Just In Time Inventory

Just In Time Inventory or JIT is an inventory management system in which inventory is updated or products are produced or manufactured only when the demand requires that. With the help of Just in time inventory management concept the controller, manufacturer and the supplier can manage the inventory production and the cost of inventory along with meeting the customer demand and requirement as well. Just in Time Inventory helps in removing the situation where the total inventory exceeds the demand of the customer and becomes a burden for manufacturer, supplier and controller of the inventory. While implementing JIT manufacturing use the materials and process to meet the demand of the customer and supplier but do not produce excess inventory. Most of the retailers are not interested in carrying excess inventory as it requires more space that results in increased costs.

If the manufacturer don’t implement the concept of JIT this means that it is producing inventory in excess that is not being carried by the retailer as a result it has to spend more on maintaining raw material inventory and finished goods inventory. In such cases manufacturer may end up with excessive goods that they need to be dispose off or to sell them at low price in auctions.

Just in Time Inventory system is considered to be one of the most efficient systems of managing inventory. However there are also associated risks with JIT that may result in stock shortage just due to a simple glitch. Your inventory may run dry due to sudden transportation problem, delayed shipments or erratic weather.

Other Related Accounting Articles:

• Consigned Stock
• Inventory Accuracy
• Inventory with High Turnover
• Retail Inventory Method
• Obsolete Inventory Percentage
• Comparing LIFO and FIFO methods of Inventory
• Beginning Inventory Explained
• Inventory Turnover Ratio or Stock Turnover Ratio (ITR)
• Physical Inventory – Inventory Valuation
• Requirements of a System of Materials Control