It Is A Management Philosophy Essay
An inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. This method requires that producers are able to accurately forecast demand.
Investopedia explains 'Just in Time: A good example would be a car manufacturer that operates with very low inventory levels, relying on their supply chain to deliver the parts they need to build cars. The parts needed to manufacture the cars do not arrive before nor after they are needed, rather do they arrive just as they are needed. This inventory supply system represents a shift away from the older "just in case" strategy where producers carried large inventories in case higher demand had to be met.
[Just In Time - The Concept] It is a management philosophy which aims at eliminating waste from every aspect of manufacturing and its related activities. The term JIT refers to producing only what is needed.
JIT is defined as “A technique for the organization of work-flows, to allow rapid, high quality, flexible production whilst minimizing manufacturing waste and stock levels.” (CIMA Official Terminology).
There are two aspects to ‘Just in Time’ and they are Just- In-Time Production and Just- In-Purchasing.
JIT production is defined as “A system which is driven by demand for finished products, whereby each component on a production line is produced only when needed for the next Stage.”