![]() ![]() In the case of any supply shortages or delays, JIT can lead to unexpected costs. Training the people and building the technology infrastructure to support Just in Time logistics is an expensive investment. Implementing Just in Time logistics comes with various hidden costs. Therefore, businesses need to find the optimum level of safety stock and deal with shipping variance. One delay early in the process can disrupt all the corresponding steps. Thus, one small disruption can quickly spread throughout the supply chain. However, with Just in Time, the buffer stock is minimized as much as possible. So if there’s a delay in one part of the process, the buffer helps to offset the inventory shortage for the later steps. Usually, firms have buffer stock at various points in the supply chain. Challenge 2: Possibly Severe Impact of Minor Disruptions Thus, firms need to rely on data models to accurately forecast demand. If the actual demand is much higher than the forecast, then the supply chain won’t have enough stock to deliver the items on time. If the actual demand is much lower than the forecast, then the inventory will increase. This information helps managers to plan the inventory and delivery to ensure on-time fulfillment. Firms need to predict the demand for an item and how it will change over time. Implementing Just in Time logistics is impossible without accurate demand forecasting. Challenge 1: Difficulty of Accurate Demand Forecasting However, just like all things in life, there are challenges as well. The inventory requirements are lower, and delivery times are faster. There are undoubtedly many benefits to implementing Just in Time logistics. The flow of goods across the supply chain becomes more flexible and adaptable. Thus, the firm can satisfy different customer requirements. Shorter lead times mean it’s possible to fulfill many orders on short notice. Managers can quickly modify the supply chain to suit new demands. ![]() Having JIT capabilities enables a firm to be more responsive. That’s literally in the name, in case you forget! Thus, Just in Time logistics helps optimize lead times and enable faster fulfillment. Moreover, JIT operations focus on constantly minimizing wasted time. If the sub-processes take the same time as before, but the waiting in between each step in the process gets shorter, then the total time to delivery will also get shorter. Benefit 3: Faster DeliveriesĪnother consequence of reduced inventory is a shorter waiting time at inventory. Thus, reducing the number of goods stuck in inventory helps minimize operational costs and increase profit margins. And every extra minute spent in inventory between deliveries means added costs. Storing and managing inventory is costly. One of the effects of reduced inventory is the corresponding reduced inventory storage costs. But they are dramatically reduced if the firm successfully implements the JIT process. Of course, in the real world there are always some inventory requirements. If the item arrives just before the start of the next process, then theoretically there’s no need for any inventory. The most obvious benefit of Just in Time logistics is reduced inventory throughout the supply chain. Let’s look at some of the benefits and strategic advantages that Just in Time logistics provide. Firms have also adapted it for various aspects of the logistics process. Over the last few decades, organizations over the world have adopted the technique. ![]() JIT helped Toyota achieve a high level of efficiency in manufacturing. Toyota was the first company to apply it and perfect it for manufacturing processes. Like many other management practices, the Just in Time philosophy originated in Japan in the 1970s. The firm can potentially manufacture, store, or ship an item when a customer needs one and not before. Thus, Just in Time logistics aims to minimize inventory (which can be expensive to store), reduce delivery time, and eliminate any wastage, such as unneeded items. The idea behind JIT logistics is to ensure that the item arrives at the warehouse at the moment the manufacturer can ship it to the customer. Then later, the item’s manufacturer may ship it to the customer from the warehouse. For example, a driver may deliver a finished manufactured item for storage at a warehouse. Think about how an item usually moves through various steps in the supply chain process. In this article, we’ll discuss its details, benefits, and drawbacks, and you’ll learn how you can prepare so you can implement it successfully. Just in Time (JIT) logistics is an inventory management strategy that aims to deliver goods immediately before they’re needed for the next stage in the logistics process. ![]()
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