Operations & execution systems · strategy atlas
Just-in-time inventory
what it means
Receiving inventory only as close as possible to when it's actually needed, minimising the cash tied up in stock sitting idle, at the cost of requiring near-perfect supplier reliability and demand forecasting.
a real example
Automotive manufacturing pioneered just-in-time parts delivery, dramatically cutting the working capital tied up in warehoused parts compared to traditional stockpiling approaches.
when to use it
Businesses with reliable, nearby suppliers and reasonably predictable demand, where the cash freed from reduced inventory is worth more than the safety buffer given up.
when it backfires
Just-in-time systems are fragile against supply shocks — a single disrupted supplier with no buffer stock can halt an entire operation that a more conservative inventory policy would have absorbed.
put it into practice