Just in Time Supply Chain: Complete UK Ecommerce Guide
For an ecommerce business, holding too much stock can tie up valuable cash, increase storage costs and leave you with products that become outdated or difficult to sell. But holding too little stock creates a different problem. A sudden increase in demand, supplier delay or unexpected delivery issue can quickly lead to stockouts and disappointed customers.
This is where a just in time supply chain can make a significant difference.
Just in time, often shortened to JIT, is an approach to inventory and supply chain management where products, materials or components are ordered and received close to the time they are actually needed. Instead of keeping large quantities of stock in storage, businesses aim to maintain inventory at a level that supports demand while reducing unnecessary holding costs.
However, just in time supply chain management does not mean simply keeping as little stock as possible. It requires accurate demand forecasting, reliable suppliers, good inventory visibility and an organised fulfilment operation.
FIFO, or first in, first out, can also play an important role. While FIFO is primarily an inventory valuation and stock rotation method, it can support a just in time operation by helping businesses ensure older inventory is used or shipped before newer stock where appropriate.
For UK ecommerce brands, particularly those dealing with food, cosmetics, clothing and other fast moving products, understanding how these approaches work together can help improve stock control and fulfilment efficiency.
What is a just in time supply chain?
A just in time supply chain is a supply chain strategy designed to ensure inventory arrives when it is needed rather than being stored long before demand occurs.
The basic principle is straightforward.
A business forecasts demand, monitors stock levels and orders inventory according to its expected requirements. Suppliers then deliver the required goods close to the point at which the business needs to use or sell them.
For example, imagine a UK skincare brand normally sells around 1,000 units of a particular moisturiser every month.
Rather than storing 10,000 units in a warehouse, the business may work with its supplier to receive smaller quantities on a regular basis. If demand remains consistent, inventory can move through the supply chain without spending unnecessary time sitting in storage.
This can reduce:
• Warehouse space requirements
• Inventory carrying costs
• The amount of capital tied up in stock
• The risk of obsolete inventory
• The amount of stock that needs to be discounted
The approach does, however, depend heavily on accurate information and reliable supply chain partners.
A supplier that regularly misses delivery dates can make a just in time model difficult to operate.
How does a just in time supply chain work?
A successful JIT supply chain generally depends on several connected processes rather than one specific inventory technique.
1. Forecast customer demand
The starting point is understanding how much stock customers are likely to purchase.
Businesses can use previous sales, seasonal patterns, promotional activity, marketplace data and current trends to estimate future demand.
For example, an ecommerce business selling Christmas gift sets will expect demand to increase significantly before December. It therefore cannot rely solely on average annual sales figures.
Demand forecasting needs to account for the fact that customer demand changes.
2. Monitor inventory levels
Businesses need accurate information about how much stock they actually have.
This includes stock that is:
• Available for sale
• Reserved for orders
• Inbound from suppliers
• Being processed
• Stored at a fulfilment centre
• Damaged or unavailable
Without accurate inventory visibility, JIT becomes much harder to manage.
A system may show that a business has 500 units available, for example, while 150 of those units have already been allocated to customer orders.
The business may therefore have considerably less available stock than it initially appears.
3. Set appropriate reorder points
A reorder point tells the business when additional inventory needs to be ordered.
This should consider more than the amount of stock currently available.
Businesses should also consider supplier lead times, average daily sales, seasonal demand and safety stock.
A basic example would be:
Reorder point = Average daily demand × supplier lead time + safety stock
If a business sells 20 units a day and its supplier normally takes five days to deliver, it needs approximately 100 units to cover normal demand during the lead time.
Additional safety stock can then provide protection against unexpected demand or supplier delays.
4. Order inventory close to when it is needed
Once inventory reaches the appropriate reorder point, the business places an order with its supplier.
The objective is to receive the stock before the existing inventory runs out, without bringing in significantly more inventory than necessary.
This is one of the defining characteristics of a just in time supply chain.
5. Receive and process stock efficiently
When inventory arrives, warehouse processes become extremely important.
