Just In Time - JIT

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DEFINITION of 'Just In Time - JIT'

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.

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BREAKING DOWN 'Just In Time - JIT'

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 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.

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RELATED FAQS
  1. What is the difference between JIT (just in time) and CMI (customer managed inventory)?

    Just-in-time (JIT) inventory management focuses solely on the need to replenish inventory only when it is required, reducing ... Read Full Answer >>
  2. What are some tactics businesses can use to increase unlevered free cash flow?

    Unlevered free cash flow is defined as earnings before interest taxes, depreciation and amortization (EBITDA) less capital ... Read Full Answer >>
  3. How can a company control its holding costs?

    A company can control its holding costs through efficient management of its inventory and the efficiency of its overall logistics ... Read Full Answer >>
  4. How is investing in a corporate bond different from buying shares of the company's ...

    Examples of just in time, or JIT, inventory processes are found in automobile manufacturing, drop shipping retailers, fast ... Read Full Answer >>
  5. What are the main benefits of a JIT (just in time) production strategy?

    The chief benefit of the just-in-time production (JIT) strategy is that it allows businesses to ensure that there is always ... Read Full Answer >>
  6. What are the main problems with a JIT (just in time) production strategy?

    The benefits of the just-in-time (JIT) production strategy are well-documented, but it can also have some serious disadvantages. ... Read Full Answer >>

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