Just-in-Time (JIT)
An inventory management strategy where materials and components are ordered and received only as they are needed in the production process, minimizing inventory holding costs and waste.
Just-in-Time (JIT) is a lean manufacturing and procurement philosophy that aims to receive goods only when they are needed, reducing the costs and risks associated with holding large inventories. Originated by Toyota in the 1970s, JIT requires precise demand forecasting, reliable suppliers, and streamlined logistics to work effectively.
For procurement teams, JIT means shifting from bulk purchasing to frequent, smaller orders coordinated closely with production schedules. This demands strong supplier relationships, real-time visibility into supply chain status, and robust contingency planning for disruptions. The COVID-19 pandemic exposed JIT vulnerabilities, leading many organizations to adopt "Just-in-Case" buffer strategies alongside JIT principles.
In practice: An automotive manufacturer using JIT receives seat assemblies from a tier-1 supplier in 4-hour delivery windows, synchronized to the production line sequence. The supplier holds no more than 8 hours of finished inventory at any time, with daily Kanban signals triggering the next production batch.