As a means of quickly filling orders. If you hold too much inventory, you tie up your money for longer than necessary. If you have too little inventory, you risk disrupting customer and channel relationships. Many marketers can't gauge the true inventory costs because costs are spread over many departments and facilities. Your inventory level affects profitability.
Marketers carry little inventory and have lower storage costs.
There is no extra inventory to fall back on, so a late delivery will delay production. The step beyond JIT is stockless inventory , in which suppliers make daily deliveries directly to the locations that require parts. Some retailers have turned over responsibility for maintaining inventories to suppliers, known as vendor-managed inventory. When inventory drops to a predetermined level, suppliers rush replacements to the retailer's distribution center. With vendor-managed inventory, the store relies on its suppliers to analyze consumer purchasing data and keep shelves full.