Just In Time Inventory System (JIT)

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Introduction
The just-in-time (JIT) inventory system was developed in Japan after World War II, in an effort to control costs during fiscally challenging economic times (Waguespack and Cantor, 1996). The challenge that faced many Japanese companies in the post-War era was to find a way to meet the needs of customers and businesses while utilizing as few resources and as little capital as possible. The Japanese developed these set of techniques in order to control production, limit unnecessary products and reinvest the valuable capital left from the savings back into the business structure (Waguespack and Cantor, 1996). Much of the success of many Japanese corporations over the past four or five decades has been was linked to the principles of JIT (Chhikara and Weiss, 1995).
Premise for JIT
The basic premise for JIT is fairly simple: a company only produces an item when there is a need, or just-in-time for a company or individual to purchase it (Manoocherhi, 1988). The theory of JIT also accepts that there may be a need for an item at another work station and this would also create the need for production. Rather than utilizing the common practice of mass production and attempting to sell and distribute the products after they are created, JIT waits until there is a defined need that must be met. By doing this, JIT systems allow companies to decrease the level of production, decrease the necessary manpower hours utilized in mass production modes of supply, and eliminates the waste inherent in over-production. These techniques are especially effective for small companies, who are far less able to absorb the impact of unsold products. JIT has been shown to significantly impact reductions in overhead costs that reduce re-investments, and encourage stabilizing business practices(Manoocherhi, 1988).
JIT Utilization
In order to relate the most comprehensive picture of the effects of JIT, it is necessary to look at the way in which businesses utilize JIT systems. JIT has also developed an off-shoot theory called JIT II, and information and comparison of these two differing structures will be presented.
One example of the utilization of JIT principles has been within the business operations of oil refiners. The push to reduce inventory costs has led oil refiners to develop JIT techniques within their process (Waguespack and Cantor, 1996). Rather than carrying the cost of over production and storage of oil, the refiners have chosen to utilize JIT principles and only produce what is needed to meet the day to day requirements of supply.

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