A JIT inventory control system supplys input to a production or distribution site
only at the rate the items are needed. Such a system reduces inventories whether it is
used within the firm or as a mechanism regulating the flow of products between adjacent
firms in the distribution channel. [Ref. 3:p. 113]
It is, in a sense, the uninterrupted flow of 100% acceptable materials delivered
on due dates, at optimal costs, 100% ofthe time. Most companies not using JIT are
required to maintain large inventories of consumables and parts to ensure that production
lines and distribution are never interrupted. This represents an investment in inventory
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and also in the infrastructure required to maintain the inventory, including warehouses,
materials movement equipment, and the necessary accounting controls. [Ref. 23 :p. 11]
The JIT manufacturing system improves product quality and productivity by
eliminating waste. Waste is defined as anything other than the minimum amounts of
equipment, materials, and workers that are absolutely essential to production. To have
a pure JIT system, production and purchasing activities must be synchronized. In other
words, the production system is not complete without adopting JIT purchasing practices.
[Ref. 3:p. 9]
What if a company could be guaranteed that items would be delivered just-in time
to be used in a production process or distribution channel? Much of the funds tied
up in inventory and infrastructure could be used in other, more profitable areas, such as
research and development, marketing, or price reductions.