Procurement Glossary
Just-in-Time: Definition, methods and application in Procurement
November 19, 2025
Just-in-time is a production and procurement strategy that aims to deliver materials and components exactly when they are needed. This method significantly reduces stock levels and optimizes the flow of capital in companies. Find out below what just-in-time means, which methods are used and how current developments affect procurement.
Key Facts
- Origin in the Japanese automotive industry at Toyota in the 1970s
- Reduces storage costs by up to 50% thanks to on-demand delivery
- Requires reliable suppliers with short and stable delivery times
- Works optimally for standardized products with predictable demand
- Increases dependence on suppliers and their ability to deliver
Contents
Definition: Just-in-Time
Just-in-time refers to a production and procurement philosophy in which materials, components and products are delivered exactly when they are needed.
Core principles of the just-in-time approach
The basis is the elimination of waste in all its forms. Central elements are
- Demand-oriented production without overproduction
- Minimization of stock levels and temporary storage
- Continuous improvement of processes
- Close cooperation with reliable suppliers
Just-in-time vs. traditional warehousing
In contrast to traditional stockpiling with high safety stocks, just-in-time works with minimal buffers. While traditional inventory management focuses on availability, just-in-time focuses on precise demand planning and short delivery times.
Importance of just-in-time in Procurement
For procurement, just-in-time means a fundamental realignment of supplier relationships. Material planning must be precisely aligned with the production rhythm, which requires close coordination between Procurement, production and suppliers.
Methods and procedures
The successful implementation of just-in-time requires specific methods and systematic procedures in procurement.
Kanban system as a management tool
The Kanban system is at the heart of just-in-time control. Material replenishment is triggered via visual signals:
- Cards or electronic signals control the material flow
- Pull principle: replenishment only takes place when actually needed
- Reduction of excess stock through demand-oriented triggering
Supplier integration and partnerships
Just-in-time only works with reliable suppliers. Selection is based on strict criteria of delivery reliability and quality. Long-term partnerships enable joint process optimization and significantly reduce delivery time scatter.
Automated scheduling and order triggering
Modern just-in-time systems use automatic scheduling to trigger orders. ERP systems generate order proposals based on consumption data and production plans, minimizing human error and shortening response times.
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Important KPIs for just-in-time
Measuring the success of just-in-time requires specific key figures that reflect efficiency and risks in equal measure.
Delivery service and adherence to delivery dates
The delivery service level measures on-time delivery and is critical for just-in-time success. Target values are typically over 98%. Measuring the delivery time variance shows the reliability of suppliers.
Inventory key figures and capital commitment
The stock range for just-in-time should be minimal, typically less than 5 days. The average stock level is continuously monitored to identify deviations from the just-in-time principle.
Quality and process efficiency
Quality indicators such as error rate and complaint rate are particularly critical with just-in-time. Key warehouse figures such as inventory turnover and stock range show the efficiency of the system. An inventory health dashboard provides a real-time overview of all relevant metrics.
Risks, dependencies and countermeasures
Just-in-time involves specific risks that can be minimized by taking appropriate measures.
Supplier dependency and default risks
The high level of dependence on a small number of suppliers represents the greatest risk. Delivery failures can stop production immediately. Countermeasures include the qualification of second suppliers and the implementation of backorder systems for critical materials.
Quality problems and their effects
With just-in-time, quality defects lead directly to production disruptions as there is no buffer stock. Preventive quality assurance at the supplier and strict incoming inspections are essential. Cycle counting helps with continuous stock monitoring.
Forecast uncertainty and fluctuations in demand
Inaccurate forecasting errors can lead to stock shortages or overstocks. Flexible supply contracts with adjustable quantities and short replenishment times reduce these risks. Regular demand analyses and rolling planning increase planning accuracy.
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Practical example
A car manufacturer implements just-in-time for seat assembly. The seats are delivered by the supplier in the exact sequence of vehicle production, synchronized with the production line. This sequential delivery completely eliminates the need for intermediate storage and assembly takes place directly from the truck. The result: 60% less storage space, 40% less capital tied up and 95% less handling effort.
- Electronic call-off signals control delivery 4 hours before required
- Quality inspection is carried out at the supplier before dispatch
- Backup supplier ready for emergencies
Current developments and effects
Just-in-time is constantly evolving and is influenced by new technologies and changing market conditions.
Digitalization and AI-supported forecasts
Artificial intelligence is revolutionizing consumption forecasting for just-in-time systems. Machine learning algorithms analyze historical data and external factors to create more precise demand forecasts. This significantly reduces both stock-outs and overstocks.
Resilience vs. efficiency after global crises
The COVID-19 pandemic and supply chain disruptions have challenged the pure just-in-time concept. Companies are developing hybrid approaches that combine efficiency with strategic safety stocks for critical components.
Sustainability and just-in-time
Environmental aspects are becoming increasingly important. More frequent, smaller deliveries can increase the CO2 footprint. Modern approaches integrate sustainability criteria into inventory optimization and develop environmentally friendly transport concepts for just-in-time deliveries.
Conclusion
Just-in-time remains a powerful tool for reducing costs and increasing efficiency in procurement. Digitalization opens up new opportunities for more precise forecasting and automated control. At the same time, global uncertainties require a balance between efficiency and resilience. Successful just-in-time implementation relies on strong supplier partnerships, robust processes and continuous adaptation to changing market conditions.
FAQ
What is the difference between just-in-time and just-in-sequence?
Just-in-Time delivers materials at the right time, while Just-in-Sequence also takes into account the exact sequence of production. Just-in-sequence is the further development for complex variant production, where not only the time but also the sequence of delivery is decisive.
Which sectors are best suited to just-in-time?
The automotive industry, electronics manufacturing and mechanical engineering benefit most from just-in-time. The prerequisites are standardized products, predictable demand and reliable suppliers in geographical proximity. Industries with a high number of variants or irregular demand are less suitable.
How do you calculate the optimum order quantity for just-in-time?
With pure just-in-time, the order quantity corresponds to the exact requirement without a safety buffer. In practice, small batch sizes based on daily requirements or shift requirements are used. The supplier's minimum order quantity and transportation costs limit flexibility.
What risks arise from just-in-time and how can they be minimized?
The main risks are delivery failures, quality problems and fluctuations in demand. Minimization is achieved through supplier audits, second supplier qualification, flexible contracts and hybrid approaches with strategic safety stocks for critical components. Continuous monitoring of the supply chain is essential.
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