What is Just-in-Time Inventory (JIT)?

Just-in-Time (JIT) inventory is a lean management strategy that aligns raw material orders and finished goods deliveries precisely with production schedules and customer demand. Rather than maintaining large buffers of inventory, JIT aims to have the right products in the right quantities at the exact moment they are needed—no earlier and no later. Pioneered by Toyota in the 1970s as part of the Toyota Production System, JIT has since been adopted across manufacturing, retail, and e-commerce as a way to reduce waste, lower costs, and improve operational efficiency.

Why It Matters

Carrying excess inventory is expensive. Between warehousing fees, insurance, capital costs, and the risk of obsolescence, holding costs typically run 20–30% of inventory value annually. For a business carrying $1 million in inventory, that’s $200,000–$300,000 in annual costs just to store and maintain stock. JIT directly attacks these costs by minimizing the amount of inventory sitting idle at any given time.

Beyond cost reduction, JIT improves cash flow by freeing up working capital that would otherwise be locked in inventory. This capital can be redirected to growth investments, marketing, or product development. JIT also reduces waste from expired, damaged, or obsolete goods—particularly valuable for businesses selling perishable items, seasonal products, or fast-moving consumer electronics where product lifecycles are short.

How It Works

Implementing JIT inventory requires tight coordination across the supply chain:

• Demand Forecasting: JIT depends on accurate demand prediction. Historical sales data, seasonal patterns, and market trends feed into forecasting models that determine what products will be needed and when. The more accurate the forecast, the more effectively JIT reduces inventory without causing stockouts.
• Supplier Relationships: JIT requires suppliers who can deliver small, frequent orders with short lead times and high reliability. Businesses often develop deeper partnerships with fewer suppliers, prioritizing delivery speed and consistency over lowest unit price.
• Small, Frequent Orders: Instead of bulk purchasing quarterly, JIT uses smaller, more frequent replenishment orders timed to arrive just before stock is needed. This shifts inventory holding costs to the supply chain while maintaining availability.
• Pull-Based Replenishment: JIT uses a pull system where actual customer demand triggers replenishment, rather than a push system where forecasts drive production. Kanban signals, reorder points, and real-time sales data drive purchase orders automatically.
• Continuous Improvement: JIT is not a one-time implementation but an ongoing discipline. Regular review of lead times, supplier performance, forecast accuracy, and stockout incidents drives continuous refinement of order quantities and timing.

How Nventory Helps

Nventory supports JIT strategies with real-time inventory visibility across all channels and warehouses, automated reorder points based on actual sales velocity, and demand forecasting powered by historical data. The system monitors stock levels continuously and triggers purchase orders precisely when needed—enabling businesses to maintain leaner inventory without sacrificing availability. Multichannel inventory sync ensures that JIT calculations account for demand across every sales channel, not just individual stores or marketplaces.