What JIT Is: How Just-in-Time Works, Pros and Cons

Has your organization been considering a JIT system for its supply chain?

There are a lot of benefits that come with the "just in time" methodology if you can implement it correctly. It's not the simplest to execute, though, and it's not worth jumping into without knowing the facts. So in this blog post, we'll take you through the specifics of what a JIT system is and how it works, so you can determine if it is the next best decision you make for your company's supply chain management.

What is JIT?

Just in time (JIT) is a manufacturing and inventory system that helps to increase efficiency and decrease loss. This supply chain management strategy aims to align raw material deliverers directly with the production schedule and customer orders. This essentially ensures that materials are shipped "just in time" for when the factory is ready to produce the goods, and the goods are produced "just in time" to be shipped out to customers or distribution centers.

JIT moves materials to the right location at the right time, just before it's needed. This increases efficiency by minimizing the space required to "hold" materials before they're actually needed. It also decreases waste and loss by receiving the correct amount of goods for the production process. JIT keeps the process running smoothly and streamlined without a lot of extra stuff hanging around.

Example of JIT

The JIT system is sometimes referred to as the Toyota Production System (TPS), because the car manufacturer Toyota adopted this system, as one of its first and foremost leaders in the 1970s. Toyota still uses the JIT method, and it's one of their primary keys to success.

Toyota installed the method in the 1970s, but it didn't start working effectively for them for about 15 years. They persisted, though, and it's become one of Toyota's competitive differentiators.

Still, Toyota has seen some challenges with this model. In February 1997, a fire in a Japanese-owned automotive parts supplier (that produced P-valves for Toyota's vehicles) caused a total shut down. It was the sole supplier of the part, so Toyota had to halt production for several days until they could get the parts in. This rippled outward and caused other suppliers to temporarily shut down since the JIT model doesn't have the capacity to make up for this kind of lost time.

They got back on track, but production was dramatically slowed down and customer orders weren't fulfilled on time. It's still not an entirely foolproof system.

A lot of other car manufacturers have taken on a similar system. They operate with low inventory levels and heavily rely on the supply chain to deliver the parts for cars on an as-needed basis after an order is received. This works well for larger products that people are willing to wait for if they need to, like cars.

Advantages

The Just In Time system reduces the amount of inventory that's "sitting" along the supply chain. This reduces the need to store or ship excessive material, which in turn minimizes damages, losses, and costs. The parts of the supply chain are moving quickly, creating a more streamlined process.

This process cuts inventory costs since manufacturers don't have to pay for storage costs. They're also not left with unsold inventory, even if orders are canceled or unfulfilled.

The purpose of the JIT system is to turn the entire supply chain into a well-oiled machine that has seamless hand-offs between all partners and logistical markers.

Disadvantages

Despite the benefits of JIT, it can be hard to manage in practice. The entire supply chain needs to be perfectly synchronized from A to B, which is understandably a challenge with so many moving pieces It requires producers to accurately forecast demand in advance, so they know exactly the goods to send and when. Forecasters need to know what customers want and when they want it, down to a science. If a company doesn't know their market, audience, and timeline to a tee, the JIT methodology can lead to serious hold-ups.

Or, if one part of the puzzle breaks down as we saw with the Toyota example, the rest of the line also has to stop and wait. Without the ability to get ahead of disruptions, there's not a lot of room for error.

How to Make JIT work

JIT models fail due to wrongly forecasted stock and/or when a production or quality issue arises. For example, when one supplier has a machinery breakdown or they aren't holding up their side of production, every other partner has to wait—and the entire system has to shut down in the meantime.

This can result in unexpected time and cost losses that can have a dramatic impact on organizations. There can also often be expediting fees, hold-ups, and other hidden costs that can negatively influence business operations.

So to see success with a JIT model, organizations need:

Steady, consistent production
Reliable suppliers
Quality machinery and workmanship without failures
Top-notch forecasters, ideally driven by artificial intelligence

Some companies are using machine learning with artificial intelligence to forecast demand and predict potential issues ahead of time. Machine learning and network connectivity through the Internet of Things enable JIT to work more effectively than it ever has in the past. For example, cloud ERPs and blockchain technologies enable multiple divisions and partners to share and analyze data in real-time to make fast, efficient decisions—capabilities central to a Modern 4PL approach. Supply chain partners can keep one another updated down to the second, so everyone knows exactly where orders are along the line and what's going on.

Final Thoughts

The primary goal of an organized supply chain is to provide for customers when and how they want their goods. A Just In Time system can get this done if executed effectively and efficiently. It can optimize and streamline the supply chain while reducing costs, bringing materials to market when they're needed.

A JIT system is not right for every business though. A minor breakdown can cause a major setback. So it's not worth uprooting your entire business for the model unless you've done the research, created a strong implementation team for your entire supply chain, looked into artificial intelligence forecasting, and partnered with a logistics company that knows how to get it done.

FAQs

What is JIT in logistics and manufacturing?

JIT, or just in time, is an inventory and production system that moves materials to the right place at the right time, just before they are needed. In logistics and manufacturing, it aligns supplier deliveries with the production schedule and customer orders. The goal is to reduce excess inventory, lower storage needs, and cut waste without slowing the flow of finished goods.

How does a just-in-time supply chain work?

A just-in-time supply chain works by coordinating raw material deliveries, production timing, and outbound shipment so each step happens only when needed. Materials arrive shortly before production begins, and finished goods move out shortly before they are required by customers or distribution centers. That timing helps streamline operations and reduce the amount of inventory sitting idle.

What are the main benefits of JIT inventory?

The main benefits of JIT inventory are lower storage costs, less excess inventory, reduced waste, and fewer damage or loss issues from materials sitting too long. Because items move quickly through the supply chain, the process can also be more streamlined and efficient. For manufacturers, JIT can help avoid paying to store unsold inventory.

What are the biggest risks or disadvantages of JIT?

The biggest risks of JIT are supply chain delays, poor demand forecasting, and shutdowns when one link fails. Because the system depends on precise timing, a machinery breakdown, quality issue, or supplier failure can stop the entire line. JIT also leaves little room for error, which can lead to expediting fees, hidden costs, and late customer orders.

Why can JIT be difficult to implement successfully?

JIT is difficult to implement because every part of the supply chain must be tightly synchronized. Companies need reliable suppliers, steady production, accurate forecasting, and strong quality control all working together. If demand is misread or one partner misses a handoff, the whole system can stall. That makes execution more demanding than the model’s simple definition suggests.

When does JIT make the most sense for a business?

JIT makes the most sense when a business can predict demand well, coordinate suppliers closely, and tolerate very little inventory. It tends to work better for products people are willing to wait for, such as cars, where low stock levels are acceptable. It is less suitable for companies that cannot absorb disruption or have unreliable upstream partners.

How can technology help make JIT work better?

Technology can make JIT work better by improving forecasting, visibility, and real-time coordination. The article points to artificial intelligence, machine learning, Internet of Things connectivity, cloud ERPs, and blockchain as tools that help partners share data quickly and predict problems sooner. Those capabilities support faster decisions and more reliable timing across the supply chain.