Just-in-time (JIT) inventory is a supply chain management strategy that minimizes inventory holdings by receiving goods only when needed for production or sale, reducing storage costs and working capital requirements. This approach requires precise coordination with suppliers and efficient logistics systems but can create vulnerability to supply disruptions and price volatility.

JIT inventory systems affect commodity demand patterns and price volatility by reducing buffer stocks and increasing sensitivity to supply disruptions. Companies using JIT must carefully manage supplier relationships and may use financial hedging to replace physical inventory buffers. Understanding JIT adoption helps predict demand patterns and supply chain vulnerabilities.

Real-world example: An automotive manufacturer using JIT inventory receives steel deliveries hourly rather than maintaining large stockpiles, reducing costs by $50 million annually but increasing exposure to steel price volatility and supply disruptions that can halt production quickly.