Inventory Management What Is Just-in-Time (JIT) Inventory Management? Top Systems for Your Business By Amrita Chakraborty Inventory Management 2 comments Last Reviewed: November 14, 2024 Inventory management is only as effective as the strategy you deploy to control and track your products and assets. From Apple to Kellog’s, Fortune 500 companies look to just-in-time inventory management to minimize on-hand inventory and maximize return on investment (ROI). Compare Top Inventory Management Software Leaders Compare the Best Just-in-Time Inventory Management Software Select up to 5 Products from the list below to compare Product User Sentiment ScoreStart PriceFree TrialCompany SizeDeploymentSYSPRO85%Great $199Per User, Monthly No Small Medium Large Cloud On-Premise DELMIAworks80%Great $25,000Annually No Small Medium Large Cloud On-Premise SAP S/4HANA Cloud87%Great $40Per User, Monthly Yes Small Medium Large Cloud On-Premise Katana MRP93%Excellent $179Monthly Yes Small Medium Large Cloud On-Premise TRXio86%Great $159 Yes Small Medium Large Cloud On-Premise Compare Compare JIT inventory management, coupled with a dedicated application, allows managers to monitor and track raw materials, production, shipping and more to keep your inventory in line with customer demand. So, what is just-in-time inventory? In this article, we’ll break down the strategy, discuss its core benefits and features, look at successful implementations, and share our top solutions. What Is Just-in-Time Inventory Management? Just-in-time inventory management is a lean methodology specially created for increasing organizational efficiency, decreasing unnecessary expenses related to inventory wastage and ensuring that goods arrive only as and when needed. In order to implement this strategy, several internal and external risk factors — like inflation, technology failure, change in policies, high competition, and change in consumer tastes and preferences — need to be considered. Primary Benefits A just-in-time inventory system offers numerous benefits to its users. Some of the most prominent benefits are: Reduce Inventory Waste: Overproduction is common but highly undesirable in most businesses. It occurs when a product’s supply is higher than its demand in the market. This leads to the unnecessary accumulation of unsalable products or inventory. These products are dead stocks that lead to wastage and take up unnecessary space. Successfully implementing a just-in-time inventory management system helps you reduce or eliminate the accumulation of unstable products, limiting inventory wastage. Minimize Warehouse Holding Expenses: Maintaining a warehouse is costly and having excess inventory adds up. The cost of holding a warehouse has significantly increased in recent years. In fact, the average per sq. ft. cost raised from $7.91 in 2021 to $7.96 in 2022. There is a parallel increase in warehouse staff costs as well. All these factors put together can impact your overall warehousing expenses. With a just-in-time inventory system in action, you only order goods when the consumer makes a purchase. This eliminates the need for stocking up on unnecessary inventory in your warehouse and, in some cases, even eliminates the need for having a warehouse altogether. Improve Manufacture Control: Manufacturers have to stay on their toes to increase or decrease production based on fluctuating market demand. Just-in-time inventory management gives them greater flexibility and control over the production of necessary and unnecessary items. Additionally, this strategy helps deal with the problem of having unusable inventory in stock, and producers can adapt to the market’s ever-changing needs quickly. Source Local Goods: In order to carry out an agile production process, local sourcing is best for a business using or planning to implement JIT inventory management. Sourcing inventory locally brings in numerous additional benefits to the business. Inventory orders get delivered much faster to clients with fewer transportation costs. Get our Inventory Management Software Requirements Template Notable Drawbacks Although the just-in-time model has several pros, it also has a few drawbacks that you need to be aware of: Out-of-Stock Risks: Keeping just enough stock on hand can leave you without products at inopportune times. Running out of products has a detrimental impact on customer satisfaction and can even reduce repeat buys from your loyal customers. Limited Pricing Flexibility: This inventory management system can potentially reduce your profit margins. Since you replenish stock closer to sales, you don’t get the opportunity to wait around and sell products at their best price. Plan ahead to combat this. Last-minute Errors: It becomes challenging to deal with instances like a missed shopping window or slowed production processes if you only have minimal items available. Successful Implementations This inventory management strategy originated at Toyota in Japan, and since then, the implementation has yielded successful results. You can see other popular examples of a just-in-time inventory management system in action at Apple, Kellogg’s, Xiaomi, Zara, Tesla and more. Let’s delve a little deeper into the important factors that helped these companies effectively implement a just-in-time inventory system and how they reaped the benefits of their implementation. Grayton This watchmaker was the pioneer in adopting lean manufacturing strategies within the industry. Implementing JIT inventory