It also gives manufacturers more control and flexibility. Following this inventory management system could help you reduce the number of items that you have to store in your warehouse, or get rid of the need for warehouses completely. This means that the item that you order is sold even before it reaches you, so you won’t have to store it too long. Under this inventory system, you could place an order with your supplier only after your customer orders from you. The just-in-time inventory system helps you reduce these costs because you only place an order with your suppliers when you actually need it. Warehousing can be rather costly, and the more inventory you hold, the higher your costs become. The main objective and purpose of the just-in-time inventory system is to reducing your carrying and warehousing costs for your inventory and to increase your inventory turnover. What is the purpose of just in time inventory system? You’d want to source your supplies locally as far as possible under this system so that your lead time is reduced and the supplies are delivered to you much faster. Doing that will increase efficiency and reduce the scope for error substantially because every process will be very carefully monitored.Īlong with reducing your inventory carrying costs, using the just-in-time strategy also helps you reduce your inventory waste by reducing the chances of overproduction, not allowing the supply to exceed the demand for the products, thus avoiding the accumulation of unsellable inventory. To implement JIT, you need to meticulously plan the whole supply chain and make use of the right software in order to carry out the entire process till delivery. The whole point of this is to lower the company’s inventory holding costs and boost inventory turnover. In just-in-time inventory management, goods and materials are received from suppliers only as they are needed. The just-in-time (JIT) inventory concept is a manufacturing workflow and inventory management technique that seeks to reduce costs and flow times within production systems and the distribution of materials and products. What is the just in time concept of inventory management?
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