Business, Legal & Accounting Glossary
Just-in-time is an inventory system where raw materials are delivered right before they are needed on the assembly line, and finished goods are manufactured just before they are shipped to customers. Just-in-time improves return on investment by substantially reducing overhead cost, limiting quality inspections, and eliminating obsolete inventory. Just-in-time does generate substantial risk, however: under just-in-time systems, production stops when parts aren’t delivered on schedule, and huge bottlenecks are created when product isn’t shipped on schedule. Thus successful just-in-time manufacturing requires both superior management and a highly disciplined workforce. Just-in-time is closely associated with methods introduced and refined by the Toyota Motor Company of Japan and copied by manufacturers throughout the world. In truth, however, just-in-time is simply one element of the comprehensive Toyota Production System, which attempts to eradicate waste of all kind.
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This glossary post was last updated: 1st April, 2020