Just-in-Time (JIT)

An inventory management strategy, pioneered by Toyota in the 1970s, where materials arrive precisely when needed in the production process rather than being stockpiled. JIT reduces carrying costs and waste but leaves supply chains vulnerable to disruption, as the global semiconductor shortage of 2020-2022 painfully demonstrated. Investors analyzing manufacturing companies pay close attention to inventory-to-sales ratios as an indicator of how well JIT systems are functioning.