Just-In-Time (JIT) purchasing is a system of buying which improves effectiveness and efficiency. As noted by D. Jerry Bowman in the journal Industrial Engineering, companies implementing JIT methods usually achieve "improved productivity and profitability." According to Ansari and Modarress, the definition for Just-In-Time purchasing is reflected in its name. Thus, in implementing the JIT concept, "materials are purchased or parts are produced in an exact quantity and just as they are needed." One of the major goals of JIT purchasing is to reduce the amount of inventory which is maintained at the manufacturing plant. At most, the JIT philosophy calls for only a few weeks' worth of production inventory. Ernest Raia, in the journal Purchasing, has claimed that the ultimate goal of JIT purchasing is to carry only a two-week supply; however, even this "seems like a veritable glut compared to the three hours of inventory maintained by Honda in Marysville, Ohio."
Unfortunately, this type of emphasis on inventory reduction has confused many managers on the issue of what JIT purchasing is really all about. In this regard, Ansari and Modarress point out that JIT purchasing is intended not only to reduce inventory, but also to reduce "waste" throughout the production process. Ansari and Modarress define waste as "anything other than the minimum amounts of equipment, materials, workers, and time that are absolutely essential to production." The techniques used in JIT purchasing also help to reduce waste in terms of excessive paperwork. The reduction of waste results in increased productivity as well as improvements in quality. Furthermore, waste reduction in the purchasing and manufacturing processes results in lower production costs. By helping to decrease overall inventory costs, the JIT system frees up "capital that could be invested elsewhere." With these benefits, it is little wonder that JIT purchasing is becoming increasi...