What kind of companies use JIT inventory? But with JIT inventory, materials are only ordered when they’re needed. Using traditional methods, they may overestimate the amount of materials needed and end up overspending. JIT inventory allows the manufacturer to reduce the amount of products held onto, which lowers the risk of overspending.įor example, let’s say a computer manufacturer previously used historical data to estimate the amount of stock needed for a new quarter. They rent or build smaller warehouses and pay closer attention to their supply chains. Companies that operate JIT inventory management use commerce management software and order smaller quantities of the products they sell. The objective of JIT is to reduce overhead and gain efficiency of inventory management. Since JIT relies on materials arriving “just in time,” careful tracking is crucial to ensure the process runs smoothly. If a material or part arrives damaged from a supplier, replacements are not immediately accessible. Using reputable suppliers and building a strong relationship with them will improve communication and reduce disruptions as much as possible. If there are supply chain delays on materials, orders will also be delayed, which can lead to unhappy customers and order cancellations.
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