The benefits exist, but they have a price
Just in time (JIT) produces and delivers only what the next customer in the chain asks for, in the right quantity and at the right moment. Kiichiro Toyoda formulated the idea and Taiichi Ohno turned it into shop-floor practice within the Toyota Production System.
The list of gains is well known. What few people mention is that each gain comes with a trade-off. When inventory drops, the slack disappears. When the slack disappears, the problems show up. That is exactly the purpose of the method, but it only works if the company is prepared to see and treat whatever surfaces.
This article presents 7 benefits, each with its corresponding risk. For the definition and the step-by-step implementation, read Just in time: what it is and how to implement it. Here the focus is on deciding with your eyes open.
Benefits 1 to 3: inventory, cash, and space
1. Less idle inventory
Producing only what will be consumed reduces raw material, work in process, and finished goods. Risk: with no cushion, any supplier delay or machine breakdown stops the line the same day.
2. Less capital tied up
Inventory is idle money. By reducing it, cash is freed for other uses. Risk: part of the savings is transferred to the supplier, who starts delivering more often and may pass the cost on in the price.
3. Less space occupied
Without piles of material, there is room to produce, rearrange the layout, or simply move around safely. Risk: with no reserve space, an unexpected stoppage has nowhere to accumulate what has already been produced, and the flow stalls completely.
An illustrative example shows the size of the first and second gains. A part with consumption of 200 units per day and a cost of R$ 40.00 is held at 5 days of coverage: 200 × 5 = 1,000 parts, or R$ 40,000.00 in inventory. If coverage drops to 2 days, inventory becomes 400 parts, or R$ 16,000.00. R$ 24,000.00 was freed. With a cost of capital of 12% per year, that represents R$ 2,880.00 per year (24,000 × 0.12), for this one part alone.
Benefits 4 to 7: quality, lead time, and discipline
4. Quality problems show up early
With small batches and little material between workstations, a defect is noticed in minutes, not weeks. The cause is still fresh. Risk: if the team has no method for solving causes, the defect just stops the line more often. See the 5 Whys and poka-yoke.
5. Shorter lead time
Less queueing between steps means the product crosses the factory faster and the company responds better to the order. Understand the calculation in lead time. Risk: the promise of a short lead time requires a stable process. If variability is high, the promised lead time is not met.
6. Less production waste
Producing ahead of time is one of the losses listed among the 7 wastes. Cutting it reduces rework, motion, and obsolescence. Risk: eliminating overproduction without leveling demand creates load peaks and idle time. The remedy is leveling.
7. Discipline and day-to-day improvement
JIT forces organization: standards, up-to-date maintenance, reliable suppliers. Risk: accountability can turn into pressure if leadership demands results without providing the conditions. Discipline must come with support, not with threats.
Summary: gain and trade-off side by side
| # | Benefit | Trade-off | How to mitigate |
|---|---|---|---|
| 1 | Less inventory | No slack for failures | Small, defined safety stock |
| 2 | Less capital tied up | Cost can migrate to the supplier | Long-term contracts and shared forecasts |
| 3 | Less space | No reserve area | Contingency plan for stoppages |
| 4 | Quality visible early | More frequent stops | Root cause method and error prevention |
| 5 | Shorter lead time | Requires a stable process | Standardization and preventive maintenance |
| 6 | Less waste | Load peaks | Production leveling |
| 7 | Discipline | Pressure without support | Leadership at the gemba and realistic targets |
When JIT is not the answer
Just in time pays off most when demand is reasonably predictable, processes are stable, and suppliers are reliable. Outside those conditions, the method can become a source of disruption.
- Distant, unstable supplier: weekly deliveries from far away do not sustain a lean line. Reduce inventory gradually, tracking delivery reliability.
- Machines with frequent stops: before cutting inventory, treat the cause with TPM.
- Slow tool changeover: small batches are only viable with quick setup.
- Highly irregular demand: without leveling, the inventory vanishes and lead times explode.
The practical rule: reduce inventory in steps and only take the next step when the previous one is stable.
How to capture the gains without becoming fragile
- Measure stability before cutting: stops, scrap, and supplier delays.
- Cut inventory in small steps and track the effect for a few weeks.
- Keep a small, explicit safety stock, with an owner and a replenishment rule.
- Use a pull system to signal replenishment. See the kanban guide and kanban versus pull production.
- Talk with suppliers about consumption forecasts, delivery windows, and packaging.
- Record every stop and treat the causes in short, frequent meetings.
When the line stops for lack of material, the right decision is not to go back to high inventory. It is to investigate the cause, fix it, and only then reassess the level of protection. For the flow perspective, read benefits of continuous flow.
Next step
Choose a family of regularly consumed parts and calculate today's inventory in days of coverage and in reais. Set a small reduction target, for example one day less, and list what could go wrong with that change. For each risk, assign an action and an owner. Execute, observe for two or three weeks, and only then move forward.
This short cycle of measurement and correction is what separates JIT that works from JIT that just cuts inventory and hopes for the best.
Frequently asked questions
What are the main benefits of just in time?
Less inventory, less capital tied up, less space, quality visible earlier, shorter lead time, less waste, and more process discipline.
What is the biggest risk of just in time?
Fragility: with little inventory, supplier or machine failures stop the line. That is why the method requires stability and reliable suppliers.
Does just in time mean zero inventory?
No. It means the minimum inventory needed for the flow, with a clear replenishment rule. Zero is a direction, not a literal target.
Does JIT suit every company?
It suits best where demand is predictable and processes are stable. In other cases, it is applied gradually, working first on the causes of instability.
Keep studying
Sources
- OHNO, T. O Sistema Toyota de Produção: além da produção em larga escala. Porto Alegre: Bookman.
- MONDEN, Y. Toyota Production System: An Integrated Approach to Just-in-Time. CRC Press.
- Lean Enterprise Institute. Just-in-time (glossário). https://www.lean.org/lexicon-terms/just-in-time/
- Lean Enterprise Institute. Waste (glossário). https://www.lean.org/lexicon-terms/waste/
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About the author
Lean Manufacturing & Behavioral Management Specialist
Over 20 years in the automotive and metalworking industries (GM and Dana), Lean Manufacturing practitioner since 2006. SENAI instructor and mentor in Brazil’s Brasil Mais Produtivo program, delivering consulting, training and audits for 50+ companies, combining quality, productivity and people development.
