This is a logistics system by which materials arrive at the point of use just in time, thus saving on inventories “and warehousing. Their implementation affects the purchasing, transport, warehousing, production, quality control and data processing functions, and requires an amount of discipline which many businesses find difficult to create and sustain.
In order to be successful, it has to be operated by all channel members in a given channel. It calls for all materials to be part of the work-in-progress, without pausing to collect storing expenses. Each part of the manufacturing process has to get the right elements in the correct amounts just in time. JIT is found to work best in repetitive manufacturing situations where the suppliers are close by, the forecasts are accurate and there exist significant levels of inventory to start with. Significant cost reductions can be made if JIT is successfully applied.
