Six years after a flurry of articles predicted the end of just-in-time production in the automotive industry, that projection has not come to pass. While the disruptions of the last several years have exposed just-in-time’s weaknesses, it’s still the industry default. In this article, we’ll explore why that is, the hurdles that inhibit change, and where the industry might be headed.
Why and how did just-in-time become the global standard of automobile production?
Just-in-time manufacturing followed on the heels of decades of consolidation in the automobile industry. However, consolidation didn't solve the problem of limited real estate for plants and warehouses, or the rising cost of storing inventory. In markets like Japan, access to large storage facilities was rare. Also, in the wake of World War II, auto makers needed to prioritize efficiency and eliminate waste.
Enter: Taiichi Ohno of the Toyota Motor Corporation, who is credited with designing and establishing just-in-time production
Q&A
Just-in-time wasn’t just about keeping less inventory. It was part of broader efforts to optimize auto production and make it faster, leaner, and more efficient. Auto makers saw the success of the Toyota Motor Corporation, and soon, just-in-time became the industry standard.
What has just-in-time done well and where has it fallen short?
Just-in-time has helped the industry optimize around flow, cost, and coordination. It has shortened lead times, kept inventories low, and exposed surplus capacity. It has also forced auto makers to address operational issues such as imbalances, equipment problems, and idle time, rather than blaming stockouts.
But in an era of continual volatility, just-in-time has fallen short of its initial promise. Supplier failures, shipping shocks and delays, and semiconductor shortages are never isolated events. In a system that depends on precision and low buffers, disruptions can quickly spread throughout the network and linger for years.
If volatility is the norm, why is just-in-time still the standard?
While recent global events have exposed the shortcomings of just-in-time, moving away from this model is difficult. Many automakers’ supply bases are multi-tier, globally distributed, capital intensive, and increasingly dependent on components like chips and batteries whose production is often concentrated in one region. Supply chains are also operating in an economic and geopolitical era that is less predictable, so planning for the long term is harder.
How automotive planning models have shifted in the last decade: selective resilience and a growing move toward automation
In the last decade, it’s been harder for automakers to ignore volatility. The pandemic and subsequent chip shortage exposed many of the limits of just-in-time, along with poor visibility across multi-tier suppliers and overdependence on distant or concentrated resources.
Despite numerous articles claiming that just-in-time was on its way out, that has not happened. Instead, the emerging model blends elements of just-in-time, but they add a focus on visibility, optionality, and strengthening supplier relationships where disruption risk is highest. According to a 2025 Roland Berger study, one important shift is selective inventory buffering. Tighter supplier controls, diversified sourcing, and regionalizing where possible are also among the tactics planners are adopting now.
A new factor: electric vehicles
Another recent stress test for the automotive industry is electric vehicles (EVs). While the market is growing globally, it’s not growing in a smooth or predictable way: consumer demand varies by region, regulations are in flux, charging infrastructure remains uneven, and policy support has become less reliable.
However, Chinese EV makers are setting new competitive benchmarks for quality, price, and accessibility. Chinese automakers are producing EVs much faster and for a lower cost than most European or US companies. They’re also pushing hard for expanded access to more global markets.
For US and European automakers, this poses a strategic dilemma. They can’t ignore EVs if they don’t want to fall behind. But they also can’t plan around a single, predictable adoption curve. Even if tariffs and regulations slow the direct entry of Chinese EVs into US markets, they might find other ways in through indirect routes. They’re forcing automakers to rethink how they plan for demand, supply, technology, competition, and uncertainty all at once.
Where does automotive go from here?
The automotive industry and the business landscape it operates in have moved beyond the context and constraints that made just-in-time. The industry has also evolved past bloated industry strategies.
So what can automakers do?
The automakers that pull ahead will be ones that embrace adaptive planning. They’ll focus on gaining a clearer view across supplier tiers, testing scenarios before disruption hits, and balancing cost, capacity, inventory, and service in the same decision cycle. They’ll enable planning that is continuous, connected, and fast enough to help teams see and act on tradeoffs before a small constraint becomes a supply chain-wide problem.
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