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While JIT inventory systems are quite attractive for this reason, they are a double-edged sword. And though a JIT system might even be a necessity given the inventory demands of certain business types, its many advantages are realized only when some significant risks to healthy inventory management are mitigated.
JIT systems have several cost-cutting advantages. As Charles mentioned in his Dell Computer case study, JIT inventory systems, a “financial imperative” for Dell, can radically reduce holding costs. In the case of Dell Computers, this meant that the fewer finished computers Dell holds in inventory, the less money they lose per computer as they “rot” on a shelf...
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