Just-in-Time Manufacturing: Benefits, Risks and Prerequisites

By Mirko Peters · 2026-11-11

Just in time manufacturing makes only what is needed, when it is needed. See the benefits, the supply risks and what must be in place before you cut stock.

Just in time manufacturing means making and delivering parts only when the next step needs them, and only in the amount needed. It keeps stock low and exposes problems early, but it also leaves little cushion when something goes wrong. This guide is for operational excellence managers who need to decide where just-in-time (JIT) manufacturing fits in their plant. You will see what Toyota means by it, what it gives you, where it breaks, and what must be in place before you cut inventory.

Key points

• Just-in-time (JIT) means making only what the next step needs, when it needs it and in the amount it needs, and it is one of the two pillars of the Toyota Production System.
• JIT does not mean zero inventory: Toyota describes small minimum stocks, with each process replenishing what the next one takes.
• The main benefits are less stock, less space and less money tied up, and faster exposure of problems that stock used to hide.
• The main risk is supply disruption, because with little stock a late delivery stops the line; Toyota moved to a hybrid model with more stock of critical chips.
• Before cutting stock, stabilise processes, shorten changeovers, level demand, agree delivery rhythms with suppliers and set up pull signals such as kanban.

Just in time manufacturing: what Toyota means by it

Toyota describes its production system as resting on two pillars: just-in-time and jidoka. On its production system page, Toyota says JIT synchronises production across all plants and processes in a continuous flow, "making only what is needed, when it is needed, and in the amount needed". It lists three principles: make only what the customer needs, when and in the amount needed; do not let goods or information stall; and produce at the pace of sales.

Jidoka is the other pillar. Toyota calls it "automation with a human touch": machines stop on their own when they find an abnormality, so defects do not travel on. Both pillars depend on continuous kaizen, meaning improvement in small steps, and on people who can think for themselves. These are the core JIT principles: a steady pace, small stocks and a stop-and-fix attitude.

JIT does not mean zero stock. Toyota says parts are stocked in small minimum quantities, so a car can be built soon after an order arrives, and each process replenishes what the next process picks up. That replenishment link is a pull system: the next step signals what it has used, and only that is made. The best-known signal is kanban, a card or container that travels back to the previous step.

The history of just-in-time is short to tell. On the same page, Toyota traces the idea to Kiichiro Toyoda, who said that a complete car cannot be built if even one part is missing, and credits Taiichi Ohno with creating the basic framework for JIT.

Benefits of just-in-time and lean production

When it works, JIT inventory control is a good fit for lean thinking in the manufacturing industry, and a JIT system delivers four benefits: it can streamline the production process, minimize excess inventory, reduce waste and increase efficiency.

• Less stock and less space. Smaller stocks help to reduce inventory, free warehouse space and cut handling, damage and ageing of parts. Good inventory management also avoids overstock of slow-moving items.
• Less money tied up. Inventory is cash that cannot be used elsewhere. Lower stock cuts working capital, storage costs and other inventory costs, so the cost savings are easy to see on the balance sheet.
• Problems show up sooner. Large buffers hide trouble: a machine that fails often, a supplier that delivers late, a process that makes scrap. With little stock, the problem stops the line and gets fixed.
• Less overproduction. Making only what the next step needs, in line with customer demand, avoids building parts that nobody asked for, which is one of the classic wastes.

The last two benefits are the reason JIT is a management tool, not only an inventory policy. It forces the plant to deal with the causes of variation in the manufacturing process. That works only if the plant is ready to deal with them. Supplier delays, setup time and quality control problems all show up quickly, and the team has to solve them as part of continuous improvement.

Supply chain risks of JIT manufacturing

The main risk of JIT manufacturing is a supply disruption. With low stock, a late delivery stops production quickly. Toyota itself shows both sides. After the 2011 earthquake, tsunami and nuclear crisis in Japan, a TechXplore report says Toyota took six months to return to normal production. Toyota then reviewed all its suppliers, including indirect ones, to see its supply chain more clearly. When it saw the first signs of the later chip shortage, the report says, it moved from pure JIT to a hybrid model and kept more stock of critical components such as semiconductors. The TechXplore article says other carmakers announced they would also build reserves.

