![]() ![]() ![]() Many restaurants receive orders several times a week. Since much of their inventory is perishable, they need it to arrive just before it is used, or they have increased food waste. ![]() The supplier delivers the shingles directly to the job site a day or two before the job starts, the roofers arrive on site and complete the work, and the company doesn’t have to store or transport inventory.Īnother example of JIT inventory is in the restaurant business. One example of a JIT inventory management system would be if a construction company received a roofing job and ordered the shingles with a lead time set to just before the job start date. What Is an Example of a JIT Inventory System? Using this method of inventory control means you’re not spending money storing excess items and materials for extended periods.Īnother way to get just-in-time inventory is by waiting for a customer order before you order the item or materials to make the item yourself. This usually means making more frequent smaller quantity stocking orders. If you want to be on the safe side, you can order earlier to have a buffer in case there’s a delay, but that will likely increase your storage costs. For instance, if your supplier typically delivers new items in 10 days, you can place an order 10 days before you think you’ll need it. Ordering time frames vary based on how long your suppliers take to get new products to you. To get just-in-time inventory, you reorder products or raw materials to replace the ones that you expect to sell or use by the time the new order arrives. Outside of dropshipping-where a business doesn’t keep any items in stock and instead fills orders on demand-true zero inventory is nearly impossible to achieve. Instead, all of it is moving toward the customer. While the goal of just-in-time inventory is to have zero excess inventory sitting around, the goal of zero inventory is to have no inventory whatsoever waiting around. These two terms aren’t exactly the same- Zero inventory is based on JIT inventory strategies but takes it to an extreme level. Now it’s used by companies of all sizes to reduce waste, improve productivity, and lower costs. The just-in-time inventory system was first implemented by Toyota in the 1970s. Just-in-time is the opposite of the just-in-case inventory system, which relies on having extra materials and supplies (also known as safety stock) on hand in case they are needed. Managing inventory levels with this method means you can spend less money on storage space and improve your inventory turnover or how fast you sell items after stocking them.Īs such, JIT involves ordering smaller batches of inventory but placing orders more frequently. Just-in-time inventory (JIT) means that you order products to arrive right before you need them. So, how does it work? And is it right for your business? Let’s take a closer look to find out. One of the ways you can strike this just right balance is by using the just-in-time inventory management system. Ideally, you have enough products to meet customer demand but not so much that you have a hard time selling them all. Instead, you’re trying to achieve that level that’s just right. Too little, and your sales go cold for lack of inventory. Too much, and you get burned by inflated costs. Managing inventory often feels a lot like a Goldilocks situation. ![]()
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