Using Technology to Improve Supply-Chain Resilience

On the flipside, Just in Time Inventory management has its potential disadvantages. If you’re a construction professional searching for a simpler way to efficiently manage your...

Just-in-time, or JIT, is an inventory management method in which goods are received from suppliers only as they are needed. The main objective of this method is to reduce inventory holding costs and increase inventory turnover. Let’s say you’re running a manufacturing business, and you’ve currently got so much raw material on hand that it’s taking up space on your shop floor and slowing down the production process.

End-to-end visibility across the supply chain

Under standard inventory-based production models, businesses place large orders for materials from wholesalers, and many items can be produced from one shipment. As production depletes the first shipment of raw materials, another order is shipped, creating a convenient time buffer. On-demand production means companies must find suppliers that are willing to fulfill small, frequent orders on very short notice, which often means using local suppliers to reduce shipping time and expenses. With no back stock of inventory or materials, any supply chain issue can lead to delivery delays and angry customers. In the apparel sector, for example, buyers must place peak-season orders six months in advance. With high volatility, demand forecasts in June can be completely different than actual demand in December.

Depending on the nature of the industry, seasonal fluctuations might need to be taken into account to accomplish a robust forecast of the goods in the market. And, of course, the JIT inventory system can be found in automobile manufacturing, where it was first developed by Toyota Motor Company. Executives reasoned that the company could adapt more quickly and efficiently to changes in trends or demands for model changes if it did not keep any more inventory in store than was immediately needed. Large product orders are a bit of a gamble, since you have no guarantee that you’ll actually sell every item on your shelves. But if you order smaller numbers of items at a time, you enjoy greater agility to abandon products that are no longer selling well.

Technology Is the Driving Force Behind Supply Chain Excellence

The benefits of the just-in-time (JIT) production strategy are well-documented, but it can also have some serious disadvantages. "Just in time" means that the success of this business strategy depends largely on precise coordination between businesses and their suppliers to ensure prompt delivery. Because there is no inventory buffer, business can suffer greatly if any one element of production is delayed. Just-in-time inventory systems are a great way to reduce costs and improve efficiency.

These cards are collected, then used to trigger a replenishment order—just for the number of components or amount of raw material you’ve used. There are several actions that could trigger this block including submitting a certain word just in time inventory examples or phrase, a SQL command or malformed data. That meant a manufacturer didn't need a warehouse full of windshields and brakes. It could have those parts delivered hours before they were scheduled to be used on the assembly lines.