{"id":7069,"date":"2025-04-28T02:27:42","date_gmt":"2025-04-28T02:27:42","guid":{"rendered":"https:\/\/sblog.seebiz.com\/blog\/?p=7069"},"modified":"2025-04-28T02:27:42","modified_gmt":"2025-04-28T02:27:42","slug":"just-in-time-inventory","status":"publish","type":"post","link":"https:\/\/sblog.seebiz.com\/blog\/just-in-time-inventory\/","title":{"rendered":"What Is Just-in-Time Inventory & Why Big Firms Prefer It?"},"content":{"rendered":"

After World War II, when the world was slowly recovering from the aftereffects, Japan was contemplating how to regain its strength as quickly as possible. In 1952, Kiichiro Toyoda, founder of Toyota Motor Corporation, initiated the development of a system that could help them surpass American automobile manufacturers without spending a fortune on inventory costs. In the 1970s, Toyota designed and developed the system known as Just in Time or the Toyota Production System. With this system, Toyota produced automobiles with 30% more efficiency and lower inventory costs. How?<\/span><\/p>\n

Because the concept behind developing this system was to produce and restock inventory only when needed, minimizing costs related to overstocking and waste.<\/span><\/p>\n

Also, there are myths related to JIT that it is the same as EOQ. But it is not. Later in this blog, we will see how they differ.\u00a0<\/span><\/p>\n

Let’s begin by understanding why businesses love the Just in Time inventory management system and why it is a good choice for your business.\u00a0\u00a0<\/span><\/p>\n

What is Just-in-time inventory management?<\/span><\/h2>\n

Just-in-time inventory management is a system where you restock based on customer demand at that time. In JIT, businesses don’t add extra safety stocks just in case. Rather, they only produce or restock based on what\u2019s needed and when (demand-based).<\/span><\/p>\n

The easiest way to understand this is by looking at coffee shops and bakeries around you. They stock in every day instead of every week to prevent waste (due to spoilage) and overstocking (cutting out margins).<\/span><\/p>\n

Back in the days when no one ever thought that big companies making large products like automobiles could also operate on such models. But Toyota was the pioneer who applied this model in the automobile industry and successfully reduced costs on the inventory.<\/span><\/p>\n

This is how JIT works;<\/span><\/p>\n