials for jobs as needed, they may not have the excess stock to account for assembly errors. It comes with the inherent risk of stockouts or delays because a supplier lead time delay can result in inventory arriving late.Īnother risk, particularly among manufacturers who use JIT, is that defects cut into the supply. They make new purchases just days before they’re needed for resale or distribution, meaning inventory spends very little time in storage. This method is also called a pull inventory system because manufacturers and distributors wait for customer demand to “pull” inventory through the supply chain. This can have immense cost savings because they do not invest in unnecessary inventory or spend more resources managing items in store. It usually involves ordering small amounts of inventory they know they can move quickly and then reordering from suppliers regularly. Using the JIT approach, a business lowers the volume and quantity of inventory on hand. A common goal of inventory management is to have items in the right place at the right time in the right quantity - in other words, just in time, no sooner nor later. It’s based on the principle that inventory is inherently costly, taking up time, money and space, and that it should only arrive just in time to meet customer demands. The JIT method is one of the most popular inventory management techniques in the supply chain sector.

What Is the Just-in-Time Method for Inventory Management? While developed as a production method, it has broad applications for manufacturing plants, warehouses and any company involved in inventory management. It’s a production management philosophy developed and popularized by Toyota focused on eliminating waste, inconsistencies and unnecessary requirements. The just-in-time (JIT) inventory strategy is one of the most famous modern inventory management techniques. Learn about Finale's capabilities: (888) 925-0259 Schedule a Call

Just in time inventory strategy