What characterizes just-in-time (JIT) inventory?

Just-in-time (JIT) inventory is characterized by a strategy that minimizes inventory levels by receiving goods only as needed for production or sales. This approach aligns closely with lean manufacturing principles, where the goal is to reduce waste and improve efficiency. By ordering and receiving materials precisely when they are needed, businesses can lower their holding costs associated with excess inventory, mitigate risks of obsolescence, and streamline operations.

In a JIT system, suppliers are often integrated closely with the manufacturer’s schedule to ensure timely deliveries. This requires precise planning and communication, as any delays can disrupt the entire production process. Overall, the effectiveness of JIT hinges on the ability to manage supply chains efficiently while maintaining continuous flow in production without the burden of large stockpiles.