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JIT in Supply Chain works only under certain specific conditions.
Many companies have tried using JIT concepts in managing inventory in their supply chain and experienced certain hardships. We should keep in mind that JIT implementation needs certain pre-requisites to be in place. If these conditions are missing, we would have stockouts.
JIT suppliers should be highly reliable in terms of their quality and on-time delivery performance. If their past performance is lacking in these two dimensions, we should actually hold stocks of these items to avoid production delays.
JIT implementation works best in a stable production schedule. In case of companies working on Demand Driven Supply Chain, suppliers need to excel on one more dimension… flexibility in delivery lead time and supply quantity. Till such time suppliers develop this capability, it is advisable to deploy strategic inventory buffers to take care of demand variations and supplier inflexibility.