Just In Time (JIT) is an inventory management approach that involves coordinating quantities of supply with levels of demand to ensure the fastest time to customer and the shortest time in inventory. The key to controlling inventory with JIT is knowing how long an item will last (shelf-life or actual use) and how long it will take from the time of order for the item to arrive from the supplier. Understanding these two factors allows the business to establish procedures for ordering items so that they arrive JIT for use without the need to store them for any length of time.
The JIT strategy enables companies to realize potentially significant savings from reduced inventory costs associated with ordering, storing, maintaining and distributing goods. JIT methods also help businesses improve customer and supplier relations through faster response times and quality enhancements. However, the JIT approach is not without risks. Perhaps the greatest danger lies in the degree to which a company relies on specific suppliers to fill JIT orders. With little to no inventory buffer to fall back on, relying on a few or even single supplier sources makes the business vulnerable to supplier difficulties and demands, such as distribution delays and overcharging, that may diminish the intended time and cost savings derived from JIT inventory management.