Is it Time for Manufacturers to Rethink Inventory Levels?
How to Increase Your Order-Fill Rates by Adding JIC to JIT Inventory Management
Just-In-Time (JIT) inventory control has been a part of daily life in the manufacturing and warehouse management industries for years. However, JIT met its match most recently due to an increasingly unreliable supply chain, resulting in manufacturing and warehouse distribution paralysis worldwide. If your business was not prepared for this crisis, it may be time to consider a Just-in-Case (JIC) approach.
Up until 2020, JIT was an effective inventory control method for many industries. Then COVID-19 hit the globe with a giant, never-ending wave of uncertainty, straining worldwide economies and shuttering businesses everywhere. The pandemic affected manufacturers, logistics, and warehouses beyond the travel and hospitality industries, schools, and hospitals. The resulting temporary or permanent business closures left customers with order-fill nightmares that continue to this day.
Japanese manufacturing companies introduced JIT to the world in the 1970s. The JIT management strategy aligns raw-material orders from suppliers directly with production schedules to improve manufacturing, operations, and inventory control. Later, the technique became prevalent in warehouses and distribution centers to improve efficiency and inventory overhead.
The recent supply chain backlog has led to raw materials and inventory not arriving as scheduled, thus impacting production capabilities and halting the flow of goods to and from both manufacturers and warehouses. While your competitors may be struggling to meet order-fill, you may want to consider implementing Just-In-Case (JIC) with or for your manufacturing facilities.
What is Just-in-Case?
By approaching production and inventory forecasts from a different angle, JIC involves the ability to carefully plan and take some risks. According to an Inbound Logistics' December 2021 article, "Businesses are transitioning from Just-in-Time to what has become known as a 'Just-in-Case' strategy. Just-in-Case refers to the practice of holding larger amounts of 'safety' stock, enabling a company to avoid stock-outs.”
Manufacturers may be wary of taking this investment risk given the current economy. However, JIC incorporates risk management, not blind faith. Companies must rely on their warehouse management system (WMS) software for the most complete and accurate reporting to provide the proper decision-making information. High-level reporting aids in determining which products are in high demand and will remain so, to prevent excessive future shipping delays. By adopting the JIC strategy and investing in raw materials or stockpiling extra inventory now, you can pledge to provide better order-fill for your customers with confidence.
Why JIC is Needed Now
At first glance, the idea of JIC goes against lean inventory control in several ways. It directly calls for up-front investment, higher levels of risk management, and increases in production and warehouse space, not to mention extra inventory. JIC may not seem like an efficient solution to lingering order-fill problems. But does it really hurt? Meeting your customers' demands by providing proper inventory levels to be able to fill all their orders is a win-win for everyone in the chain. In the end, JIC can provide a great advantage to you and your customers in this competitive marketplace.
If you need help improving order-fill in your facility by implementing Just-In-Case inventory control or learning how to best utilize your WMS software, find out how ASCTrac® from ASC Software can help!