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There exist few reliable vendors that can deliver high quality inventory within very short timeframes.
Inventory is supplied in the nick of time in small lots which drastically reduces the carrying costs.
Long term purchase contracts are entered into with suppliers at economical prices which curtails the paperwork and negotiation time associated with arriving at the supply price.
The inspection of inventory takes place as and when received, paving the way for a lean inventory management department.
Transportation costs with regard to the movement of inventory from the storage locations to the production sites can be avoided.
Goods are produced as per the requirement of the end-user and hence over-production and the resultant excess holding of inventory can be avoided.
Payments are made for batches of goods supplied as per contract terms, rather than for small lots, which leads to effective working capital management.
The production cycle becomes shorter, as the waiting time and interruptions due to delays are avoided.
Wastage due to production of defective products is eliminated as the output at every stage of production is inspected, before passing on to the next stage
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