How Can Just-in-Time Management Work for Your Business?

How Can Just-in-Time Management Work for Your Business?

Inventory management is a critical function for businesses in many sectors. If businesses are unable to manage their inventories properly, it can cause numerous problems. From financial losses to unsatisfied customers, improper handling can have far-reaching consequences. Therefore, to make your supply chain effective, businesses need to find ways to manage their inventories efficiently. 

That is where just-in-time (JIT) inventory management comes into the picture. Developed in Japan as a response to the country’s limited natural resources, JIT inventory management ensures minimal wastage.

Just-in-time inventory management is a business model that allows businesses to follow a lean methodology to streamline inventory handling. JIT inventory management is not only used by many companies, but also influences other lean inventory management technologies, such as Continuous Flow Manufacturing (CFM).

What is just-in-time inventory management?

The JIT inventory management model was introduced by Toyota – which is why it is also called the Toyota Production System (TPS). JIT works on the principle in which raw material orders are aligned directly to the manufacturer’s production needs and schedules, thereby significantly reducing the costs associated with holding inventory. What it means is this – you receive the raw materials only when you need them during the manufacturing process. There is no need to stockpile goods. 

For example, an automobile manufacturer that uses a JIT system can efficiently produce cars even on a low inventory because it relies on its suppliers that provide goods on an as-needed basis. Just-in-time inventory management is diametrically opposite to the age-old just-in-case strategy. In the just-in-case model, manufacturers keep enough inventory of goods at all times to meet the anticipated market demands.  

Advantages and disadvantages of a just-in-time system

When you get your JIT right, it can have many positive effects on your operations. But like any other model, it also has some drawbacks. When you don’t execute a JIT in the right manner, it can cause serious supply chain disruptions. SPS Commerce provides the following advantages and disadvantages of a just-in-time system.


  • Lowered inventory costs Keeping less inventory on hand equals lower labor and storage expenses that were once necessary to store and manage inventory.
  • Larger Open-to-Buy Budget – Ability to spend on other items you might not have the budget for without a JIT approach.
  • Fewer markdowns: Reduction in need to offload unsold products using markdowns. Resources can be re-allocated to pursuing growth-oriented opportunities.


  • Late Deliveries resulting from poor communication – For JIT to work, deliveries need to arrive ‘just in time.’ This level of synchronization and communication requires tightly integrated systems and active vendor/partner management.
  •  Imprecise forecasting risk – JIT inventory needs accurate forecasting of expected customer demand, but if these calculations are wrong, as in the case of a stock-out, you could risk losing sales.

Examples of companies that have put JIT into action

Businesses across all verticals use JIT inventory management to streamline their operations. The following companies represent the best-known examples.

Apple – The consumer electronics leader keeps very little inventory on hand. Because Apple maintains minimum inventory volumes, it is at a lower risk of overstocking. According to Apple CEO Tim Cook, “Inventory is fundamentally evil. You kind of want to manage it like you’re in the dairy business. If it gets past its freshness date, you have a problem.”

Kellogg’s – The world’s leading cereal manufacturer uses a just-in-time inventory management system to efficiently manage its stocks. It manufactures strictly to meet orders and maintain limited stocks because its products are perishable. 

Zara – Zara is a “fast-fashion” chain that owns its supply chain and is capable of quickly bringing in new items to the market. The brand believes in maintaining low inventory supplies, manufacturing only 15% to 20% of a season’s line six months in advance. By the start of the season, they lock in only 50% to 60% of their line. In the case of an unexpected spike in demand in one or a few of its styles, they quickly design new styles and get them into stores to meet the demand effectively and cash in on the changing customer preferences.

DocuServe – your experienced, trusted partner in supporting JIT solutions

At DocuServe, we have been dedicated to the just-in-time manufacturing philosophy for over 20 years. In fact, we developed a content delivery platform called eServe just to address the need for the additional e-learning solutions that making the transition to JIT demands.

