What is the goal of JIT (Just-In-Time) purchasing in procurement?

The goal of Just-In-Time (JIT) purchasing is primarily to reduce inventory costs. This approach focuses on receiving goods and materials only as they are needed in the production process, rather than keeping large amounts of inventory on hand. By minimizing the amount of inventory, organizations can lower their storage costs, reduce the risk of obsolescence, and improve cash flow. JIT encourages a leaner operating model, where resources are utilized more efficiently, allowing for a more responsive supply chain that can adapt to demand fluctuations.

While JIT can also contribute to eliminating waste and can improve supplier relationships by fostering closer collaboration, its principal objective remains cost reduction through minimized inventory levels, making it more efficient overall. High stock levels are contrary to the principles of JIT, as this purchasing method seeks to keep inventory as lean as possible to enhance overall operational efficiency.