Just In Time is an inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs.
This method requires that producers are able to accurately forecast demand.
A good example would be a car manufacturer that operates with very low inventory levels, relying on their supply chain to deliver the parts they need to build cars. The parts needed to manufacture the cars do not arrive before nor after they are needed, rather they arrive just as they are needed.
This inventory supply system represents a shift away from the older "just in case" strategy where producers carried large inventories in case higher demand had to be met.
Just in time is a technique to reduce the storage cost of goods and loss from deteriorate and obsolete inventory.This is when zero or insignificant inventory is held and inventory is only required when the order is placed by customer.
In order to pursue with such a technique,relationship with supplier is the key.Only if the supplier ensures to deliver goods (of the right quantity and quality) and most importantly on time can this technique be successful.
Usually in this case the company will have few suppliers but working quite closely (high dependence on the supplier)
It is appose to the traditional concept where the companies intended to minimize the cost by purchasing the inventory in bulk quantity in order to obtain discounts