What is Just-in-Time Inventory?
Just-in-time (JIT) inventory is a management system in which materials and goods are received only as they are needed in production or sales, minimizing inventory holding costs. It depends on tight integration with suppliers and accurate demand planning.
How It Works
- Forecast demand at fine granularity.
- Place small, frequent orders with reliable suppliers.
- Maintain minimal safety stock and rely on short lead times.
- Monitor disruption risk and have contingency plans.
Saudi Context
Saudi automotive and electronics distributors use JIT principles to limit working capital tied up in inventory, supported by local 3PL warehouses near Jeddah and Riyadh.
Example
A car assembly plant receives steel sheets twice a day from a nearby supplier, eliminating the need for large on-site storage.