management helped boost revenue. It resulted in a streamlined, cost-effective fashion model — a substantial win in the entrenched high-end watch industry. Toyota In 1970, Toyota introduced and implemented its own JIT-based strategy successfully. That approach is now known as the Toyota Production strategy, which follows the tenets of a just-in-time inventory management system. In this, the requisite raw materials don’t arrive at its production floor until a customer places an order. Also, while production is in process, no parts or inventory are put in the next station till they are needed. This enables them to keep inventory levels at the bare minimum, resulting in lower costs. To ensure that things keep flowing, they keep small quantities of raw materials at every production station. Kellogg’s Since Kellogg’s sells perishable food items, it makes even more sense to have JIT inventory management in place. The system helps them maintain just the right stock of goods to fulfill orders, but not enough to go unused. Apple Apple also leverages the benefits of the just-in-time inventory system strategy in its production process. The tech giant operates through a central warehouse located in the U.S. and has approximately 150 major suppliers around the globe. These key suppliers build and maintain well-strategized relationships with vendors in line. As a result of production outsourcing, Apple can reduce overstock and cut down expenses. Streamline Software Selection with Services Key Features For each business, the situations and circumstances in day-to-day operations may vary. For instance, your business may require you to hold or manufacture more inventory than what you actually need for processing current order requirements. A just-in-time inventory management system makes it possible for businesses to operate by keeping realistic levels of bare minimum inventory. So, let’s look at the key features to see if adopting a JIT strategy would be the right step for your business. Barcode & Tag A barcoding module can help deal with common human errors that are most often a result of manual data entry. Barcode scanning offers quick, reliable solutions and saves significant time you may otherwise waste on entering information manually. It also improves inventory control and keeps track of several aspects like pricing, product details and more. Inventory Forecasting Ideally, no one wants to disappoint their present or prospective customers with their products running out of stock. It is extremely important to do an accurate inventory forecast to ensure that such a situation doesn’t occur. Inventory forecasting brings several benefits worth considering — it improves user experiences, helps you build a loyal customer base and assists manufacturers in allocating and acquiring resources by providing analytics. Inventory Alerts Businesses lose a lot of profits due to out-of-stocks, overstocks and returns. However, you can find peace of mind thanks to inventory management software solutions equipped to handle this challenge with low stock inventory alerts. These systems send SMS and email alerts to notify of various crucial business aspects. They can share what inventory you purchase, what leaves the warehouse, shipment statuses, shipment issue alerts and much more in real time, leading to quick problem solving and improved operational control. Inventory Security and Backups Ensuring that your inventory is thoroughly secured is imperative for all businesses. An inventory management solution can help ensure that your inventory is safe, your data is well-protected and you have a complete backup of information in place. It can also defend against malicious hacking attempts. Get our Inventory Management Software Requirements Template Needs Analysis Before you get your organization a just-in-time inventory management system, there are a few questions that you should address. Workforce: This method relies on well-trained, multi-functional staff to wear different hats and handle multiple operations as and when needed. It takes combined support and a thorough understanding of the workforce, from operational divisions to the IT team. So, one question you need to ask here is: Can your workforce handle and commit to production line tasks? Vendors: Vendors are the backbone of JIT inventory management. Are your suppliers reliable enough to deliver products on time, every time? Is your order fulfillment system equipped to handle supply chain setbacks and delays? Flexibility: Is your manufacturing and supply chain flexible enough to adapt to unforeseen disruptions such as supplier faults and natural disasters? Turnaround Time: Can you quickly supply or manufacture the goods your business offers? Technology: Does your current system support the JIT system of inventory management? Best JIT Inventory Management Systems There is a veritable sea of inventory software on the market. Our analyst team gathered information on the top-performing just-in-time inventory management systems and came up with this list of five contenders and their standout benefits, features and limitations. Compare Top Inventory Management Software Leaders TRXio TRXio is a cloud-based inventory management system that helps businesses of all sizes manage and track their assets. It lets you track inventory, shipments and purchases at your warehouse or in transit in real time. You can standardize your orders with live QR codes. It offers a centralized dashboard with drop-down menus so you can access any