Just-in-Time (JIT) Inventory
An inventory strategy that aligns raw material and product orders precisely with production or sales schedules to minimize holding costs.
Just-in-Time (JIT) inventory is an inventory management strategy that aligns raw material and product orders precisely with production or sales schedules to minimize holding costs. Rather than maintaining large stockpiles of inventory, businesses using JIT receive goods only as they are needed in the production process or immediately before customer demand materializes. This approach reduces waste, lowers storage costs, and minimizes the capital tied up in unsold inventory.
Why it matters for e-commerce brands
For Shopify and DTC merchants, JIT inventory helps reduce warehouse costs and frees up cash flow that would otherwise be locked in excess stock. This is particularly valuable for brands with limited capital or those selling products with short shelf lives, seasonal demand, or rapidly changing trends. However, e-commerce brands must balance the cost savings against risks like stockouts and longer shipping times, especially when relying on overseas suppliers.
Example
A Shopify apparel brand selling custom-designed t-shirts partners with a print-on-demand supplier that only produces shirts after customers place orders. Instead of ordering 500 units upfront and storing them in a warehouse, the brand maintains zero inventory and only pays for production when a sale occurs. This eliminates the risk of unsold seasonal designs while reducing storage costs, though it means customers wait 5-7 days for production and shipping rather than receiving next-day delivery from pre-stocked inventory.
Related terms
- Lead time
- Economic Order Quantity (EOQ)
- Safety stock
- Demand forecasting
- Dropshipping
Put Just-in-Time (JIT) Inventory knowledge into practice
Forthsuite's tools are built around exactly these concepts — giving Shopify merchants the data and automation to manage their supply chain with confidence.