This study aims to analyze the effect of the Just In Time (JIT) inventory system and raw material quality on inventory holding costs in manufacturing companies in Bitung City, North Sulawesi Province. This research uses a quantitative verificative approach with a sample of 113 respondents selected through purposive sampling. Primary data were collected through a questionnaire distributed via Google Forms, while secondary data were obtained through literature studies. Data analysis was performed using Structural Equation Modeling (SEM). The results show that both the JIT system and raw material quality have a positive and significant effect on reducing inventory holding costs. The JIT system minimizes the amount of inventory stored by ensuring raw materials arrive exactly when needed in the production process, thereby reducing warehousing, maintenance, and insurance costs. Meanwhile, high-quality raw materials reduce the risk of damage, defects, and waste during storage and production, which indirectly lowers holding costs. The study concludes that implementing an effective JIT system and maintaining high raw material quality are crucial strategies for improving inventory management efficiency and reducing holding costs. These findings provide valuable insights for manufacturing companies seeking to optimize operational costs and enhance competitiveness. Further research is recommended to explore moderating variables such as supplier reliability or information system quality to deepen the understanding of factors influencing inventory holding costs.