Goods need to be checked, booked into the inventory system, stored correctly and made available for fulfilment.
For ecommerce businesses using a third party logistics provider, efficient receiving and stock management can make a major difference.
Delays between a supplier delivery arriving and inventory becoming available for customer orders can undermine the benefits of JIT.
What is the relationship between JIT and FIFO?
Just in time and FIFO are related to inventory management, but they are not the same thing.
Just in time is a supply chain and inventory management strategy.
FIFO, meaning first in, first out, is an approach to inventory valuation and stock rotation.
Under FIFO, the assumption is that the oldest inventory is sold or used first.
For example, imagine a business receives:
100 units at £4 each
100 units at £5 each
If 120 units are sold, FIFO assumes the first 100 units sold came from the £4 batch, followed by 20 units from the £5 batch.
The accounting treatment and the physical movement of goods are not necessarily identical. A business can use FIFO as an accounting method without physically shipping every oldest unit first.
However, physically following FIFO can be extremely useful for products with a shelf life.
This is particularly relevant to:
• Food and drink
• Cosmetics
• Supplements
• Pet products
• Certain healthcare products
• Products with expiry dates
In these situations, older inventory should generally be prioritised so that stock does not remain in storage until it becomes unsellable.
Why FIFO matters in a just in time supply chain
A JIT strategy aims to reduce the amount of inventory sitting in storage.
FIFO helps ensure that the inventory which does remain in storage moves through the operation efficiently.
Consider a UK food brand selling protein snacks.
The company receives 1,000 units in January and another 1,000 units in February.
If the February stock is shipped first, the January stock may remain in storage for longer.
Following a sensible FIFO process means the January inventory is prioritised before the newer February inventory.
This helps reduce the risk of:
• Expired stock
• Product write offs
• Overstocking
• Unnecessary discounting
• Inventory waste
For products with expiry dates, businesses may also use FEFO, meaning first expired, first out.
FEFO prioritises inventory according to expiry date rather than simply the date it arrived.
This distinction can be important when different batches have different expiry dates.
Benefits of a just in time supply chain
A well managed JIT strategy can provide several benefits for ecommerce and retail businesses.
Lower inventory holding costs
Warehouse space costs money.
The more inventory a business stores, the more space it generally needs.
There are also additional costs associated with insurance, handling, security, stock management and warehouse labour.
Reducing unnecessary inventory can therefore lower overall carrying costs.
Less capital tied up in stock
Buying thousands of units months before they are needed means cash is tied up in inventory.
A JIT approach can allow businesses to keep more working capital available for other activities such as marketing, product development and business growth.
Reduced risk of obsolete inventory
Products can become obsolete for many reasons.
Fashion changes. Technology develops. Packaging is updated. Consumer preferences shift.
A product that sells well today may be difficult to sell six months later.
Holding smaller quantities can reduce the amount of inventory exposed to these risks.
Better use of warehouse space
Warehouse space is particularly important for growing ecommerce businesses.
Instead of filling storage locations with slow moving products, businesses can focus on inventory that is more likely to be sold.
This can improve warehouse organisation and potentially allow a business to grow without immediately requiring significantly more storage capacity.
Potentially less waste
For products with expiry dates, reducing the amount of stock stored for long periods can help minimise waste.
Combining JIT replenishment with FIFO or FEFO stock rotation can be particularly useful for food and drink brands.
What are the disadvantages of just in time inventory?
JIT is not without risk.
The biggest issue is that the business has less inventory available to absorb unexpected disruption.
Supplier delays
If a supplier normally takes five days to deliver but suddenly needs three weeks, a business operating with very little safety stock can quickly run out of products.
Unexpected demand
A product may suddenly become popular because of social media exposure, an influencer campaign or an unexpected marketplace trend.
If inventory levels are too low, the business may not have enough stock to meet demand.
Supply chain disruption
Shipping delays, customs issues, manufacturing problems and transport disruption can all affect a JIT operation.
UK businesses importing goods from overseas should pay particular attention to lead times and customs processes.
More dependence on accurate forecasting
JIT works best when businesses have reliable information.
