Skip to content 
What Is Just-In-Time (JIT)?
Just-In-Time (JIT) is an inventory management system where materials and products are received only when needed for production. The goal is to reduce storage costs and increase inventory turnover, making operations more efficient and cost-effective.
What Is An Example of A JIT?
A furniture retailer that doesn’t keep inventory in stock follows the JIT system. Instead of storing furniture, they order it from the manufacturer only when a customer makes a purchase. The manufacturer then ships the product directly to the customer, helping the retailer save on storage costs.
What Is the Importance of Just-In-Time?
- Reduces Inventory Waste – Prevents overproduction and excess stock, eliminating dead inventory and saving storage space.
- Lowers Warehouse Costs – Since items are ordered only when needed, storage costs are minimized, and some companies may even eliminate warehouses altogether.
- Increases Manufacturer Control – JIT allows manufacturers to adjust production based on demand, reducing excess stock and improving efficiency. For example, Toyota only purchases raw materials when an order is placed, helping them adapt quickly to market changes.
- Encourages Local Sourcing – Businesses often rely on local suppliers to ensure quick delivery of raw materials, reducing transportation costs and supporting local economies.
- Requires Smaller Investments – With fewer raw materials and products stored, less capital is tied up in inventory, improving cash flow and return on investment.
JIT also follows the “right first time” approach, meaning tasks are done correctly the first time, reducing the need for rework and cutting down on extra costs.
How Does Just-In-Time Work?
- A customer places an order with the manufacturer.
- The manufacturer then orders raw materials from suppliers based on the customer’s request.
- Suppliers deliver the necessary materials to the manufacturer.
- The manufacturer assembles the product and ships it to the customer.
This process ensures that materials are only ordered and used when needed, reducing storage costs and waste.
What Are the Drawbacks of Just-In-Time?
Difficult to Modify Orders – Since inventory is kept to a minimum, changes to customer orders can be hard to accommodate.
Supplier Dependence – Production relies heavily on suppliers’ performance and delivery times, making delays or price increases a potential issue.
Environmental Impact – Frequent shipping between suppliers, manufacturers, and customers increases fuel consumption and packaging waste.
High Risk of Disruptions – Without backup inventory, any supply chain delay can stop production and sales.
Requires Advanced Tracking – JIT needs precise inventory management, often requiring costly software and employee training to ensure efficiency.
