|Just-In-Time (JIT): Just-in-time is an inventory strategy implemented to improve the return on investment of a business by reducing the carrying costs of in-process inventory. It emphasizes that production should create items that arrive when needed and neither earlier nor later. Quick communication of the consumption of old stock which triggers new stock to be ordered is key to JIT and inventory reduction. This saves warehouse space and costs. However since stock levels are determined by historical demand any sudden demand rises above the historical average demand, the firm will deplete inventory faster than usual and cause customer service issues.
What is achieved using JIT:
- Eliminate wasted inventory items from sitting in warehouses going unordered for large amounts of times only to tie up your accounting books depreciating in value and taking up space.
- Order equipment when you need it and fulfill orders or services on time with a cost efficient model.
- Puts in a system and streamlines your inventory item re-ordering and order fulfillment process.
How SME Handles JIT:
- Inventory items that become assigned or “tied” to an order belong to that order and becomes easily traceable.
- Set minimum on hand, and reorder amount for every inventory item.
- Set the count required to fulfill orders.
- Identify preferred inventory vendors, manufacturers, and the lead item needed when ordering new inventory items.
- Detail kit items to create specific packages that are custom to your specific company’s offers.
For more information on Just-In-Time or Inventory Tracking please visit this link: Inventory Management in SME