Just-In-Time (JIT) inventory is a method of inventory management aimed at keeping inventory costs as low as possible. Using electronic inventory control systems, various triggers and monitoring can be built in to the production or sale process making it possible for businesses to keep a bare minimum of stock or materials on hand. When the next part or product is required, it is ordered to arrive ‘just in time’ enabling an efficiency and cost-minimisation not possible when holding excess stock or materials.
Just-In-Time gives businesses far more control over manufacturing and an ability to adjust quickly to customer demand, ultimately enabling lower costs and higher profits. While there are some businesses not suited to using Just-In-Time it is, as a general rule, beneficial and now widely used.
In order for you to judge if it is a viable and beneficial model for your business, let us take a closer look at the main features.
The Benefits of Just-In-Time Inventory
Less Tied-Up Capital
Like inventory control in general, one of the main benefits for your business that Just-In-Time offers is the reduction of tied-up capital. Inventory kept to a bare minimum is an efficient and cost-reducing method, providing that management and demand forecasting are accurate.
Instead of money tied up in excess stock, parts and obsolete products, Just-In-Time allows for real-time, intuitive inventory management. This means that your business can follow trends and demands with considerably less investment in unpopular or rarely used parts and products.
Low Cost Warehousing
Using Just-In-Time methods, businesses can keep their material storage and stock-on-hand costs low. The storage space previously used for stock and materials can be freed up for other uses. For new businesses that start up with this model in place, warehouse space can be greatly reduced from the outset. Also, the costs of insuring inventory can be effectively minimised.
Greater Control and Efficiency
All businesses want to have the greatest amount of control possible over inventory costs and the efficiency of production or ordering of products. Just-In-Time provides one of the best ways to do this and is so well used by some companies that finished products or items for resale are only ordered once a sale has been made. This allows businesses to better match and adjust to customer demands. With less materials and products on hand, capital can be used more efficiently and trends can be kept pace with intuitively and effectively. When Just-In-Time is implemented correctly, the need for excess unsold stock or materials is greatly reduced.
Lower Costs Passed Forward
For some businesses, the lowering of costs that Just-In-Time enables means that products can be sold to customers cheaper or savings used to increase business or profits.
Are There Any Downsides?
When used well and implemented via electronic inventory control and management systems, the downside of the Just-In-Time model is largely limited to incorrect forecasting, system glitches or delivery and transportation problems. These can be ironed out through good planning and the use of effective inventory control software, ideally one that utilises SaaS (software as a service) and cloud technologies. Choosing the best software for your business is now a relatively painless process. Find the one that offers the best features, support and integration for your company’s needs such as Unleashed Software.