What characterizes just-in-time (JIT) inventory?

Just-in-time (JIT) inventory is characterized by receiving goods only as needed for production, which is a core principle of JIT management. The philosophy behind JIT is to minimize inventory holding costs and reduce waste by ensuring that materials and products arrive right when they are required in the production process. This allows companies to operate with lower inventory levels, improve cash flow, and enhance efficiency.

By focusing on delivering materials just as they are needed, JIT enables supply chains to be more responsive and flexible, ultimately leading to a reduction in excess stock and the associated costs of storage and handling. Companies implementing JIT aim to synchronize their supply chain operations with production schedules, which can lead to improved overall operational performance.