How Does JIT Improve Your Business?

Just-in-time (JIT), also referred to as lean manufacturing is an inventory strategy adopted by manufacturers to increase efficiency by receiving goods only as needed from a supplier. The main purpose of implementing this strategy is to lower inventory costs and decrease waste.

Who Uses JIT?

Both small businesses and major corporations may benefit from a JIT system, as these systems will reduce cash flow as well as capital needs to run a business. A few examples of businesses that utilize JIT are retailers, restaurants, tech manufacturing, and automobile manufacturing.

Advantages of JIT Inventory

Inventory Mitigation

When your company mitigates inventory, the overproduction of product will be eliminated and in turn, cash flow will increase. Inventory begins to accumulate when the supply of a product exceeds the demand, this can be costly. Since JIT systems only order product when a customer places an order, it eliminates the accumulation of inventory.

Related Post: How Does JIT Delivery Help You Make a Profit?

Decreases Warehouse Holding Cost

Excess inventory and the warehousing required to hold it can be costly. JIT helps minimize both costs. Companies order products only when a customer order is placed, eliminating the need for the product to be stored in a warehouse for any period of time. Utilizing this system can significantly reduce the number of items in your warehouse or potentially eliminate the need to use a warehouse altogether.

Increased Efficiency

With the elimination of excess inventory, your company will be able to create a more efficient environment. By eliminating extra warehousing and product waste, your company will drastically cut costs and be able to use funds in different parts of your business. In addition to reduced cost, employees in your company will be able to work more efficiently by focusing on one job instead of worrying about inventory mitigation and overproducing product.

How does JIT Inventory Management Benefit a Business?

When products are overproduced, many companies end up with unsaleable inventory that takes up valuable storage space. These products may eventually be liquidated or disposed of, resulting in financial loss. Implementing this JIT strategy allows your company to reduce expenses, eliminate product waste and boost financial performance.

Transitioning your operation to a new system may be a challenging process and taking on something new can feel like a financial risk. However, if your company is losing money due to product waste and excess warehousing it may be time to implement a JIT system so that your company may focus on other aspects. Starting with outsourcing JIT to manage your inventory can lead to outsourcing other services for your business. Here at NewStream Enterprises, LLC we provide various services for all your outsourcing needs, from kitting and packaging to supply chain management, it all so that you can implement supply chain management and love your supply chain too!

Does NewStream have the expertise for you? Contact us today!