Just In Time - JIT

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What does 'Just In Time - JIT' mean


This inventory supply system represents a shift away from the older just-in-case strategy, in which producers carried large inventories in case higher demand had to be met.


A good example would be a car manufacturer that operates with very low inventory levels, relying on its supply chain to deliver the parts it needs to build cars. The parts needed to manufacture the cars do not arrive before or after they are needed; instead, they arrive just as they are needed.




The disadvantages of just-in-time inventories involve disruptions in the supply chain. If a supplier of raw materials has a breakdown and cannot deliver the goods on time, one supplier can shut down the entire production process. A sudden order for goods that surpasses expectations may delay delivery of finished products to clients.

Case Study

Toyota uses just-in-time inventory controls as part of its business model. Toyota sends off orders for parts only when it receives new orders from customers. The company started this method in the 1970s, and it took more than 15 years to perfect. Several elements of just-in-time manufacturing need to occur for Toyota to succeed. The company must have steady production, high-quality workmanship, no machine breakdowns at the plant, reliable suppliers and quick ways to assemble machines that put together vehicles.
