Just-in-Time Approach

Within inventory management, there is the just-in-time approach, which only orders inventory when it’s needed. Under this method, a company doesn’t try to keep extra inventory on hand. Instead of ordering inventory ahead of time, we wait until the customer places their order to order the inventory.

For a car manufacturer, we wait until someone purchases a car and then we order the inventory. This might be risky because we could hurt our customer sentiment if there’s a delay in deliveries. We can only use the just-in-time approach when you have quick delivery times of inventory and good relationships with your suppliers.