Just-in-Time Logistics
How does it work and is it the right choice?
Just-in-Time Logistics (also known as JIT) is a logistics concept in which companies aim to deliver goods. Immediately when they’re required, in order to facilitate the next stage of the supply chain or logistical process. Deciding whether Just-in-Time logistics is necessary for your business is of course essential, but it is important to know that JIT is a science that comes with its own list of benefits and corresponding challenges. Most importantly, if you decide your business could benefit from this, is that you partner with the right company. When choosing to adopt a Just-in-Time logistics as a business. Your logistic provider needs to offer a Time Critical service in case of logistic emergencies that JIT can cause.
The Benefits of Just-in-Time Logistics
By looking at the key benefits afforded by Just-in-Time logistics, you can determine whether it is a service your business could find advantageous.
#1: Less Inventory
One of the most obvious benefits of Just-in-Time (JIT) logistics is the reduction in inventory requirements throughout every stage of the supply chain. JIT ensures that deliveries arrive just before the commencement of the next phase, thereby minimizing the need for holding inventory. While there may still be a need to maintain some inventory as a safety buffer for your business, the required amount will be significantly reduced. However, as previously mentioned, a reliable partner company is essential to effectively implement Just-in-Time logistics. As their Time Critical service becomes a valuable asset when JIT faces complications, such as delays or breakdowns.
#2: Faster Deliveries
A consequence of the successful implementation of Just-in-Time logistics is faster deliveries due to the smooth supply chain process. JIT logistics, means the waiting time between each step of the supply chain is reduced, shorter the delivery time. The reduction of wasted time means your business can optimise lead times and make your business’ processes happen faster.
#3: Lower Costs
Another JIT benefit is the lowering of operational costs. As you will need to hold far less inventory, you will save money that would otherwise be spent on warehouse or storage space. Holding inventory for any length of time costs money, as do longer delivery times. When not paying out for storage or longer deliveries, profit margins can increase, as outgoing costs are lessened.
There are countless other benefits too, including better levels of responsiveness, a more reliable supply chain and tighter, more focussed scheduling.
Is JIT Logistics the Right Choice?
Would your business benefit from Just-in-Time Logistic services?
Just-in-Time logistics can significantly reduce business spending, as well as tighten up your supply chain. How to know if your business would be better off using JIT logistics is dependent on several things. The size of the goods you are shipping, as well as the quantity, are big factors. The bigger or bulkier the goods, the more storage space required for on-hand inventory. If you are transporting large quantities of goods, then this additionally requires a large – and therefore expensive – amount of storage space.
The industry you are in is also relevant. Some industries (such as aerospace, tech manufacturing and automotive manufacturing) benefit hugely from Just-in-Time logistics. These industries are fast-paced and cannot afford downtime or supply chain breakdowns and thus require deliveries that are reliable. On the other hand, if your business is not in an industry where specific delivery time is essential to keep things moving. Then JIT logistics would not necessarily be the best choice.
The Challenges of Just-in-Time Logistics
While Just-in-Time logistics is the next level in time sensitive services, it’s not without its own challenges.
#1: Accurate Demand Forecasting
The whole process of Just-in-Time logistics breaks down if a business cannot accurately forecast their demand. This forecasting is essential to plan inventory and delivery to ensure on-time fulfilment. If for instance, the true demand is out of line with the forecast, the supply chain could fail due to a stock shortage or too much inventory. Data models, therefore, need to be airtight and understood to forecast demand accurately.
#2: Minor Disruptions = Serious Impact
Just-in-Time logistics differs from standard supply chain logistics due to the removal of excess inventory. While this is helpful (as mentioned above) when it comes to not requiring significant storage space. The elimination of what is commonly referred to as ‘buffer stock’ implies that even a minor disruption can have significant negative consequences. If a delay or disruption occurs early in the supply chain. It can—and will—affect all subsequent stages of the process.
#3: Initial Costs
Just-in-Time logistics can come with some initial costs. Training personnel and setting up the technological infrastructure to facilitate Just-in-Time logistics is an investment. While it is more than likely to be worth the added charges, it is important to understand that this is necessary in order for JIT logistics to deliver the benefits expected.
Getting Started in Just-in-Time Logistics
And making sure you chose the right company to partner with.
Despite these few potential challenges, Just-in-Time logistics is an invaluable service that many businesses in a variety of industries can – and do – benefit from. Your organisation needs to be prepared to deal with the necessary set-up of JIT logistics in order to experience the simplifying of their supply chain.
One of the most important things when deciding to implement Just-in-Time logistics within your business. Is making sure you partner with a company who can provide a reliable and effective Time Critical service. Royale International have a large portfolio of Just-in-Time logistic clients they work with, simplifying supply chains across a number of different sectors. Their efficiency and professional service offers an unparalleled Time Critical service that is guaranteed to help simplify and streamline your business delivery needs. For more information on the ways that Royale International can help you manage your Just-in-Time logistics, click here: https://www.royaleinternational.com/services/time-critical-services/