What is the purpose of a "just-in-time" supply strategy?

The purpose of a "just-in-time" supply strategy is to reduce inventory holding costs by receiving goods only as needed. This approach allows organizations to minimize the amount of stock they keep on hand, which in turn reduces the costs associated with storing, managing, and maintaining excess inventory. By timing the receipt of goods to align closely with production schedules or customer demand, companies can streamline their operations, reduce waste, and improve cash flow by not tying up capital in unnecessary stock.

In environments where efficiency and responsiveness are critical, this strategy helps to ensure that materials arrive precisely when they are required for production or sales processes, thereby enhancing operational flexibility. This method can also contribute to improved quality control, since products are less likely to degrade or become obsolete when they are used shortly after being received.