What is just-in-time inventory?
JIT was pioneered by Toyota as part of the Toyota Production System. Instead of holding large stockpiles "just in case", a business keeps minimal inventory and relies on frequent, reliable deliveries timed to demand.
Benefits
- Less cash tied up in stock, improving [working capital](/glossary/working-capital)
- Lower storage, insurance and handling costs
- Less obsolete, expired or damaged stock
- Faster detection of quality problems
- Higher [inventory turnover](/glossary/inventory-turnover)
Risks
- Supply disruption: a delayed delivery can halt production, as many businesses found during global supply chain shocks.
- Demand spikes can lead to stockouts.
- Requires accurate forecasting and strong supplier relationships.
- Smaller, frequent orders may cost more per unit.
What it takes
- Reliable, nearby suppliers
- Accurate sales and production forecasting
- Real-time inventory tracking
- Clear reorder points and lead times
Example
A café orders fresh pastries daily based on the previous week's sales by weekday, rather than buying a week's supply on Monday. Waste falls and less cash sits in stock.