part of your inventory management system from a single screen, saving you time. In addition, customizable reporting allows you to access the information you need to improve your business and make data-driven decisions. Inventory records in TRXio. Top Benefits Streamline Navigation: Access Inventory Vista, a complete, single-location dashboard, from any computer. Use drop-down functionality from the dashboard to gain a complete view of your entire inventory system. Standardize Identification: Create a standard label format for every item in your inventory. Use multilingual printing to breach language barriers and target a larger audience. Go Mobile: Monitor inventory on the go by accessing a simplified version of the full system on any mobile device with an internet connection. Simplify Verification: Conduct blind audits to simplify inventory verification and ensure accurate cycle counting. Customize inventory counts based on your most needed parameters, such as outside locations or sub-sections of your warehouse, to simplify verifications further. Reduce Errors: Automate order change modification and logging to limit human-made errors from manual data entry. Sta;y on top of changes to eliminate misplaced items. Key Features Order Management: Monitor order statuses to streamline billing, accounting and invoicing. Assign and reserve specific items for existing and future orders. Integrate with QuickBooks and other third-party apps to receive orders directly into the system. Live QR Codes: Create LiveQR labels with unique identifiers (UID) for individual items. These codes offer several benefits, like traceability and visibility, while the product management platform lets you control expenses, obtain and update information, and more for all of your assets. Movement Analytics: Improve your accuracy by continuing to track items after they’re out of the warehouse. You can review information on where products are currently located and who has them. Reporting: View inventory and project details. Receive low-stock notifications for custom reorder thresholds. Generate custom, actionable inventory reports to enhance decision-making. Project Management: Organize projects by phase, location and assigned staff. Create visual project mappings to get a complete view of project scopes. Monitor status updates workflows in real time. Limitations Migrating from other inventory management software solutions to TRXio is difficult. It’s a canned software package, meaning the features you don’t need can’t be disabled, which can complicate usability. Price: $$$$$ Deployment: Platform: Company Size Suitability: S M L Compare Top Inventory Management Software Leaders SYSPRO SYSPRO is a cloud and an on-premise ERP software developed for producers and distributors to help them plan, execute and control product manufacturing. It consists of financial, inventory, manufacturing and distribution management modules. With an active third-party development community, it integrates with nearly any supporting solution you need designed specifically to work alongside the base platform. Inventory details in SYSPRO ERP. Top Benefits Optimize Supply Chain Processes: Optimize your supply chain management by developing sourcing strategies, evaluating supplier performance, mastering risk management and maintaining control over transportation and logistics. Receive Third-party Support: Integrate applications from third-party developers specifically designed to work in tandem with SYSPRO. Leverage a service-oriented architecture (SOA) to customize and add to the base platform. Access a Partner Network: Take part in vendor-offered training, receive end-to-end partner support, and access channel sales and marketing resources to get the most from the system. Connect Departments: Keep all departments of your business on the same page with real-time information by linking and handling all processes within the system, from the beginning of the supply chain to customer service to accounting. Reduce Errors: Automate and monitor your complete SCM processes within a centralized location to reduce human error from manual data entry. Key Features Order Management: Collaborate with suppliers and customers to keep orders on track. Automate, streamline and manage order-to-delivery processes with a 360-degree view of your operations. Process and fulfill orders using a dedicated sales order module. Financial Management: Access accounting and financial capabilities directly within your inventory management system to gain detailed, real-time insights on factors that affect your financial well-being. Predict and manage cash flow with payment-due data. Planning & Scheduling: Manage your manufacturing life cycles, including planning, scheduling, publishing, collecting, tracking and analyzing, to optimize your operations. View available resources and equipment, schedule maintenance, and reduce downtime by automating scheduling. Production Management: Plan, execute and track items at all stages of the production process by using built-in tools and production integrations. Gain complete visibility of the supply chain, from manufacturers to suppliers to customers. Operations Management: Connect all of your business departments, including accounting, quoting and estimating, inventory, order management, engineering, material handling, sales, etc., to keep everyone on the same page. Limitations SYSPRO doesn’t come with built-in warehouse management capabilities. The system doesn’t support equipment maintenance