What advantage of Just-In-Time (JIT) management of stocks?

Advantages of just in time inventory management

Companies like to use JIT as it is seen as a more cost efficient method of holding stock. Its purpose is to minimise the amount of goods you hold at any one time, and this has numerous advantages:

Less space needed: With a faster turnaround of stock, you don’t need as much warehouse or storage space to store goods. This reduces the amount of storage an organisation needs to rent or buy, freeing up funds for other parts of the business.

Waste reduction: A faster turnaround of stock prevents goods becoming damaged or obsolete while sitting in storage, reducing waste. This again saves money by preventing investment in unnecessary stock, and reducing the need to replace old stock.

Smaller investments: JIT inventory management is ideal for smaller companies that don’t have the funds available to purchase huge amounts of stock at once. Ordering stock as and when it’s needed helps to maintain a healthy cash flow.

All of these advantages will save the company money.