What is a "just-in-time" (JIT) inventory strategy?

A "just-in-time" (JIT) inventory strategy is effectively characterized by receiving goods only as they are needed in the production process. This approach minimizes the amount of inventory held at any one time, thereby reducing carrying costs and minimizing waste. By coordinating supply chain activities closely with production schedules, companies can streamline their operations, improve efficiency, and respond more flexibly to customer demands.

This strategy relies heavily on accurate demand forecasting and strong relationships with suppliers to ensure that materials arrive at the right place and the right time without delays. When implemented effectively, a JIT inventory system can lead to significant reductions in storage costs and improve overall supply chain responsiveness. In contrast to maintaining large stockpiles for emergencies or adopting overly cautious ordering practices, JIT focuses on efficiency and agility in inventory management.