Business – 4.2 Inventory management – Just in Time (JIT) | e-Consult
4.2 Inventory management – Just in Time (JIT) (1 questions)
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The main purpose of JIT is to minimise the amount of inventory held by receiving goods only when they are needed in the production process. This reduces waste and improves efficiency.
- Reduced holding costs: Less capital is tied up in stock, leading to lower warehousing, insurance and obsolescence expenses.
- Improved cash flow and responsiveness: Faster turnover means cash is freed up more quickly, and the firm can adapt more readily to changes in demand because production is driven by actual orders rather than forecasts.