JUST IN TIME (JIT)
INVENTORY STOCKING PROGRAMS
A key decision in manufacturing industry businesses is how much inventory – usually a business’s largest asset – to keep on hand. Service Steel offers Just-In-Time (JIT) inventory stocking programs to fit YOUR company’s needs.
Inventory decisions involve balancing three classes of costs:
- Ordering costs
- Holding costs
- Shortage costs
Just-in-time (JIT) inventory management, also known as lean manufacturing and sometimes referred to as the Toyota Production System (TPS), is a strategy that can be used to increase manufacturing efficiency and improve a company’s return on investment by reducing non-essential costs. As the name suggests, a Just in Time (JIT) stocking program is one that provides:
- WHAT the customer needs
- WHEN they need it
- The requested QUANTITIES
- Delivery WHERE needed
JIT is a demand-pull system that involves ordering and receiving inventory for production and customer sales only as it is needed to produce goods, and not before with continuously low inventory levels and no safety stock. This strategy helps lower inventory carrying costs.
JIT inventory stocking reduces costs by:
- Minimizing warehouse storage needs
- Reducing purchasing to buying just enough resources to make the ordered products and no more
- Freeing up cash flow for other uses
- Eliminating waste – with less stock there is less likelihood of stock supplies perishing or becoming obsolete/out-of-date.