Just in Time Inventory Management

With the right inventory management systems and processes, your business can predict and meet customer demands. Companies and businesses employ just in time inventory management to increase efficiency and minimize waste by receiving products only as needed and reducing inventory costs. 

 

Learn How Breiner Helped One of the Biggest Auto Manufacturers in the World

 

What is Just in Time Inventory Management?

Just in time (JIT) inventory management is a system that is used to control the flow of inventory to and from a business where it minimizes losses and increases efficiency. Just in time is a production system that cuts inventory costs by producing only the right amount of inventory needed for the customer’s order. The goal is to have high production volumes but with minimized inventory on hand to increase efficiency and eliminate inventory waste. 

 

1. Customer Places Order 2. Manufacturer Receives Order 3. Manufacturer Orders Materials from Supplier 4. Supplier Receives Order 5. Supplier Delivers Materials to Manufacturer 6. Manufacturer Received Product 7. Manufacturer Assembles Product 8. Manufacturer Fulfills Order 9. Customer Receives Product 

 

Just in Time Inventory Management in Action: Toyota Motor Corporation

Toyota Motor Corporation uses JIT inventory controls to order parts only when it receives new car orders. Toyota began using this method in the 1970s and it took 20 years to perfect the process. Toyota and JIT inventory management have reliable suppliers that will always deliver the parts needed fast and have the resources to efficiently assemble the vehicles needed.  

JIT inventory management has also benefited multiple industries like: 

  • Large Retailers 
  • Restaurants 
  • Tech Manufacturing 
  • Automobile Manufacturing 

 

Benefits of Just in Time Inventory Management

Just in time inventory management requires careful planning of the entire supply chain to carry out the entire process until delivery. This increases efficiency and eliminates errors because each process is monitored.  

 

Reduces Inventory Waste

When the supply of a product in the market exceeds demand, the just in time inventory management eliminates overordering and overproduction. You will also be able to have low inventory levels to reduce the risk of inventory going unsold in the warehouse. When production volumes are low, you can minimize and decrease the losses incurred due to defective products by easily identifying any defective inventory items when production volumes are low.  

 

Reduce Costs and Increases Efficiency

Companies and businesses that follow just in time inventory management will reduce the number of unnecessary items and materials in their warehouses. Through the JIT inventory system, warehouse holdings can decrease holding costs. Warehouses can be really expensive and having excessive inventory can increase your costs. Your business can purchase raw materials only when it is needed (when a customer places an order), so it’s not necessary to store your items.  

 

Gives Manufacturers more Control

The JIT inventory management has control over the manufacturing process. Manufacturers at a responsive rate can respond to customers’ wants and needs by increasing production when a product is in demand and reducing production with a slow-moving product. You will be able to reduce the costs and quickly adapt to the changes in demand. 

 

Just in time inventory management improves efficiency and provides cost savings. With careful planning your company can buy the right number of resources, reducing costs, overstock, and inventory wastes. Your company is in more control, and you have the potential to generate benefits for your organization.  

 

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