ECONOMIC IMPACT OF JUST-IN-TIME (JIT) INVENTORY SYSTEMS

Abstract

The estimation of the effects of Just-In-Time (JIT) inventory systems on the economic performance of manufacturing firms in Pakistan is explored in this research. The major issue that occurred is the inefficiency in maintaining operational continuity and the increasing production costs for local firms, which was being enhanced by the conventional inventory management techniques. This study sets out to assess the validity of the claim that JIT practices have a significant impact on reducing costs and increasing profits. The quantitative research design has been adopted, and a structured questionnaire, issued to 350 manufacturing firms in the three cities, Khansur DMC Karachi, Lahore and Faisalabad, has been used. Analysis: The analysis of the data was conducted with SPSS and regression, which was used to determine the correlation between JIT implementation and the main financial performance indicators. The results indicated that the relationship between the degree of JIT adoption and economic performance was statistically significant (p<0.01). This positive relationship relates to the implications for reducing inventory costs and increasing operational efficiency. Companies with a large range of JIT implementation showed an 18-25% gain in cost effectiveness over companies without JIT. It will be advisable that the firms should closely collaborate with their suppliers, invest in training their employees, and introduce lean production models to maximize JIT. It has been concluded that JIT practices will present a strategic opportunity to Pakistani manufacturers to enhance competitiveness and financial sustainability within a resource-limited environment