Define Just-In-Time (JIT) system. State its merits and demerits.

   Define Just-In-Time (JIT) system. State its merits and demerits.

Just in time (JIT) means producing what is needed when needed and no more.

W.J.Stevension, “Just-In-Time (JIT) is a highly co-coordinated processing system on which goods move through the system and services are performed just as they are needed”.

So, a Just-In-Time (JIT) inventory system is one in which the inventory arrives only shortly before it is needed. Many large companies use this types of inventory system as opposed to warehousing large amounts of inventory at all times.

This kind of inventory can present your business with some merits but it also comes with a few potential demerits.

Merits of JIT: The major merits of Just-In-Time are:

·              It increases productivity.

·              It is highly flexible.

·              It increases product and service quality.

·              It reduces space requirements.

·              It is the proper use of equipments.

·              It reduces inventory.

Demerits of JIT:

·        There is little room for mistakes as minimal stock is kept for re-working faulty product.

·        Production is very reliant on suppliers and if stock is not delivered on time, the whole production schedule can be delayed.

·        There is no spare finished product available to meet unexpected orders.

·        It leaves a firm without a buffer stock of inventory.