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What is a Just In Time Inventory?

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All businesses will work hard to keep their costs to a minimum. There is usually savings to be made in every aspect of an operation and one of areas where there will be interest in making savings will be the inventory process. Just in Time (JIT) inventory is all about managing the inventory process so that costs are kept to a bare minimum and that everything occurs as efficiently as possible. JIT is about looking for any wastage and removing this where possible. The overall goal is to get the highest possible return on the money invested in inventory.

How Just In Time Inventory Works

This type of management involves closely monitoring how materials are used in the production of goods. It involves looking for any evidence that these materials are not being used as effectively as they could be. For example, if there is a lot of material waste during the production process this will need to be rectified. It also involves ensuring that ordering of materials occurs as efficiently as possible so that the material is there when it is needed. There will also be concern about any material that needs to be stored long term if it is not required right away.

Just in Time inventory focuses on ordering each material as it is required. Of course to order effectively it is vital to know how long it will take the material to be delivered. If something can be delivered rapidly then there may be less of a requirement to store it in large amounts. Another thing that is important to consider is the shelf life of the materials. Some materials can be stored for a very long time while others will become useless if they are not utilized quickly.

Just In Time inventory goes beyond the inventory process but all the way to delivery of the good to the customer. Once the materials are constructed to produce the finished product the story isn’t over. It will still be necessary to get this product into the hands of the customer. There will be interest in finding the most effective way of doing this. There will be the goal to have goods shipped as fast as possible after they are finished because this will avoid the need of providing a lot of storage space. It can also be that shipping goods fast will mean paying less tax on them.

Some Final Thoughts on Just In Time Inventory

JIT inventory is an important aspect of any successful business. Managers and business owners have been involved in this type of management since at least the beginning of the last century. It ensures that the materials used in production are used as effectively as possible so that the business is not losing any money. We now live in a very competitive world and any savings that can be made are always going to benefit the company. It also benefits the consumer because it should mean that the prices of goods fall.

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Meet the Author

Anthony Carter currently resides in Fife, Scotland with his wife Lisa, and their three wonderful children. As a senior editor for various publications, if he's not reading and writing, you would find him photographing and traveling to some of the most far-flung locations around the world.


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