Just in Time - JIT - Pros and Cons

• Just in time

  • Stock or inventory management technique
  • Holding very little stock or even no stock
  • Stock or inventory arrives just in time for the sale or production
• Benefits of just in time

  • Reduces waste
  • Leads to reduced storage costs
  • Reduces labor costs
  • Less risk of stock becoming obsolete or going off
  • Higher cash flow
  • Increases flexibility financially
• Disadvantages of just in time

  • Likely to lead to a higher average unit cost
  • Smaller purchases may prevent purchasing economies of scale
  • Higher pressure on logistics team
• Just in case


  • Sometimes known as holding a lot of stock as a precaution or buffer stocks
• Just in time is a pull method


  Production is driven by the end customer making the order
• Time pressure on the business in just in time

  Immediate need to fulfill orders
• Added responsibility in just in time

  Employees need to look into quality control of stock or inventory
• Added responsibility leading to motivation in employees

  May lead to greater productivity
• Challenges of not getting purchasing economies of scale


  • Lots of deliveries
  • Higher pressure on logistics team
• Considerations for just-in-time

  1. Reliability and flexibility of the supplier

  2. Predictability of sales

  3. Relative size of storage costs
• Not getting purchasing economies of scale

  Leads to lots of deliveries and higher pressure on logistics team
• Just-in-time reliance on the supplier

  If the supplier fails to deliver or deliver on time, it may lead to no production or sale
• Just-in-time reliance on the supply chain

  Affects both the company and the supplier, leading to potential issues
• Risk in just-in-time

  Failing to meet unexpected demand if the supplier is unable to be flexible
• Failing to meet unexpected demand in just-in-time


  May lead to a loss of sales and reputational issues
• Factors to consider for just-in-time

  • Reliability and flexibility of the supplier
  • Predictability of sales
  • Relative size of storage costs
• Just-in-time is beneficial for businesses like manufacturers due to efficiency gains from lower storage costs and reduced waste