What does the term "Just-in-Time" (JIT) inventory approach focus on?

The "Just-in-Time" (JIT) inventory approach is centered around the idea of minimizing inventory levels while meeting production requirements efficiently. It emphasizes the reduction of in-process inventory to enhance a business's return on investment. By maintaining lower inventory levels, businesses reduce the costs associated with storage, handling, and waste. This approach ensures that materials and products arrive precisely when needed in the production process, leading to a more streamlined operation and less capital tied up in inventory.

The focus on reducing in-process inventory allows companies to respond more dynamically to changes in demand and production schedules. JIT practices also encourage efficiency in supply chains and production processes, fostering better relationships with suppliers to ensure timely deliveries of materials. This ultimately supports more effective cash flow management and operational performance, reinforcing the economic benefits of the JIT system.