Just in Time (JIT) — common mistakes

When evaluating JIT in an exam, always connect its prerequisites to the business in the case study. For instance, if a business has poor industrial relations or uses unreliable overseas suppliers, argue that JIT would be an inappropriate choice, explaining the likely consequences.

A good evaluation answer will weigh the benefits of cost savings against the risks of production stoppage. Conclude by making a justified judgement on whether JIT is suitable for the specific business context provided in the case study.

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.

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.

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.