The Ins and Outs of Just in Time Inventory Management

Posted by Jarrett on Nov 23, 2021 10:45:00 AM



Excess or outdated inventory can cost you time and resources while creating supply chain issues and costly waste—especially for e-commerce companies selling products using multiple channels. As the business landscape continues to become even more faster-paced and complex, leveraging a Just-In-Time (JIT) inventory management model is an ideal method to save both time and money.

A JIT inventory management model is designed to maximize efficiency while lowering overall costs. This lean-management framework seeks to order and receive products when needed for order fulfillment, drastically reducing the need to hold inventory on hand. As an example, the JIT process involves purchasing products—raw materials and/or parts to be assembled in production—when an order comes in or when product demand is forecasted.


There are several advantages to JIT inventory management including:

  • Saving space by holding a minimum amount of stock and supplies on hand.
  • Decreasing costs by removing excess inventory, which then decreases labor and storage needs.
  • Reducing product markdowns due to improper forecasting and excess inventory.  
  • Lowering waste of holding excess inventory that can become damaged or obsolete.
  • Increasing change order levels due to less inventory and available space.
  • Providing opportunities to innovate and expand your business due to overall streamlining and cost savings.


However, we have been forced to change the way we approach utilizing a JIT model during the COVID pandemic. With supply chain challenges, such as driver and warehouse worker shortages, as well as equipment and other necessary resources in short supply, the industry has had to identify creative ways to handle both inventory shortages and excess stock. 


“Just-in-time by its nature requires some predictability and the pandemic interrupted that cycle,” stated Debbie Fogel-Monnissen, CFO of the Institute for Supply Management in an article in CFODive in June. Another executive in the article added,


“To overcome some of these challenges more companies are exploring near-shoring options, maintaining greater stock levels and using innovative inventory management solutions to make sure production isn’t disrupted and maintain their competitiveness.”


As we recover from the pandemic and begin to offload excess inventory, while restocking shortages, implementing a JIT inventory management model will take a detailed strategy and extensive planning—especially in this “new normal.” Many companies will be relying more heavily on a 3PL to help design JIT strategies, as well as implement and manage them.


A 3PL like Jarrett has the knowledge, expertise, and successful track record to support any size business need and can help you navigate the current supply chain and inventory challenges. Speak with an expert to learn more about creating a flexible and agile JIT inventory management strategy for your business during and in a post-pandemic world by visiting our website.

Topics: Inventory Management


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