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Just-In-Time Inventory is Dead. Welcome to the New World.

Cover Image for Just-In-Time Inventory is Dead. Welcome to the New World.
Charlie Greyhound
Charlie Greyhound

Starbucks, with more customer demand, is running out of major inventory components while using a Just-In-Time (JIT) inventory. Home Depot, overrun by those wanting to fill their time with D-I-Y projects, is running out of major inventory components. Automakers, with customers clamoring for new cars, are crippling by a shortage of computer chips predominantly produced in Asia. Nike and other apparel brands struggle to stock retail outlets with their wares. They are running out of major inventory and must halt assembly lines. Just-In-Time inventory is dead, unthinkable in this new world, right?

Global shortages of critical supply goods reflect the deep disruption of the pandemic. Combine this with decades of companies limiting their inventories through efficient (but risky) JIT inventory levels.

The depth and breadth of these shortages show the extent to which JIT has come to dominate commercial life. This helps explain why it is one of the reasons construction builds are having trouble purchasing supplies. A principal contributor to the tragic shortages of personal protective equipment occurred early in the pandemic. This left frontline medical workers lethally exposed without adequate gear.

What is Just-In-Time inventory

Just-In-Time (JIT) inventory was a supply chain revolution in the business world created within the Toyota manufacturing plants by Taiichi Ohno. It was a means of meeting consumer demands with minimum delays. By keeping inventories thin, major retailers use more of their space to display a wider array of goods. And lean production has significantly cut costs while allowing companies to pivot quickly to new products.

Across all major industries, companies have historically embraced JIT to stay nimble, adapting to changing market demands, while cutting costs. But the tumultuous events of the past year have revived concerns where industries have taken inventory minimization too far. This is leaving them incredibly vulnerable to disruption while chasing the thinnest of CapEx and OpEx. As the pandemic hampered factory operations and sown chaos in global shipping, many economies around the world are crippled by shortages of a vast range of raw products. JIT works when everything (internal and external) is running near perfect. In a time of a global pandemic, economic upheavals, and supply chain interruptions, Just-In-Time is officially dead.

Introducing Just-In-Case

Replacing Just-In-Time inventory (JIT) by Just-In-Case (JIC) inventory strategy means companies keep larger inventories on hand. This type of inventory management strategy aims to minimize the probability that a product will experience a Stockout. No product, no revenue, right?

Supply chain experts all agree that JIC is helpful because it prepares the company for unexpected jumps in demand or declines in the supply of raw materials and components. The downside is that companies must pay more for warehousing and the storage of idle materials. However, given recent circumstances, that is a price most companies are now willing to pay for.

But JIC is a framework for rough inventory levels. This only gets you partway to optimizing your inventories in a turbulent world. Beyond the framework is the optimization of inventory, to protect against theft, hoarding, excess, and lost assets. This gives all areas of the company visibility, insight, and control of their critical assets.

To optimize inventory min-max levels in JIC, companies need a robust Field Data Collection. This is applicable to warehouses, offices, field & site locations, and anywhere else your valuable assets exists. Track anything, track everything... and have actionable data at the fingertips of every connected department.

For companies converting to JIC from JIT, who want to optimize their inventory, Sitehound is here to help make the transition.

More info on this topic find here.

Charlie Greyhound
Charlie Greyhound
Charlie, a Dynamic Brand Ambassador for Sitehound Asset & Inventory Management Software, specializing in driving brand awareness and user engagement. Expert in demonstrating software benefits, training users, and leveraging social media platforms to highlight product features and successes. Passionate about optimizing asset management and inventory processes for diverse industries.

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