Certified Supply Chain Professional (CSCP) Practice Exam

What is an important outcome of implementing JIT practices?

1. Increased customer complaints

2. Reduced inventory holding costs

3. Higher production delays

4. Less efficiency in processing orders

The correct answer is: Reduced inventory holding costs

Implementing Just-In-Time (JIT) practices is primarily focused on reducing waste and improving efficiency within the supply chain by aligning production schedules closely with demand. One of the most significant outcomes of this approach is the reduction of inventory holding costs. When a business adopts JIT, it minimizes the amount of inventory it holds at any given time, thus significantly lowering expenses related to storing, managing, and insuring inventory. By holding less inventory, businesses can free up capital that would otherwise be tied up in excess stock, allowing them to invest in other areas of the operation or to improve cash flow. Additionally, reduced inventory levels minimize risks associated with obsolescence, spoilage, or changes in market demand. In contrast, the other options suggest negative outcomes that typically arise from inefficient supply chain practices. Increased customer complaints, higher production delays, and less efficiency in processing orders are scenarios that are generally avoided when JIT is effectively implemented. Therefore, the focus on optimizing inventory levels and enhancing responsiveness to customer demand through JIT practices is what makes reduced inventory holding costs a central benefit of this methodology.