JIT concept vehicle retailing

One of the core challenges many retailers have traditionally struggled with is managing their inventory effectively and efficiently – hot products would sell out quickly, leaving merchants unable to meet customer demand, while slow-moving items would sit in warehouses and freeze capital until they were offloaded (offer at heavy discounts).

JIT stresses the important of only carrying the bare minimum amount of stock required to satisfy the demand of customers. Traditionally, retailers have aimed to carry surplus, so they don’t run out of stock and miss out on sales. However, in a time when operating within a budget is a priority objective due to a recovering economy, this isn’t an option. With a JIT model deployed, the goal would be to have zero inventory, and have merchandise sent to the warehouse only when an order has been placed.

''COVID-19 will give opportunity to rethink the existing vehicle retailing model to the new innovative model''

Retail is an industry where your financials need to be lean and mean across the board. One of the biggest ancillary costs to a retailer is the inventory holding costs associated with housing excess stock, which has been ordered based on best guess estimates or for that rainy day.

Rent, electricity, water and other costly warehousing overhead costs can quickly swallow those margins even before the stock has hit the floor and had a chance to end up in your customer’s hands.

JIT system will cut out the need for large warehouses – or at the very least minimize the storage space required – which flows back to the bottom line of your business.

Inventory obsolescence, or ‘dead inventory’, is a major problem retailer face in industries such as technology and fashion. What might be cutting edge one season may be destined for the history books a mere month or so later.

JIT system will ensure that you’re not stuck with products that no one wants, saving you having to reduce the price just to clear the stock (if possible) and ultimately cutting into your profit margins. With a JIT system you won’t be left babysitting high levels of stock that have reached the end of their product life cycle.

JIT inventory management system means you’re not putting down large amounts of cash on stock that you may or may not need down the line. Instead, those resources are used in other areas that can give your business a competitive edge in a dog-eat-dog environment.

JIT stocking at retail level the industry needs a robust forecasting mechanism which is at present not in place. The retail business is very market-oriented and implementing JIT without accurate forecasting is not possible here.

Automakers and dealers have to judiciously analyses the way it is managed if they want JIT to be part of their new normal supply chain.

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