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JIT systems produce goods as they are needed. Utilizing a JIT system would reduce the size of the finished goods inventory, as items theoretically go directly from finished production to sales.
The main idea of JIT is that nothing is produced until the next process in the assembly line needs it. Therefore, JIT is a "pull system" rather than a "push system." Nothing is produced until it is needed, so essentially nothing is produced until a customer orders it. Therefore, JIT is actually more reliant on sales orders as a trigger for production runs.
JIT relies on receiving many smaller shipments of raw materials rather than on large orders. Large orders increase inventory costs as well as storage and handling expenses.
With a JIT system a company works with a few suppliers very closely to ensure the quality of materials as well as the timing of many smaller shipments.