The principle of JIT is simply that we have items when they are needed and none when they are not needed.
The elements of JIT are the techniques to be developed, for example:
- supply what is required
- supply the quality required
JIT techniques are less easy to apply for some businesses. Retail shops find it important to hold stock so that the customer can have a choice of several options, so JIT supply would not be appropriate for in this scenario. If the customer were buying the same item by mail order, then there is a very good opportunity to use JIT techniques.
Some retail companies implement the JIT inventory method by using arrangements with drop shipping companies. An example of this is a company that markets office furniture but does not manufacture the furniture itself or keep the inventory of it on hand. Rather, as it receives orders for furniture from customers, it purchases the needed furniture from a manufacturer and has the manufacturer deliver it straight to the customer.
Typical features of the ideal company where JIT concepts could be applied would be:
- Narrow product range
- High volume
- Stable market
- Good quality management
- Local, reliable suppliers
- Dependent suppliers
- Fast-cycle processes
The operational benefits arising from JIT are:
- Inventory investment
- ‘Supply to order’ instead of ‘provision for stock’
- Easier forecasting so less slow moving stock
- Better flexibility
- Simplified administration
- Waste elimination
The disadvantages of just-in-time inventories involve disruptions in the supply chain. If a supplier of raw materials has collapsed and cannot deliver the goods on time, one supplier can shut down the entire production process. An unexpected order for goods that surpasses expectations may delay delivery of finished products to clients.
Telesto will help you manage your inventory cycle process with ease using different techniques embedded into the App’s workflow. For more information, visit Telesto’s website at: www.telesto.app.
“Holding inventory shows we don’t have control.”