If sales forecasts are consistently inaccurate, stock levels can become too high or too low.
Supplier relationships become more important
Businesses using JIT need suppliers that can deliver consistently.
Price is therefore not the only factor that should be considered when selecting a supplier.
Reliability, lead time, minimum order quantities, communication and quality are equally important.
JIT vs holding large amounts of safety stock
One of the most important decisions for an ecommerce business is determining how much inventory it should hold.
There is a balance between efficiency and resilience.
Holding very large quantities can protect against supplier delays but increases storage and carrying costs.
Holding very little inventory can reduce costs but increases the risk of stockouts.
The answer will depend on the business.
A brand selling predictable, non seasonal products may be able to operate with relatively lean inventory.
A business selling seasonal products or products affected by unpredictable demand may require greater safety stock.
The goal is not necessarily to achieve zero inventory.
The goal is to hold an appropriate level of inventory for the business's demand and supply chain characteristics.
How to implement a just in time supply chain
If you are considering JIT for your ecommerce business, it is best to introduce the approach gradually.
Step 1: Analyse historical sales
Look at your sales history and identify:
• Average daily and monthly sales
• Seasonal trends
• Fast moving products
• Slow moving products
• Sales spikes
• Products with unpredictable demand
This provides the foundation for better inventory planning.
Step 2: Calculate supplier lead times
Do not rely solely on the lead time your supplier quotes.
Look at the actual time between placing an order and receiving usable stock.
If your supplier says five days but deliveries regularly take eight days, your inventory planning should reflect the real world figure.
Step 3: Identify critical products
Not every SKU needs the same inventory strategy.
High volume products may need tighter monitoring.
Products with long supplier lead times may need additional safety stock.
Products with short shelf lives may benefit from JIT combined with FIFO or FEFO.
Step 4: Establish reorder points
Create a reorder point for each important SKU.
This should account for average demand, supplier lead time and an appropriate level of safety stock.
Step 5: Improve inventory visibility
Use inventory management software or a fulfilment system that provides accurate information about stock levels.
For businesses selling across multiple channels, this becomes especially important.
A product could be sold through a website, Amazon UK, eBay, TikTok Shop and other marketplaces.
If inventory is not synchronised, overselling becomes much more likely.
Step 6: Review the strategy regularly
JIT is not a set and forget approach.
Review your inventory performance regularly and adjust reorder points as sales patterns change.
A product that sells 100 units per month today could sell 300 units next month following a successful marketing campaign.
JIT and ecommerce fulfilment
The fulfilment operation has an important role to play in a just in time supply chain.
Once inventory reaches a fulfilment warehouse, the business needs confidence that the stock can be received, stored, picked, packed and dispatched efficiently.
For growing UK ecommerce brands, using a third party logistics provider can help create a more structured fulfilment process.
A 3PL can receive stock from suppliers, store inventory, process customer orders and dispatch parcels through suitable delivery networks.
This can be particularly useful when a business wants to keep its internal operation lean.
At Blue30, fulfilment processes can support ecommerce businesses that want greater visibility and control over their inventory without managing every warehouse task themselves.
A well organised fulfilment operation can also help businesses identify stock levels, monitor movement and prepare orders efficiently.
How Blue30 can support inventory and fulfilment
A just in time supply chain depends on more than ordering products at the right moment.
Once inventory arrives in the UK, it needs to be managed properly.
Blue30 provides ecommerce fulfilment services designed to help businesses manage stock, orders and warehouse operations from one location.
Depending on your requirements, fulfilment can include receiving inventory, storage, pick and pack, kitting, FBA preparation and dispatch.
For products where stock rotation is important, clear inventory tracking and batch management can also help businesses maintain better control over older and newer inventory.
This is particularly useful for businesses selling products where expiry dates or batch information matter.
The objective is to create a fulfilment process where inventory is visible, orders can be processed efficiently and stock does not simply sit in a warehouse unnoticed.
JIT inventory example for a UK ecommerce brand
Consider a UK cosmetics brand selling 500 units of a skincare product each month.
