Just in time – JIT – The just-in-time concept is one of the Lean tools and is essentially an inventory strategy that prescribes receiving goods only when they are needed thus reducing waste, inventory costs and decreasing capital needed to run the business. In addition, having low inventory can be viewed as more flexible, i.e. if a product does not sell well, you can always switch to something else (both in terms of finished goods and raw materials).
One obvious disadvantage of JIT, it is hard to predict demand and hence sometimes customers will demand products that you have no inventory off, thus decreasing your revenues and creating a client irritant. Nevertheless, adopting the just-in-time strategy can potentially create a cost and efficiency advantage for a business. The just in time diagram below identifies some of the key areas where just in time strategy may be applied.