modules. It does not offer human resources (HR) or payroll modules. Price: $$$$$ Deployment: Platform: Company Size Suitability: S M L Compare Top Inventory Management Software Leaders Katana Katana provides a wide range of features that are important for the successful implementation of a JIT inventory management system in an organization. With production based in the cloud, this solution is ideal for handling inventory management in small and mid-sized manufacturing businesses. A view of real-time inventory control in Katana. Top Benefits Optimize Inventory Levels: Avoid stock-outs or excess inventory by viewing optimal inventory data to make purchasing decisions. Evaluate an optimal stock balance calculation based on on-hand inventory, safety stock levels, open sales, open purchases and manufacturing orders. Reduce Errors: Minimize human-made errors by automating inventory processes, such as reorder notices, auto-booking and stock levels. View real-time inventory levels that automatically account for sales and purchases. Ensure you never accidentally lose new data by enabling auto-save functionality. Breach Language Barriers: Access any language, either through built-in language support or integrating Google Translate extensions. Make Sales: Integrate eCommerce solutions, such as Shopify, Walmart, Amazon and more, to list for-sale products and automatically adjust inventory levels based on digital retail sales. Perpetuate Inventory Tracking: Keep an up-to-date, automated cost count based on the average cost method used for perpetual inventory systems. Key Features Production Planning: Use drag-and-drop priority settings for manufacturing tasks, track raw materials, evaluate ongoing production overviews and more in real time. Manufacturing Floor-level Control: Create to-do lists for production locations and lines, and set priorities for individual production projects. Set unique tasks for all work orders. Real-time Inventory: Store up-to-date inventory records and automatically update them when placing new sales or manufacturing orders. Automate inventory information modifications based on inventory lists or inventory movement. Reorder Points: Set custom reorder points for any inventory item to enhance purchasing decisions. Receive notifications and data on progress towards reaching your set optimal levels. Auto-booking: Add committed materials into the system to automatically assign them to the highest priority tasks or edit material allotments with drag-and-drop capabilities. View delay risks for orders automatically highlighted by the system. Limitations Katana does not have barcode scanner integration functionality. Subscribers do not have access to a bulk editing feature for products. It doesn’t support inventory costing methods like first-in-first-out (FIFO) or last-in-first-out (LIFO). Price: $$$$$ Deployment: Platform: Company Size Suitability: S M L Compare Top Inventory Management Software Leaders DELMIAworks DELMIAworks is an ERP software suite that helps monitor, check, track and communicate organizational and manufacturing actions and information in the supply chain. It offers multiple deployment options, providing businesses with the additional benefit of choice. Dashboard summarizing key info in DELMIAworks. Top Benefits Track Opportunities & Campaigns: Execute and monitor marketing campaigns to track sales opportunities so you can identify potential new revenue streams. Monitor Unlimited Locations: Create and track inventory items across unlimited locations. Scale your inventory system as you scale your business. Simplify Archiving: Archive emails using drag-and-drop capabilities to save and review communications directly within the system. Maintain Visibility: Gain complete visibility into all things manufacturing across your entire supply chain, including operating hours, production requirements, asset availability, available labor, etc. Make Data-driven Decisions: Use real-time reports and insights to improve business decisions regarding forecasting, spending, production, sales and more. Key Features Shipping Management: Organize your shipping department to fulfill requirements and customer needs. Create pick tickets, generate packing slips, print shipping reports and authorize returns. Sales and Order Management: Make and manage sales orders from a single screen. Link sales orders directly to their cost source (e.g., projects, preventive maintenance, shipping, etc.). Financial Management: Manage expenses, process income, monitor cash flow and view costing information. Integrate with the vendor’s other solutions for a complete financial view across your entire organization. Bill of Materials: Generate visual manufacturing representations, including part numbers and their relationships to packaging, components, secondary operations, tool requirements, process notes and instructions. Customer Relationship Management: Track, record and manage details for customer and vendor interactions. Limitations The software’s asset management module does not comply with GAAP auditing requirements. Its multi-language functionality doesn’t support French effectively. The accounting software has challenges related to invoicing. Price: $$$$$ Deployment: Platform: Company Size Suitability: S M L Compare Top Inventory Management Software Leaders SAP S/4HANA SAP S/4HANA is an integrated ERP solution that has embedded analytics, industry best practices, artificial intelligence (AI), robotic process automation (RPA) capabilities and