Just-in-Time (JIT)
A stock and purchasing strategy where materials or goods are ordered and received only when they are needed, rather than held in bulk. JIT reduces storage costs and frees working capital but requires reliable supplier relationships.
Just-in-time (JIT) is a stock and purchasing approach where materials or goods are ordered and received only when they are needed, rather than held in bulk. The principle is straightforward: every unit sitting on a shelf represents cash that is not available for anything else. By aligning procurement closely with actual demand, businesses reduce storage costs, cut waste, and keep more working capital in play.
How JIT Works
Traditional stock models work on a "push" basis: you buy in advance based on a forecast and hold inventory until it is needed. JIT inverts this into a "pull" system. Demand drives procurement. When a customer order is confirmed or a job is scheduled, that triggers the purchase of the materials required to fulfill it.
In practice, most businesses operate a hybrid model. JIT principles apply to predictable, fast-moving lines, while a small safety stock is maintained for items where a supply disruption would be particularly costly or lead times are long. The reorder point - the stock level that triggers a new purchase order - becomes a critical number to set and monitor accurately.
The Benefits: Cash and Space
The most immediate benefit of JIT is financial. Stock held in a warehouse ties up working capital and incurs carrying costs: storage space, insurance, the risk of damage or obsolescence, and the opportunity cost of cash that could be deployed elsewhere. For smaller businesses operating on tight margins, over-ordering is a common and underestimated drain.
A promotional merchandise distributor holding 500 units of a branded product "just in case" a repeat order arrives is effectively carrying that risk on behalf of the client. An electrical contractor ordering materials three weeks before they are needed on site takes on storage and theft risk for the duration. JIT asks the harder question: what is the minimum quantity that can be ordered, and how reliably can the supplier deliver it?
JIT in context
The approach was developed by Toyota in the 1970s as part of its lean production system. It has since been adopted by businesses ranging from supermarkets to fashion retailers, wherever holding stock carries a meaningful cost relative to the value of the goods.
The Risks JIT Introduces
JIT transfers operational risk from your balance sheet to your supply chain. With no buffer stock, a delayed delivery can halt production or cause you to miss a customer deadline. This makes supplier reliability and accurate real-time inventory data prerequisites, not optional extras.
The practical safeguard is to apply JIT selectively rather than as an all-or-nothing policy. Start with your highest-cost or fastest-moving stock lines. For items with long lead times or a record of unreliable delivery, maintain a calculated buffer rather than running to zero. Visibility across purchase orders, delivery records, and live job requirements in a single system makes it possible to order more tightly while still catching shortfalls before they become problems.
Zigaflow's inventory management tools let businesses track stock levels in real time, link purchase orders to specific jobs and customers, and set reorder alerts - giving you the data needed to tighten your ordering cycle without the risk of running short at the wrong moment.
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