What does a just-in-time inventory system aim to achieve?

A just-in-time inventory system focuses on ensuring materials arrive only as they are needed for the production process. This approach minimizes the inventory holding costs and reduces waste by aligning inventory levels closely with production schedules. By receiving materials just in time for their use, companies can decrease excess stock and improve cash flow, as less capital is tied up in inventory.

This strategy not only helps in maintaining efficiency in production but also enhances responsiveness to customer demand, as businesses can adjust inventory levels based on actual sales and consumption patterns. Adopting a just-in-time approach can lead to streamlined operations and reduced costs associated with storage and handling of inventory.