28 Jan
Just in Time (JIT) Inventory Management Explained:
Just in Time is an inventory management system focuses on maintaining an adequate inventory. The purpose of JIT inventory is to only order stock when required to keep inventory to a minimum. This supply chain management system requires keeping a close collaboration with suppliers to ensure the stock arrives on time to meet customer demands.
Just in Time Advantages and Disadvantages:
Advantages of Just in Time Management:
Just in time inventory has become an increasingly popular stock management system over the years to maintain competitive advantage and increase profitability. There are many benefits to implementing just in time management:
Eliminate Waste:
The key feature of Just in Time management is the model reduces over ordering and excess stock. Keeping a low level of inventory reduces the risk of unsold and will have minimal amounts of inventory obsolescence. Minimal stock also means production errors can be detected easily resulting in fewer faulty products being sent out to customers!
Improves Warehouse Efficiency:
Implementing just in time inventory management improves warehouse efficiency. The software system eliminates faults in the warehouse operations and improves the quality of processes through continuous improvements.
Reduced Costs:
Receiving inventory when required will reduce the operational and inventory costs. There are many expenses that are reduced due to the just in time management system such as labour expenses, storage experiences, stock expenses etc.
As less space is required for just in time inventory, the holding costs are lowered. Because less inventory is required, businesses invest significantly less in its inventory. Additionally, just in time stock management also reduces labour costs as less warehouse operatives are required to fulfil orders.
Just in time inventory management systems also decreases the amount of storage related accidents, therefore, reduces additional expenses.
Improve Customer Service:
Customer service is essential in eCommerce businesses therefore, it is important to provide a high standard service. JIT reduces lead times for consumers as the system reduces manufacturing time therefore can deliver products more quickly and easily! As there is less inventory, suppliers can concentrate on producing high-quality products with low failure rates which in turn increases customer satisfaction and lowers production costs.
What are the Disadvantages of Just in Time?
Supplier Dependence:
The JIT framework requires a reliable supplier to deliver the inventory on time to meet the customer demands. However, an undependable supplier that fails to meet the delivery times and delivering incorrect quantities will cause the production process to be disrupted.
The framework requires more planning to ensure an organised and prepared workflow. As a result, businesses must account for this when planning inventory levels, ensuring that suppliers can meet varying volume requirements at different periods especially during season demands.
Missed Business Opportunities:
With the JIT framework, it requires having little inventory in stock, however this can cause an disadvantage to the business as you will have the risk of running out stock. Businesses may not be able to meet massive orders immediately and won’t be able to provide a fast service to customers.
How does Just-in-Time Work?
The below diagram highlights the different stages in Just in Time Inventory Management processes:
What Businesses should use Just in Time?
There are many different industries that would benefit from implementing just in time inventory management into their warehouse operations. Fashion, technology, retail, packaging, luxury, and publishing companies are all examples of businesses that used just in time systems.
Conclusion:
You can outsource with Meteor Space to improve your existing stock control tactics. We can help increase your critical skills, improve your warehousing efficiency, and improve the customer service. To find out if just in time is the ideal inventory management system for your business, speak to one of our experts about our inventory management systems and capabilities! Please get in touch today.
