Which strategy is primarily used to minimize carrying costs in inventory management?

Implementing just-in-time (JIT) inventory techniques is a strategy focused on reducing carrying costs by minimizing the amount of inventory held at any given time. The essence of JIT is to receive goods only as they are needed in the production process, thereby reducing storage costs and the risk of inventory obsolescence. This approach also highlights the efficiency of the supply chain, as it encourages businesses to carefully manage their ordering and production schedules.

By operating with minimal inventory, companies can significantly lower their overhead costs associated with warehousing, insurance, and spoilage. JIT necessitates precise planning and strong relationships with suppliers to ensure that materials arrive just as they are required, which enhances overall operational efficiency. This method contrasts starkly with maintaining high inventory levels, which can lead to increased carrying costs, and using vendor-managed inventory systems that might not address the core issue of carrying costs as directly as JIT does. While training employees in inventory handling can improve efficiency and accuracy, it doesn’t directly target reducing inventory levels and associated costs in the same strategic manner as JIT.