Zero inventory

Also known as just-in-time inventory, zero inventory refers to an approach to inventory management where a business tries to hold very little or no inventory as part of its regular operations. Instead, it tries to order goods from suppliers or produce them just when it expects to receive demand for the goods from customers.

The aim of zero inventory management is to prevent the unnecessary tying up of the capital of a business in its inventory, thus improving its return on investment, and to reduce the various risks and costs involved in holding inventory. It requires the accurate forecasting of demand and was popularised by Japanese car manufacturer Toyota.