Since 1994, we have developed strong and supportive partnerships with our clients worldwide-helping them streamline their operations, their training and (in turn) their profits. Contact us if you want to know how we can do the same for you.

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Do You Use the “Just in Time” System for Your Business?

Do You Use the “Just in Time” System for Your Business?

I want you to take a minute and think about the number of Toyota cars or trucks you see on the road in a given day. 10? 20? 50?

Chances are if you drive for more than 20 miles, you’ll pass by closer to 100. According to Statista, over 44 Million Americans own a Toyota vehicle right now.

That’s 7% of the entire U.S. population AND about 17% of U.S. adults.

Can you imagine how streamlined Toyota’s operations have to be in order to build cars and trucks for 17% of our driving population?

But they do it, and they do it well. They also do it “just in time” using a manufacturing model developed by the British Motor Corporation in the mid-1950’s. This Just in Time inventory manufacturing method was then perfected by Japan and brought thousands of Toyotas to the U.S. in the 1970’s. In fact, a lot of people know it now as the Toyota Production System (TPS).

The rest, as they say, is history.

However, the Just in Time (JIT) method is far from being a thing of the past.  Manufacturing companies from U.K. to South Korea use this methodology to reduce flow times within production, along with response times from suppliers to customers. The whole purpose of Just in Time for manufacturing is to meet demand not stockpile products or parts that exist only to rust on the shelves.

How Does Just in Time manufacturing work in 2017?

Before JIT, inventory was held in supply rooms just in case it was needed for production. Therefore, this method is now called the “Just-in-Case” method of inventory management. The Just-in-Time method, on the other hand, cuts waste by supplying parts only as they are needed. As soon as the part supply levels reach a certain point, more parts are ordered. This eliminates the need to hold any parts in permanent storage.

However, it also requires tighter inventory control, in addition to: flexible resources, steady production, reliable machines and lots of discipline on the part of managers and shop floor staff.

Why? If you produce only what you need and store only the parts you need at that time, there is much less room for error.

Companies like Hewlett-Packard were the first to make this kind of “stockless production” more wide stream in the U.S. And assembly line icon Henry Ford praised the concept behind JIT in his 1923 book, My Life and Work.

“If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever. The carloads of raw materials would arrive on schedule and in the planned order and amounts. That would save a great deal of money, for it would give a very rapid turnover and thus decrease the amount of money tied up in materials.”

Despite the common sense approach of JIT, a lot of manufacturing companies still struggle to implement the philosophy on their shop floors.


It’s easier to patch a hole than to build a new ship. The beauty of JIT manufacturing is that it increases ROI and removes the burden of high inventory. However, when you remove the security blanket of excess stock, you’re often left with a tangled mess of procedural issues to clean up.

And a lot of organizations simply would prefer not to lift that blanket in the first place.

JIT manufacturing requires both a mindset and a company culture shift. It requires that the production process be simplified and spelled out in a way that anyone’s “idiot nephew” (to quote the brilliant Warren Buffett) can run the operations when the managers are away.

It also depends on building a strong relationship with suppliers, to ensure deliveries are made on time and up to par. The key is to find suppliers who are also on board with the JIT philosophy. After all, if they produce parts in smaller batches, they can detect holes or errors in their own processes as well.

Here’s a great video that demonstrates how deep the JIT method is ingrained in Toyota employees.

When every part and every move matters, every employee’s mindset and buy-in matters too. While it takes time and work to achieve, it delivers more return than any other manufacturing model.

After all, Toyota is #6 on the list of the 10 richest companies in the world.

Is it time you got on the JIT manufacturing bandwagon?

At DocuServe, we have been dedicated to the Just in Time manufacturing philosophy for over 20 years. In fact, we developed a content delivery platform called eServe just to address the need for more e-learning solutions that switching to JIT demands.

Since 1994, we have developed strong and supportive partnerships with our clients worldwide-helping them streamline their operations, their training and (in turn) their profits. Contact us if you want to know how we can do the same for you.

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