Previously, the business ordered 5,000 units at a time because it wanted to secure a lower unit price.
Although the lower purchase price looked attractive, the business had to store thousands of units for many months.
Some products approached their recommended shelf life before being sold.
The business then changes its approach.
Instead of ordering 5,000 units, it works with its supplier on smaller and more regular deliveries.
Sales data shows that around 125 units are sold each week.
The business establishes a reorder point based on its expected sales and supplier lead time, while keeping a sensible amount of safety stock.
When new inventory arrives, older batches are prioritised for fulfilment.
The result is a more controlled flow of inventory from supplier to warehouse to customer.
This does not eliminate all supply chain risk, but it gives the business greater control over how much stock it holds and how long that stock remains in storage.
Is just in time suitable for small ecommerce businesses?
JIT can be particularly useful for small ecommerce businesses because cash flow is often a major consideration.
A growing brand may not want to spend tens of thousands of pounds on inventory that will take months to sell.
A leaner inventory model can potentially allow more capital to remain available for marketing, product development and day to day operating expenses.
However, smaller businesses should be careful not to take JIT too far.
If a company has limited buying power and its supplier has long lead times, keeping very low inventory levels can increase the risk of stockouts.
A practical approach is to identify the most important products and create sensible safety stock levels rather than attempting to minimise every unit of inventory.
Frequently asked questions about just in time supply chains
What does just in time supply chain mean?
A just in time supply chain is a system where inventory is ordered and received close to when it is needed. The objective is to reduce unnecessary inventory while still maintaining enough stock to meet customer demand.
What is an example of just in time inventory?
A UK ecommerce business that sells 500 units of a product each month might arrange for its supplier to deliver smaller quantities regularly rather than receiving several thousand units at once. The business replenishes inventory based on demand and lead times.
Is FIFO the same as just in time?
No. FIFO means first in, first out and is primarily an inventory valuation and stock rotation approach. Just in time is a broader supply chain strategy focused on receiving inventory close to when it is needed.
Does FIFO work with just in time?
Yes. FIFO can work alongside a just in time supply chain, particularly where products need to be rotated based on arrival date. This can help businesses move older inventory before newer stock.
What is the difference between FIFO and FEFO?
FIFO prioritises inventory that arrived first. FEFO, or first expired, first out, prioritises inventory with the earliest expiry date. FEFO can be more appropriate when different batches have different expiry dates.
What are the main risks of a just in time supply chain?
The main risks include supplier delays, unexpected increases in demand, transport disruption, inaccurate forecasting and stockouts. Businesses can reduce these risks through reliable suppliers, accurate inventory data and appropriate safety stock.
Is JIT suitable for Amazon sellers?
JIT can be used by Amazon sellers, but it needs to be carefully planned. Amazon sellers need to consider inbound lead times, sales velocity, marketplace demand, FBA inventory requirements and the potential consequences of running out of stock.
Can a 3PL support a just in time supply chain?
Yes. A 3PL can receive, store, manage and fulfil inventory while providing businesses with greater visibility of stock movement. This can make it easier to coordinate supplier deliveries with customer demand.
Final thoughts on just in time supply chain management
A just in time supply chain can help ecommerce businesses reduce unnecessary inventory, improve cash flow and make better use of warehouse space. However, it should not be viewed simply as a strategy for holding as little stock as possible.
Successful JIT management depends on accurate demand forecasting, reliable suppliers, realistic lead times, appropriate safety stock and strong inventory visibility.
FIFO can complement the approach by helping businesses rotate older inventory first, particularly when dealing with products that have a limited shelf life. For some products, FEFO may be even more appropriate because it prioritises expiry dates.
For UK ecommerce brands, the combination of efficient inventory management and reliable fulfilment can make a significant difference as order volumes increase.
At Blue30, we help ecommerce businesses manage the practical side of fulfilment, from receiving and storing stock through to pick and pack, kitting, FBA preparation and dispatch. If you are looking to create a more efficient just in time supply chain while keeping fulfilment under control, speak to Blue30 about your requirements.
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