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#JUST IN TIME INVENTORY ADVANTAGES SOFTWARE#

Toyota’s success using JIT quickly spread to other manufacturing companies and, eventually, the strategy spilled over into other industries.

Toyota still uses JIT today and is one of the most successful companies to implement the strategy. Following World War II, Japanese companies were trying to recover their economy without spending too much, and JIT was born. Just in time inventory management was invented by Taiichi Ohno of Toyota in the 1970s. Companies without much storage space and those with smaller margins are perfect for JIT inventory management, because upfront cost commitment is lower and large storage space isn’t needed. JIT management is ideal for tech manufacturers, automobile manufacturers, clothing, jewelry, and shoe retailers, as well as many restaurants. 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.

#JUST IN TIME INVENTORY ADVANTAGES SOFTWARE#

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.

Susceptible to supply chain disruptions.

These challenges are minimal, but it’s important to be aware of them and have solutions ready. The benefits of JIT inventory management are clear, but there are also a few challenges to address. JIT inventory makes it easier and less costly for companies to pivot - to new lines, upgraded products, and so on - since there aren’t shelves of old products that need to be cleared. Less material overhead leads to less waste, and less waste helps companies save money. Companies don’t need large warehouses when they have less inventory to store, which dramatically reduces warehousing budgets. Below are a few specific advantages that JIT inventory management has to offer. When JIT inventory management runs smoothly, costs go down and efficiency goes up. It relies on constant communication between the commerce company and manufacturers, and it requires a dedicated, streamlined software in order to work smoothly.

This strategy solves the common commerce issue of overspending on materials that are not yet needed. The goal is for companies to retain little to no excess inventory at any given time. JIT inventory management is a strategy in which commerce companies receive the exact amount of inventory they need, right when they need it. Just-in-time (JIT) inventory management is a great solution for many companies and situations in need of better inventory control. The sum of all those wasted resources, then, greatly affects overall costs.Ī good inventory control system, on the other hand, can focus spending and reduce overall costs by cutting out the excesses. Without control, businesses overspend on materials or products that never get used or sold and waste resources on oversized warehouses or storage facilities for the inventory they don’t need to store. Just-in-time (JIT) inventory management - learn what it is and why it’s importantĮvery commerce company needs a hardworking inventory control strategy.