Just-in-time

Just-in-time is a manufacturing flow assumption that is designed to only require inventory at the point of production. By doing so, the total inventory investment needed by a business is greatly reduced. The concept involves a number of changes to the traditional manufacturing system, including the following:

  • Producing in small batches, so that work-in-process and finished goods do not pile up

  • Producing only to order, so that goods are not produced in anticipation of orders

  • Buying supplies locally, so that safety stock levels can be reduced

  • Having suppliers deliver frequently and in small quantities, so that the total amount of raw materials on hand is minimized

  • Shortening equipment change-overs, so that short production runs are more economical

While the concept can yield significant advantages in terms of reduced funding requirements and lower scrap levels, just-in-time can be difficult to implement.