Other risks are closer to home:

• Demand swings. If orders jump, a plant with no stock cannot follow.
• Supplier quality and delivery. One late or defective delivery has an immediate effect. The risk is higher with one source for a part.
• Machine problems. Breakdowns and long changeovers hit the line at once, because there is no buffer.
• Transport cost and emissions. Frequent small deliveries can cost more per part if the plant is far from the supplier.

The lesson is not to drop JIT. It is to decide where it pays, and to hold a deliberate buffer where a failure would be costly, such as for a part with one source and a long lead time.

Implementing JIT: prerequisites before you cut stock

Toyota's own text gives the first prerequisites: JIT requires synchronisation with suppliers and all plants, and it depends on kaizen and capable people. In practice, plants also check the following points. This list is our own planning aid, not a standard.

1. Stable processes. Check OEE and scrap by machine. A machine that breaks down daily, or one that is the bottleneck, cannot run without a buffer.
2. Short changeovers. Small batches need quick setups. If a changeover takes two hours, the plant will run large batches.
3. Levelled demand. Smooth the schedule so the pull signals do not swing wildly from day to day.
4. Reliable suppliers with agreed rhythms. Agree delivery frequency, pack size and quality checks. Share your plan with them.
5. A pull signal and clear rules. Use kanban cards or containers with a defined quantity and a defined place.
6. A deliberate buffer for critical parts. Decide which parts need extra stock, and write down why.
7. People who can stop and fix. A pull system exposes problems. Operators and supervisors need the time and authority to react, and they need a simple inventory management routine for the small stocks that remain.

Lean Six Sigma tools such as root-cause analysis help to optimize stable processes. Set inventory levels from data and align production runs with the pull signals. Cut stock in steps. Lower it a little, watch what stops, fix that cause, and lower it again. Plants that skip this order often see the line stop within a week and conclude that JIT does not work, when the real cause was a prerequisite that was missing.

Example: weekly or daily deliveries

This is an illustrative calculation, not a real plant. A part costs 12 per unit, and the line uses 400 units per day. The supplier now delivers once per week, 2,000 units at a time, and the plant holds a safety stock of 1,000 units.

• Average stock: 2,000 ÷ 2 + 1,000 = 2,000 units, worth 24,000.
• Cover if a delivery fails: the 1,000 units of safety stock last 2.5 days.

The plant agrees daily deliveries of 400 units and a safety stock of 400 units, which is one day of use.

• Average stock: 400 ÷ 2 + 400 = 600 units, worth 7,200.
• Cover if a delivery fails: 1 day.

Stock value falls by 16,800, or 70 per cent. With an assumed holding cost of 20 per cent per year, the saving is 3,360 per year for this one part. But the cover against a failed delivery drops from 2.5 days to 1 day. For a stable supplier close to the plant, that is acceptable. For a single-source part from far away, the plant may keep two days of safety stock. The calculation shows the trade-off in numbers, so you can choose on purpose.

Common mistakes

• Cutting stock before fixing causes. If breakdowns, scrap and long changeovers remain, lower stock only moves the pain to the line.
• Equating JIT with zero inventory. Toyota describes small minimum stocks, not no stocks.
• Pushing the risk to suppliers. Demanding daily deliveries without sharing forecasts makes suppliers hold the stock, and the cost returns in the price.
• Ignoring single-source parts. Know which parts have one source and what a failure would cost.
• Skipping the pull system. Without kanban or a similar signal, small stocks run out without warning.
• Applying one rule to every part. Some parts suit JIT, and others need a buffer. Decide part by part.

How software can help

An enterprise resource planning (ERP) system holds stock levels, lead times and supplier data, and it can show how many days of cover remain for each part. A manufacturing execution system can show the actual consumption at the line. Together they help to set kanban quantities and safety stocks from data, and to see a shortage coming before the line stops. The decisions about which parts to buffer remain with your team. Software also helps to check the whole supply chain: which suppliers feed which parts, and where one failure would reach many products.

Next step

Choose five parts with high stock value and look at the causes of their buffers: breakdowns, changeovers, supplier delays or demand swings. Then cut one stock in a small step and watch what happens. That is a safe way to apply just in time manufacturing where it pays.