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Benefits of JIT System are the following:
1. Inventories are reduced. In addition to releasing funds tied up in financing inventories, smaller inventories reduce the risk of potential losses due to obsolescence.
2. Space is freed up. Areas that were previously devoted to storing inventories are made available for more productive uses.
3. Throughput time is reduced. This makes it easier to respond to customer demands and can be a very significant competitive advantage.
4. Defect rates are reduced. Operating without large work in process inventories makes it much easier to quickly identify and correct production problems. This latter point cannot be overemphasized. Excessive work in process inventories make it very difficult to detect and diagnose problems.
When a facility operates without significant inventories, it is running “naked.” Problems become quickly apparent and can be dealt with in a timely manner.
