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.