Just in time manufacturing built the modern automotive supply chain: parts arrive close to the moment they are fitted, so plants carry little stock and problems surface quickly. The semiconductor shortage of 2021 and later disruptions showed the other side of that design, when a missing part with a long lead time could stop a line within days.
This analysis sets out where just in time came from, how it differs from just in sequence supply, what the chip shortage revealed about low inventories and short commitments, and how manufacturers and suppliers can design buffers without abandoning the discipline that made the system work. It is written for UK plant, supply chain and purchasing teams.
Where just in time manufacturing came from
Toyota describes the Toyota Production System as resting on two pillars. Jidoka means stopping a machine or line when an abnormality appears, so defects do not move forward. Just in time means, in Toyota’s words, “making only what is needed, when it is needed, and in the amount needed”, with processes synchronised so parts flow between plants.
Toyota’s 75-year history attributes the idea to Kiichiro Toyoda, who proposed it when operations began at the Koromo plant. The same account records that wartime rationing of materials forced the effort to be suspended in 1939, and that the concept was fully realised in 1954 with the “supermarket method”, in which each later process draws only what it needs from the earlier process, using kanban cards as the signal. Toyota credits Taiichi Ohno, with Eiji Toyoda’s backing, with building the basic framework.
The point is often lost in summaries: just in time was a way of exposing waste and problems, not simply a way of holding less stock. Low inventory made problems visible so they could be fixed.
Just in time and just in sequence compared
Automotive plants use two related supply methods, and their weaknesses differ.
| Feature | Just in time | Just in sequence |
|---|---|---|
| What arrives | The right parts in the right quantity | The right parts in the exact build order of the line |
| Typical parts | Common components and consumables | Variant-specific items such as seats, cockpits or trim |
| Main dependency | Reliable lead times and replenishment signals | Accurate build schedule shared with the supplier, often hours ahead |
| Effect of disruption | Line slows or stops when a part runs out | Line stops quickly, because each item is already tied to a specific vehicle |
Just in sequence is the tighter of the two. A sequenced supplier often works from a short schedule window and holds little finished stock, so a change to the build plan or a delay on the road can stop the line. Neither method is the problem in itself; the risk sits in parts whose lead times and supply bases do not fit the method chosen for them.
What the semiconductor shortage exposed
McKinsey’s analysis of the auto semiconductor shortage, published on 27 May 2021, describes how the problem built up. Carmakers cut chip orders when vehicle sales fell in 2020, while remote working drove demand for computers and networking equipment, and chipmakers reallocated capacity to those customers. When vehicle demand recovered faster than expected, the capacity was already committed. McKinsey identified three features of automotive practice that made the effect sharper:
- widespread just in time practice, which keeps inventory low and transmits a shortage through the chain almost immediately;
- low safety stock, because few companies had planned for this kind of event;
- short sourcing commitments of weeks to months, compared with six to twelve months in some other industries.
The US Department of Commerce’s results from its semiconductor supply chain request for information put numbers on the squeeze. It reported that median inventory of the hardest-to-obtain chips fell from 40 days in 2019 to less than five days in 2021, that buyers’ median demand was as much as 17 percent higher in 2021 than in 2019, and that fabs ran at over 90 percent utilisation from mid-2020. It named automobiles among the affected critical industries. The European Commission later cited chip shortages that forced factory closures in industries including automotive as a reason for the European Chips Act, which entered into force on 21 September 2023.
Disruption beyond chips
Semiconductors were not the last test. SMMT’s September 2026 manufacturing release, published on 29 October 2026, compared output against the previous year’s figures, which had been hit by what SMMT described as an unprecedented cyber incident that stopped production at Britain’s biggest automotive employer. Year-to-date UK vehicle output to September 2026 was 564,537 units, down 3.0 percent.
The lesson is that a lean supply chain can be interrupted by events with nothing to do with physical parts. A cyber incident that stops scheduling or communication systems can halt sequenced supply as surely as a missing component. Mapping dependencies below tier one matters as much for systems as for parts, as our guide to mapping lower-tier supplier dependencies explains.
Designing buffers without abandoning just in time manufacturing
The response that most analyses point to is not a return to large stocks everywhere but a deliberate split between parts that suit lean supply and parts that need protection. McKinsey suggested companies may need to reconsider, at least partly, their reliance on just in time delivery and low stock, alongside longer volume commitments and dual sourcing. For example, a tier one electronics supplier might keep kanban replenishment for high-volume connectors while holding a defined buffer of a single-source microcontroller with a long lead time. In practice teams can sort parts by a few questions:
- How long is the true lead time, including the upstream wafer or raw material stage?
- How many qualified sources exist, and could a second source be approved in time?
- How much of the vehicle would stop if this part ran out?
- Can the part be stored without degrading or becoming obsolete after an engineering change?
- Which systems and data feeds does the replenishment depend on?
Our article on automotive safety stock policy sets out how to size and review a buffer once the need is clear, and our guide to qualifying usable dual sourcing covers the second-source question.
Key points for plant and supply chain teams
- Just in time manufacturing was designed to expose problems; its low stock was a means, not the goal.
- Just in sequence supply is more fragile because each item is tied to a specific build slot.
- The chip shortage combined low inventory, short commitments and capacity reallocated to other sectors.
- Disruption can come from systems as well as parts, as the 2025 cyber incident cited by SMMT showed.
- Protect long lead time, single-source and line-stopping parts with defined buffers, and keep lean replenishment where supply is robust.
Sources
- Toyota: Toyota Production System
- Toyota: 75 Years of Toyota, the origins of Just-in-Time
- McKinsey: Coping with the auto-semiconductor shortage, strategies for success
- US Department of Commerce: Results from semiconductor supply chain request for information
- European Commission: European Chips Act
- SMMT: Vehicle production rises but regulatory and competitive pressures threaten recovery
Sources checked in November 2026. Rules, rates and schemes can change after publication, so check the linked official pages before acting.