much more. It offers financial management, asset management, supply chain management, production planning, contract management and procurement capabilities. Supplier evaluation metrics in SAP S/4HANA. Top Benefits Customize Use: Create extensions, vertical solutions and custom applications by accessing the platform’s SDK. Sample Capabilities: Access a two-week free trial to test the system against your unique needs. Ensure the platform meets your requirements before committing to a financial obligation. Leverage Analytics: Generate inventory analytics, including data models, stock levels, pricing information and more, to drive decision-making. Sync Departments: Manage your entire operation within one system, from production, warehousing and shipping to payment processing and financial management. Enhance Quality: Run closed-loop quality management processes, including planning, operations and support improvements across your entire business. Key Features Asset Management: Plan, schedule and execute maintenance activities, including preventive and corrective maintenance, for all of your assets. Monitor essential, time-sensitive maintenance needs and corresponding details, such as costs, breakdown rates and damage causes. Procurement: Collect and organize sourcing data to automate procurement documentation. Generate purchasing spend data on orders, requisitions, invoices and contracts. Order & Contract Management: Manage orders, cash flow and real-time data with multichannel, role-based permissions. Store, request and create contracts in a centralized repository and standardize reviews, approval processes and order processing. Financial Management: Leverage accounting, treasury, risk management and other financial operations to bring bookkeeping and SCM info into a single system. Supply Chain Management: Set business rules, material availability and allocation guidelines to automate product availability and promise dates for customer orders. Manage transportation and warehouse processes alongside your on-hand inventory. Limitations Implementation is a time-consuming process. It is not user-friendly, and an experienced person is required to tackle any issues or challenges faced in the software. Price: $$$$$ Deployment: Platform: Company Size Suitability: S M L Compare Top Inventory Management Software Leaders How We Choose Products Our team of writers and analysts at SelectHub is committed to giving you the best recommendations based on our data. To make our list, products had to meet two criteria: Closely match the topic Earn a top-5 analyst score in our selection platform Our analyst scores are based on an in-depth research process using primary and secondary sources. This includes SelectHub Analyst Briefings, direct communication with vendors, and reviewing materials such as user reviews, product brochures, specification sheets, case studies, user manuals, and technical documentation. Our platform’s Scoring Engine processes the research and computes the analyst score. The score also factors in platform settings such as industry and company size. Learn more about our research methodology and editorial standards Next Steps As is often the case, one size does not fit all — not even in the world of software. Not every just-in-time inventory system will be suitable for businesses of different sizes, or even in different industries. Therefore, before adopting the JIT strategy, it is crucial to check if it fits your business model. One of the most important factors you need to keep in mind is that this strategy generally works well with businesses that are agile and have a robust capability to manage extremely short production cycles. So, before you implement it in your production process, make sure you ask yourself a few questions. Is it possible to manufacture or supply my product quickly? Do I have a reliable source of suppliers that I can trust to provide raw materials or products quickly? Is my inventory management system flexible enough to let me update, notify and effectively manage requisite stock levels on-the-go? Am I well aware of the seasonal fluctuations, sales cycle, customer demand and other factors related to my product? Do I have an efficient order fulfillment system that enables me to bring orders to consumers on time? If you have a positive answer for all or at least most of the above questions, you are likely in a good position to adopt a just-in-time inventory management system and benefit from it. If not, maybe hold off on adopting one for now. Compare Top Inventory Management Software Leaders Final Thoughts A business’s approach to managing its inventory can make quite a difference in its efficiency, customer behavior, growth and profitability in the near future as well as in the long run. Several inventory management systems offer a wide range of benefits. Keep your unique requirements in mind and you’ll be able to figure out which inventory management software works just right for your business. You can use our free comparison report to help you make that perfect choice. How can implementing a just-in-time inventory management system strengthen your product management processes? Let us know with a comment below! Analyst-Picked Related Content Pricing Guide: Discover the true costs of inventory management systems Comparison Report: An interactive analyst report with system comparison ratings, reviews and pricing Amrita ChakrabortyWhat Is Just-in-Time (JIT) Inventory Management? Top Systems for Your Business08.14.2024