Question 1

Does JIT mean having absolutely zero inventory?

Accepted Answer

Not always. While 'zero inventory' is the theoretical ideal, in practice, most firms using JIT hold a very small, minimal level of buffer stock to cover tiny fluctuations between deliveries. The goal is to minimise inventory to the lowest possible level, not necessarily to achieve absolute zero, which can be impractical.

Question 2

Is JIT only for manufacturing businesses?

Accepted Answer

No, JIT principles are widely applied in service industries. For example, a fast-food restaurant prepares food 'just in time' based on customer orders to ensure freshness. A call centre might schedule staff 'just in time' to meet predicted call volumes. The core idea of matching resource supply precisely to demand is transferable.

Question 3

Can a business get bulk-buy discounts with JIT?

Accepted Answer

Generally, no. JIT involves frequent, small orders, which prevents a business from meeting the minimum order quantities often required for bulk-buy discounts. However, the cost savings from eliminating inventory holding costs frequently outweigh the loss of these discounts. Some firms mitigate this by negotiating long-term supply contracts to secure favourable pricing.

Just in Time (JIT)

What you need to know

Just in Time (JIT)