Just-in-time is an inventory-control method that aims to avoid holding inventories

by requiring supplies to arrive just as they are needed in production and

completed products are produced when orders are made and then delivered
immediately to consumers.

Advantages of using JIT would be reducing the capital investment needed to hold
inventory such as warehouse costs, labour and obsolescence costs, which helps
reduce the opportunity costs in having to hold inventory as they can use the
capital to spend it on more necessary essentials such as hiring skilled workers or
increasing marketing activities. This will help the business maximize its sales
revenue as their money is not tied up and they also have space to put machinery
as well, which reduces rent and improves accessibility in the workplace.

Moreover, JIT will also require multi-skilled and flexible employees, which may
increase hiring costs, but will enable the business to adjust very quickly to
changes in consumer demand as they are able to switch around between them
very easily. This will help increase their competitive advantage as their
employees have higher productivity and are able to produce better quality and
quantity of products, helping to set them apart from their rivals, thus attracting
more consumers.

Additionally, by using JIT, there will be a much less chance of inventory becoming
outdated and obsolete because goods do need to be held for a very long time.
This will therefore reduce the costs of products being damaged, thus lower
wastage costs and more profits for the business overall.

On the other hand, using JIT may offer some disadvantages such as any failures
to receive supplies of materials or components will result in expensive production
delays and frustration to potential customers. This will affect the business
customer loyalty and brand image as they are not able to satisfy their consumers
on time, causing them to switch to their competitors instead. It may also cause
disruption in business as well as loss of profits as resources will stand idle
without generating any profits.

In addition, JIT inventory will also increase the cost of buying inventories as the
business is not able to benefit from economies of scale since they can only buy
in small quantities. It will also increase the delivery costs and time as small
frequent deliveries are needed for JIT. This will make it less convenient for
production employees and increase the costs of operation as well.

Last but not least, JIT will increase the order-administration costs for the
business as they have to make and record a lot of orders of deliveries, which
may be difficult to keep track of. It also increases the workload for operation
managers as they have to make sure their orders can be made quickly and easily
without any disruptions. This will also require the relationships between the
suppliers and the business to be maintained and good as they have to make and
send deliveries very quickly.

Overall, JIT is a very cost-effective method of holding inventories, however, it is

also very risky as the business has to make sure that resources and finished
products are being delivered efficiently and cheaply. They must need a good
relationship between suppliers and customers and also a good delivery system to
make sure there are no delays. The business must have good time management
as well as qualified workers to ensure that products are produced on time.
Without clear planning and dedication, it could lead to significant loss of
reputation as customers will be mad and dissatisfied with the outcome.